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Preparing for RAC ? Strengthen Your Denials Management Process. December 19, 2008. Practical, Innovative, Medical Management Solutions. PREPARING FOR “ RAC ATTACK ”. Goal Develop a proactive attack plan to prevent financial risk for the organization Assemble a RAC Taskforce

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Preparing for RAC ? Strengthen Your Denials Management Process

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Preparing for RAC? Strengthen Your Denials Management Process

December 19, 2008

Practical, Innovative, Medical Management Solutions


PREPARING FOR “RAC ATTACK”

Goal

Develop a proactive attack plan to prevent

financial risk for the organization

Assemble a RAC Taskforce

Interdisciplinary approach with core players:

Utilization Review

Medical Records

Risk and Outcomes Director

Patient Financial Services Director

Information Technology Representative

Physician Representative (in-house or contracted)


PREPARING FOR “RAC ATTACK”

Determining the Action Plan

  • Establish line of authority for hospital wide RAC program

  • Use existing data to analyze/identify denial drivers

  • Perform in-house audits and determine hospital wide and system weaknesses

  • Establish process improvement plans

  • Develop an interdepartmental tracking system


PREPARING FOR “RAC ATTACK”

In-House Physician Advisors

PROS

  • Decrease hospital expense

  • No contingency fees

  • Existing internal peer relationships

    CONS

  • Increases existing physicians work load

  • Physician often not be specialized in denials management

  • Difficulty persuading others to embrace practice improvements

  • Limited ability to produce valuable educational reports and denial tracking reports


PREPARING FOR “RAC ATTACK”

Results Achieved: Denials Outsourcing

FYE 2005

- 29.54% of Total Cost denied

- 21.00% overturned after in-house appeal

FYE 2006

- 27.53% of Total Cost denied

- 44.90% recovered utilizing physician appeal

Summary

Significant Denials Decrease:

- 19.50% is the average recovery prior to program launch

- 29.00% is the sustained recoveries since 2006


PREPARING FOR “RAC ATTACK”

Demonstration Project RAC Statistics

  • 32% medical necessity denials

  • 42% incorrect coding denials

  • 9% insufficient clinical

  • 88% inpatient

  • 11% appealed

  • 5% overturned

  • 42% of hospitals had no denials issued


PREPARING FOR “RAC ATTACK”

  • Denials Increasing from Numerous Sources

    • CMS Denials

      • RAC Denials

      • Emergence of Medicare “Never Events” Denials

    • Increased Denials

      • Medicaid MCO’s

      • FFS Medicaid

      • Commercial Payors

  • Use RAC Preparations as Catalyst to Revamp your Denials Management Process


  • PREPARING FOR “RAC ATTACK”

    Key Components of an Effective Denials Strategy

    Primary Strategy - Proactive Prevention

    • Use data to identify key drivers of denials

    • Develop processes to mitigate these drivers thereby further reducing denials

    • Minimize denials through an effective Concurrent Review/Case Management and notification process

      Supporting Strategy - Denials Recovery

    • Aggressive appeals process recover denied dollars

    • Close the loop between approval and payment


    PREPARING FOR “RAC ATTACK”

    Primary Strategy: Data Management

    • Audit existing data to identify opportunities for improvement including areas of RAC emphasis

    • Use audit results to develop processes that address identified areas of opportunity

    • Enhance existing UM/CM/SW processes based on audit findings

    • Develop educational sessions as needed

    • Re-assess and monitor impact of newly implemented processes


    PREPARING FOR “RAC ATTACK”

    Using Data to Identify Opportunities

    Audit charts for each RAC area of emphasis

    • Objective chart review using CMS medical necessity criteria (InterQual)

    • Subjective chart review using physician medical judgment

    • Data capture and analysis of denial variables

      Analyze audited data and existing denials data

    • Diagnosis

    • Physician

    • Denial type

    • Delay reason


    PREPARING FOR “RAC ATTACK”

    Denials Management Tracking and Audit Application


    PREPARING FOR “RAC ATTACK”

    Building Processes to Minimize Denials

    • Obtain buy in from key stake holders to improve chances of success

      - Physicians, nursing, UM, IT

    • Prioritize process improvement to maximize returns

    • Select improvements with highest success rate

      - Broadest impact across all payor types

      - Simple implementation

      • Primarily systems enhancements

      • Minimal resource allocation

        - Enhance and strengthen existing processes


    PREPARING FOR “RAC ATTACK”

    Building Processes to Minimize Denials

    Examples of Process Improvement Activities

    • Short stay denials

      • RAC emphasis

  • UM/CM/SW process enhancements

    - Improve communications with payors

  • Education

    - Use data to identify educational activities for staff

    - Employ external resources as needed


  • PREPARING FOR “RAC ATTACK”

    Short Stay Denials

    • Case manager assigned to ER to review admissions for select diagnosis based on audit results

    • Consult done in ER when possible prior to admission

    • Consider implementing rapid chest pain protocol

    • Educate ER staff on admissions criteria for commonly denied diagnosis


    PREPARING FOR “RAC ATTACK”

    UM/CM Process Enhancements

    • Hold carriers to timely denial notification by denial log

    • Use log to eliminate denials for no clinical and to drive peer-to-peer process

    • Use denials audit results to focus case management and discharge planning activities

    • Work closely with payor case manager on complex cases


    PREPARING FOR “RAC ATTACK”

    Education

    • Use denial audit results to guide educational initiatives

    • Physician and UM/CM/SW educational sessions based on frequently denied diagnosis

    • Hospitalist groups respond positively with impressive end results

    • Individual physician improvements more difficult to accomplish


    PREPARING FOR “RAC ATTACK”

    Secondary Strategy Denials Recovery

    Ensure processes are in place to maximize denied claims

    recovery

    • Develop strong appeals capabilities

    • Ensure aggressive payment follow through

    • Ensure strong data capture and reporting capabilities

    • Use data to identify areas of opportunity to enhance the entire process

    • Close the loop on denials prevention CQI


    PREPARING FOR “RAC ATTACK”

    Advantages of Physician Led Appeals

    • Recognized as clinical expert vs other clinicians

    • Able to challenge payers and provide clinical conviction

    • Peer-to-peer review shown to prevent 15% of denials

    • RAC auditors must provide a physician for peer-to-peer when requested

    • Select payors now require a physicians’ name on the appeal


    PREPARING FOR “RAC ATTACK”

    The Appeal Process

    Types of Appeals

    • Informal peer-to-peer as soon as denial is identified, 1 day of denial

    • First Level appeal with medical records, 15 to 180 days depending on payor

    • Second Level for some payors – typically 30 to 90 days

    • Third Level – for some payors – typically 30 to 90 days

    • External appeals - usually through the MIA or CMS

      Complexity of Appeals

    • Multiple payors Multiple rules

    • Multiple levels Multiple time frames

    • Multiple regulators


    PREPARING FOR “RAC ATTACK”

    A Staged Approach to Appeals Management

    Automation and

    Data Management

    Research & Approval Strategy Development

    MCO Submission

    Denial Mitigation through Education

    MCO Process Management

    Denial Process & Intervention Reporting

    Payment Management Process

    Appeal Response Determination Process


    PREPARING FOR “RAC ATTACK”

    Internal Appeals Process

    • A strong appeals process is critical in developing a successful denials mitigation program.

    • The components of a successful appeals process include:

      - Identifying the denial as soon as possible

      - Collecting medical necessity information

      - Generating the appeals letter

      - Managing the payor’s appeal response process

      - Appeal response determination process

      - Payment management process

      - Data management, reporting and performance improvement


    PREPARING FOR “RAC ATTACK”

    Identifying the Denial

    • The EOB is the gold standard and should be cross referenced with other denial sources to ensure denials are correctly identified

    • For carriers with a short appeal response timeframe the denial must be identified before the EOB is received

    • Most denials are identified through the denial letter sent from the payor or phone calls

    • Payor’s daily log is a good source for identifying denials


    PREPARING FOR “RAC ATTACK”

    The Medical Necessity Argument

    • Critical components necessary for success

      • Timeliness is critical and requires a complex and efficient process to meet the varying requirements of numerous insurers.

      • Medical necessity knowledge is key to a successful appeal and often requires the leadership and input of a UM trained physician

      • Intimate knowledge of criteria sets (Milliman, InterQual etc.)


    PREPARING FOR “RAC ATTACK”

    Managing The Appeal Response Process

    • All appeals documentation must be:

      - Sent by certified mail

      - Tracking option activated

      - Follow-up calls to facilitate return of late appeals

    • Payors fail to return 35% of initial appeals for a variety of reasons

    • Depending on the insurer, only 35% to 60% of appeals are completed within the required 30 days

    • Process difficult to monitor without an appeals tracking system


    PREPARING FOR “RAC ATTACK”

    • Once an appeal response is received a decision must be made on next steps

    • If approved, clearly payment must be pursued

    • If denied:

      • Should a Level 2 or 3 be pursued?

      • Should the account be closed?

      • Should an external review be filed?

  • Between 10% to 25% of Level 2 or 3 appeals can be overturned

  • Significant medical necessity knowledge is needed to assess which appeals warrant a Level 2 or 3


  • PREPARING FOR “RAC ATTACK”

    From Approval to Payment

    • Assign accountability for payment follow-up

    • Close the loop between approval and payment

    • Follow-up with payor to ensure 100% of approvals are paid

    • Pay close attention to TPA’s


    PREPARING FOR “RAC ATTACK”

    Data Management, Reporting and Performance Improvement

    • Provide monthly results to key players

    • Status reports provide updates on the appeals process

    • Actionable reports drive the CQI process

    • Monitor impact of process improvement activities with tracking and trending of data


    PREPARING FOR “RAC ATTACK”

    Summary

    • Preparation is key

    • Minimize operational disruptions … its just another denial

    • RAC demonstration – 42% of facilities had zero denials

    • Use the opportunity to enhance your denials management process … and come out ahead

    • Reporting and continuous process improvement are critical


    Case Management Covenants, LLC

    Case Management Covenants is a Maryland based

    healthcare consulting services company specializing in

    denial management, appeal management and RAC audit

    preparation services.

    Key Staff Contacts

    President: Olakunle Olaniyan, M.D. – still a practicing physician and former managed care VP and CMO.

    Chief Operations Officer: Iskla “Chris” Brown - nurse executive with many years experience in healthcare accreditation organizations, commercial and government health insurance entities.

    Vice President, Business Development: Doug Allen – a strategic planning professional with significant experience in both the commercial and non-profit healthcare sectors.

    410-715-4913


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