Critical financial opportunities are being lost at too many U.S. hospitals. The use of Utilization Management can optimize the way hospitals’ save money and provide better patient care. Each year millions of dollars that would otherwise benefit hospitals’ bottom lines are simply overlooked. But the Utilization Management process needs to be properly reviewed and assessed in order to take advantage of revenue that is available and otherwise is unnecessarily lost being through mismanagement. Continually taking write-offs, making forced reductions, or reducing care to mitigate losses are the wrong steps. There’s a better way for hospitals to improve patient care and at the same time reap financial benefits.
Ensuring proper system management will address certain medically appropriate procedures within the UM process.
Five important areas within Utilization Management are susceptible to breaking down and can affect a hospital’s bottom line. They are:
- Department organization and management, which are key efficiency drivers.
- Understanding and adoption of regulatory guidelines. These are a necessary component to a financially healthy institution.
- Having proper clinical judgment and understanding of clinical criteria in Revenue Cycle Integration can be positive revenue drivers.
- Inefficiency and inaccuracy in documentation processing can lead to increased payer denials, and lost revenue.
- Taking into consideration that all hospitals have different requirements, staffing concerns, and reporting limits, there are still universal ways in which improvements can be made, and cost savings achieve.
The responsibility for UM can often shift among various hospital personnel. But when the time-consuming processing is not handled properly, payor denials rise, and opportunities to maximize revenue are squandered.
A first and important step to best practice Utilization Review management is through documentation that clearly supports properly billed services. Presenting correct admission orders and clearly identifying the right level of care are key. It starts at pre-admission and carries through to post-discharge, using the time frames outlined by the insurer. Those trained and skilled in UM will already know an insurers’ criterion for submission as well as be familiar with their coverage policies. Necessary authorizations can be correctly obtained, and deadlines can then be met.
But this is really only part of the story and part of why revenue is lost. Hospitals are focused on high-quality patient care. That’s the true bottom line. However, those who administer care are often not the best ones suited to couple that mission with how to stick to the rules within an insurers’ guidelines. It’s true that when patient information is properly presented insurers have discretion and can often make exceptions to their own guidelines if presented with a reason to do so.
The combination of the right personnel and the correct processes can be achieved by having a UM expert on the job. This not only will enhance the quality of health care, but also result in and cost efficiencies. The optimal solution is having the resources among the care givers and UM experts to make sure that patients not only understand the benefits but are also aware of their policies limitations.
Compliance with medical insurers requirements is an obvious obligation. But hospitals must also view that responsibility through a lens of medical necessity when claims are submitted. Any type of error that may occur during processing, such as not obtaining pre-authorizations or incorrect coding can lead to a payment denial. Payer denials are the single-most detrimental outcome in the patient coverage process and can profoundly affect the hospitals’ financial stability. Lowering the number of payer denials can dramatically impact a hospital’s profitability.
Determining how to best correct these faults can be done through a thorough review of a facility’s UM process. Gaps in the process can be detected and corrected. And proper training can prevent future errors.
Documentation must be presented to properly support treatment services. A revenue cycle management team is essential for making sure everything, from diagnosis to admissions, is correctly identified so that the insurer can easily authorize payment and avoid obstacles.
If a major health plan does not require authorization for observation, for example, it’s critical that important deadlines are not missed when a patient status changes. These are incidents in which denials frequently occur. An effective UM team and program will assure that key points such as these are known to the staff and documented accordingly.
Functioning partnerships between departments, open and productive communication among teams such as managed care, patient financial services, physicians, and care managers assure hospitals have the advantage to both advocate on behalf of patients and then are appropriately reimbursed for care.
A rise in payor denials is an easy indicator that revenue is being left on the table. Taken that industry research has shown that up to 65% of denied claims are never resubmitted. That loss alone signifies profits down the drain. Accepting these losses is too often the common reaction. Utilization Management teams can drastically reduce this loss, and others, without putting further strain on the care managers as they rightly focus their time on needed, direct patient care.
UM is a many-tiered beneficial proposition. Through oversight and organization, experienced and skill outsourced staff bring an expertise to the problem of lost revenue from which every hospital can benefit. The improved training, consistent communication, appropriate billing and reporting by knowledgeable experts is a pathway for hospitals to garner their equitable payments, enhancing their revenue stream while simultaneously improving coverage for their patient.