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 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 Key Areas Where Utilization Management Breaks Down
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 achieved.
The High Cost of Poor Utilization Management
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.
Why Clinical Teams Should Not Handle UM Alone
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.
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 cost efficiencies.
The Impact of Payer Denials
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.
How to Fix Utilization Management Gaps
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.
The Power of Cross-Department Collaboration
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. Industry research has shown that up to 65% of denied claims are never resubmitted. That loss alone signifies profits down the drain. 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.
Conclusion: UM as a Strategic Advantage
UM is a many-tiered beneficial proposition. Through oversight and organization, experienced and skilled 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.
Where bServed Helps Hospitals Enhance Revenue and Care
- In the Emergency Room
- Securing Authorizations
- Concurrent Reviews
- Level of Care Optimization
- Denials Prevention
- Appeals and Denial Recovery
- Behavioral Health Utilization Management
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