Preparing for Healthcare Reform Strengthen Your Denials Management Process

1. Preparing for Healthcare ReformStrengthen Your Denials Management Process NATIONAL AAHAM Educational Session February 6, 2009 Practical, Innovative, Medical Management Solutions

2. Strengthen Your Denials Management Process • HealthCare Reform • Paradigm shift, emphasis now on cost control • Increasing Rhetoric on hospital and physician driven costs • Hospitals to save $155 Billion in cost “Joe Biden” 7/8/09 • Too Many people die needlessly at US hospitals “US News and World Report” 7/9/09 • Too many tests drive high cost “President Obama”

3. Strengthen Your Denials Management Process • Effects of Reform • Significant reimbursement pressure • Rapidly Shifting Health Care Landscape • Increased Competition • Changing hospital physician relationship • Increased tolerance for cost control measures • CMS Denials: • RAC denials • Emergence of Medicare “Never Events” denials • Increased Denials: • Medicaid MCO’s denials up over 100% in some MD hospitals • FFS Medicaid • Commercial payers

4. Strengthen Your Denials Management Process • Response • Industry Consolidation • Focus on core competencies and maximize efficiencies • Fewer Product Lines, Niche Strategy • Stronger Physician Alliances (exclusive arrangements) • Outsource noncore services (many clinical services already outsourced.) • Maximize ROI • Enhance flexibility and maneuverability • Minimize disruption if such services become redundant

5. Strengthen Your Denials Management Process • Out Sourcing Denials • Pros • With proper due diligence can select highest possible ROI (Contingency fee) • Immediate results no learning curve • Enhanced data capture and reporting capabilities • Expert advise on denials mitigation • Ability to change Vendor easily if dissatisfied with ROI • More Focus on Core activities • Cons • Loss of Control • Requires proper oversight

6. Strengthen Your Denials Management Process Key Components of an Effective Strategy Primary Strategy - Proactive Prevention • Use data to identify key denial drivers • Enhance current UM processes • Build processes to minimize denials Supporting Strategy - Denials Recovery • Aggressive appeals process maximizes claims recovery • Close the loop between approval and payment

7. Strengthen Your Denials Management Process Data Capture, Management and Reporting • 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-measure and monitor impact of newly implemented processes

8. Strengthen Your Denials Management Process Data Capture, Management and Reporting

9. Strengthen Your Denials Management Process Results Achieved: Denials Outsourcing

10. Strengthen Your Denials Management Process Building The Process - Minimize Denials Process Improvement Initiatives • UM/CM/SW Process Enhancements - Improve communications with payors • Education - Use data to identify educational activities for staff - Employ external resources as needed • Short Stay Denials • RAC emphasis

11. Strengthen Your Denials Management Process Short Stay Denials • Case manager assigned to ER to review admissions for select diagnosis based on audit results • Consult done in ER prior to admission, if possible • Consider implementing rapid chest pain protocol • Educate ER staff on admissions criteria for commonly denied diagnosis

12. Strengthen Your Denials Management Process Supporting Strategy The Appeals 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 and Third Level for some payors, 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

13. Strengthen Your Denials Management Process The Appeals Process A Staged Approach to Appeals Management Automation and Data Management Research & Approval Strategy Development MCO Submission Denial Mitigation through Education MCO Process Management Appeal Response Determination Process Denial Process & Intervention Reporting Payment Management Process

14. Strengthen Your Denials Management Process The Appeals Process Identifying the Denial • EOB is the gold standard • For carriers with short appeals timeframes, the denial must be identified before the EOB is received • Most denials are identified through the denial letter • Use the payor’s daily log for identifying denials

15. Strengthen Your Denials Management Process The Appeals Process 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.)

16. Strengthen Your Denials Management Process The Appeals Process Managing the process is critical: • All documentation must be sent certified • Process difficult to manage without a tracking system • Payors fail to return 35% of initial appeals • Only 35% to 60% of appeals are completed within the required 30 days

17. Strengthen Your Denials Management Process The Appeals Process Once a response is received, it’s decision time: • If denied, should: • a Level 2 or 3 be pursued? • the account be closed? • an external review be filed? • Up to 25% of Level 2 or 3 appeals can be overturned • If approved, then make it pay

18. Strengthen Your Denials Management Process From Appeal to Approval to Payment • Assign accountability • Pay close attention to TPA’s • Close the loops • Follow-up and make it pay

19. Strengthen Your Denials Management Process Summary • Health Care Reform Will Change Many Business Practices • Out Sourcing Denials Mitigation Services Makes Good Business Sense. • Understanding The Denials Process will Help You better Manage in-house or Outsourced Services • Data capture, Reporting and CQI are Key • Expect and Demand Strong Results.

20. Thank You Case Management Covenants, LLC Columbia, MD 21044 www.cmcovenants.com410-715-4913