Hospitals lose millions of dollars each year to decisions made long before a patient is discharged. The most consequential is often the first: whether to classify a patient as observation or inpatient — a single call that can swing reimbursement by thousands of dollars per case.
In a Becker’s Healthcare webinar sponsored by CorroHealth, five leaders discussed how hospitals are reducing their exposure to hidden revenue loss by sharpening observation and inpatient decisions:
- Kathy DeVault, system director of health information management, Bozeman (Mont.) Health
- Pradeep V. Kadambi, MD, vice president and chief medical officer, Upper Valley Medical
Center, Premier Health (Dayton, Ohio) - Patricia Plair, vice president and CFO, Jackson Memorial Campus, Jackson Memorial Hospital (Miami)
- Eric Shelov, MD, associate chief health informatics officer, inpatient, Children’s Hospital of Philadelphia
- Adam Milne, senior vice president of strategic advisory services, CorroHealth
Here are three key takeaways from the session.
Note: Quotes have been edited for length and clarity.
- Combatting denials requires a full revenue cycle management strategy
Denials are a persistent problem, and a worsening one. Across CorroHealth’s national client portfolio, only one Medicare Advantage payer had a denial rate above 17% in 2020, Mr. Milne said. Today, denial rates in some markets run well above 30%, and many of those denials trace back to the initial observation or inpatient decision.
In response, healthcare leaders are bringing stakeholders together to analyze denial patterns and to establish patient status in near real time at admission. The aim is to intervene while a patient is still in the hospital rather than reverse a decision later, under a health plan’s authorization requirements.
“Every aspect of the revenue cycle must buy into an end-to-end strategy and a shared stance on status,” Mr. Milne said. “Organizations with provider-driven strategies that are in line with regulations and contracts are more likely to have revenue integrity.”
- Collaboration and actionable analytics can reduce payer denials
Health systems are addressing the problem at the front end, placing expertise where the status decision is made.
Jackson Memorial Campus has embedded observation liaisons in the emergency department to work with physicians before patients are admitted. The organization also introduced daily observation rounds that review every case within 24 hours, followed by multidisciplinary rounds to determine whether patients meet inpatient criteria.
Upper Valley Medical Center built cross-functional teams drawing stakeholders from every group that touches the status decision, giving leaders a clearer line of sight into denial trends.
“The goal isn’t assigning ownership of denials, because we all own it,” Dr. Kadambi said. “It’s owning the outcome and preventing it from happening again. That’s what we’re most focused on.”
- Technology alone is not enough; change management is essential
Embedding technology into daily workflows is one of the more effective ways to prevent denials. But organizational change remains a human problem. Alignment, buy-in and consistent communication from leadership are what give a new process a foundation to hold.
“We need to make it easy for people to do the right thing,” Ms. Plair noted. “Everyone has to understand the why and what’s in it for them.”
