During an executive roundtable at Becker’s Hospital Review‘s 7th Annual Health IT + Digital Health + RCM Annual Meeting, Jay Ahlmer, president of Versalus Health, discussed the new approach of an aligned focused payment improvement strategy instead of today’s department-level initiatives.
Five key takeaways were:
- Instead of focusing on narrow tactics to reduce denials, health systems need an overarching strategy that leads to increased payments. “When we just establish a bunch of random tactics that don’t really stitch together to create a strategy, we end up creating siloed initiatives and KPIs that don’t actually lead to any value,” Mr. Ahlmer said. In fact, the cost of avoiding Medicare Advantage denials is upwards of $21 million for some medium-sized health systems.
“Instead, we need to create a strategy that’s broad enough to have multiple initiatives supporting it,” he explained. “Then, we develop KPIs to support the strategy and align our team members.”
- Utilization management needs to shift from focusing on denial rates to having consistent patient observation rates. “There’s a perception that denials are the health system’s fault; that something could have been done better,” Mr. Ahlmer said. “But the major driver of denials is medical necessity, so what can you do with that?” The tendency is to change patient status to observation and not to focus on appropriate reimbursement to meet the denial metric goal. “Rather than focusing on denial rates, ,” he said. “We want to see appropriate, consistent patient status.”
- By looking at the overturn rate as a percent of appealed denials, physician advisors are currently encouraged to decrease the number of appeals. Mr. Ahlmer illustrated what happens when we focus on the wrong metric. “Let’s say you think you have a 50 percent chance of winning a case,” he said. “If the difference between winning versus losing is $5,000, the 50 percent chance amounts to $2,500. If it takes me 30 minutes to review the case, I should be making the health system about $5,000 an hour.” However, if the market standard says physician advisors should be taking only cases with a better than a 70 percent chance, all those attempts will not be made.
Mr. Ahlmer illustrated a case where a health system took a proactive strategy to push for more appeals. “It took a lot of effort because there was a huge influx of denials,” he said. However, this system went from getting paid for 55 percent of its Medicare Advantage cases as inpatient to 74 percent, regaining $14 million in improved reimbursement.
- The managed care team needs to shift from conflict resolution to challenging payer reimbursement tactics. “Managed care is completely out of the loop of on a day-to-day basis [when it comes to patient status],” Mr. Ahlmer said. “After they negotiate a contract, we sometimes find our managed care team is like a referee, only focused on resolving disputes. Instead, managed care needs to be looking at the organization’s [Medicare Advantage] reimbursement rates compared to [traditional] Medicare.”
- Revenue cycle needs to prioritize total collected reimbursement and seek new opportunities instead of focusing on write-offs or quick resolutions. “The overarching approach today revolves around quick resolutions,” Mr. Ahlmer said. “We have these claims, let’s write them off and get what we can because we have too much in AR. Instead, we need to be looking at total collected reimbursement, and really starting to think about how to maximize the opportunities for individual cases.”
By coming up with an overall revenue-focused strategy that encompasses all teams throughout the organization, instead of working in siloed departments with separate tactics, health systems can be more assertive, resulting in a positive and significant financial impact for the entire organization.
