As Medicare Advantage (MA) penetration increases arithmetically, now reported nationwide at over 30 percent of providers, the frustrations felt by hospital case management staff increases exponentially – and usually without any awareness by the people in the hospital that are responsible for negotiating those contracts. Unbeknownst to the hospital’s finance staff are the daily difficulties that often are encountered trying to get even the most basic services approved by the MA plans. And as a result, your patients may be experiencing poorer outcomes and a higher risk of readmission, – and providers may soon be seeing a decline in patient satisfaction scores.

These hurdles often emerge even before the patient is admitted, when the physician or hospital staff tries to precertify services. Seemingly endless phone trees and long waiting times are the beginning; then the clerk at the insurance company requires a full case review before transferring the call to a licensed professional, who only in rare instances is able to provide an authorization. More likely, though, is that the call must to go a medical director, who subsequently requires that the clinical information be repeated prior to approving the service. Once the service is approved, if there is even a single digit mismatch between the CPT code of the approved service and the billed service, the claim is rejected and the hospital is forced to proceed through the appeal process.

For emergency admissions, the hospital case management staff is required to call in the admission within 24 hours to provide clinical information and to try to get approval for the admission. While hospitals are required to use the new two-midnight rule for making admission decisions for patients with fee-for-service Medicare, the MA plans seem to be taking their time deciding if they are going to adopt the rule, seemingly approving its use selectively, without rhyme or reason. One national insurer has even stated that it is using both the two-midnight rule and MCG criteria to make admission determinations. Since there are many cases that require admission under the two-midnight rule but do not meet MCG criteria for inpatient admission (and cases that meet MCG criteria for inpatient admission but do not warrant admission by the two-midnight rule), this proclamation allows them to flexibility to make whichever determination results in a lesser payment to the hospital.

Some commercial insurers now have outsourced their hospital admission notification process to offshore companies. This in itself is not objectionable, but the staffs at the outsource companies only are able to receive information and not approve any admissions, adding another delay to the process. If the case manager is lucky enough to get an authorization, it is always followed by the reading of a statement proclaiming that the authorization is not a guarantee of payment – and in fact, once a claim is submitted, the insurer often denies the claim, stating that the clinical information in the medical record did not match the information provided at the time of admission.

Once the patient is ready to transition to the next level of care, the next set of hurdles is imposed. If the patient needs care at a tertiary center, choices often are extremely limited by the providers available in the insurer’s network, forcing doctors to transfer the patient to the second or third choice (or worse, to a hospital where they have absolutely no idea about the expertise of the specialists, rather than a facility with the best specialist for the patient’s condition). If the patient is stabilized but now needs long-term acute care, getting approval for acute rehab or a long-term acute-care hospital (LTACH) is nearly impossible. I have spoken with case managers who have never had an MA plan approve either an acute rehabilitation hospital or an LTACH transfer, despite the fact that the patients meet criteria and would benefit from the care. Acute rehab after a stroke can make the difference between patients spending the rest of their lives independent or institutionalized. And LTACHs are better equipped to care for the patient who requires complex wound care or weaning from assisted ventilation that has failed at the hospital. Approval for a skilled nursing facility (SNF) is less daunting, but in many communities the MA plan is only contracted with a single SNF, often the only one in the area that will accept their rates, with no patient choice provided.

Approval for home care and durable medical equipment (DME) can also impose barriers to safe transitions, as once again, the case manager and patient cannot choose the provider that can best provide for their needs, but rather they are forced to accept the contracted provider. Whereas a case manager can get a fee-for-service Medicare patient accepted by a SNF, home care agency, or DME provider within hours, on evening shift and on weekends, the providers contracted with the MA plans will not accept the patient without approval from the MA plan, which can take several days. And most case managers know better than to waste time trying to get approval for any post-hospital services off hours. As a result, the patient’s length of stay is extended, his or her risk for hospital-acquired complications increases, and the hospital does not get reimbursed for these delays, instead being told that the days were either not medically necessary or that payment is bundled into their DRG payment.

If the patient is not able to get to the most appropriate setting or is forced to use a less-than-optimal provider of post-hospital services and is subsequently readmitted, many MA plans will not pay the hospital for the second admission, either stating that their policy is to not pay for any readmissions within 30 days or that they follow Medicare rules, which dictate that readmissions within 30 days are not paid. But that is not entirely true. Medicare does pay the full DRG for patient readmissions except in two circumstances: a readmission on the same day for the same illness, or if a quality improvement organization determines that the first admission was premature. The readmission of a fee-for-service Medicare patient will be figured into the hospital’s readmission penalty for the next fiscal year, but the second admission is paid in full.

The easy way to explain this away is to blame the patient for signing up for the MA plan in the first place, as beneficiaries are informed of their benefits. But as we know from the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) report from March 2010, the MA plans have a long history of using deceptive marketing practices, and senior citizens are especially susceptible to these pitches. The finance people also may claim, mistakenly, that you cannot negotiate with the MA plan because you depend on their commercial product patients to contribute to the hospital’s bottom line.

So, what can hospital finance people do to help their patients and their colleagues in case management? The power is in your pen. When you sit down to negotiate contracts with the insurers, invite case management to the bargaining sessions. Let them read the contract and find the flaws. Be a tough negotiator. Use the list below to guide your contract review. As noted above, the collateral damage caused by an inadequate MA plan contract can be significant, with unhappy patients, poorer patient outcomes, frustrated employees, lower HCAHPS scores, lower reimbursement, and a damaged reputation in the community. If enough hospitals said “no,” the MA plans would not feel as though they can continue to play their “take it or leave it” games.

So, what non-financial issues should be addressed in the contract? As you have probably heard from your health information management (HIM) staff, the burden of preparing and copying charts for Recovery Auditor (RAC) audits is substantial, yet the RAC is limited in the number of charts that can be requested. MA plans have been known to have provisions for the requesting of a copy of the medical record for every inpatient admission, without any payment for processing and copying, and then for withholding payment of the claim until the record is audited. This not only stretches your health information management (HIM) staff, but also affects cash flow. So be sure the contract sets a limit on the number of charts that may be requested, and that it addresses payment for the copying and sets time limits on withholding claim payment. While they will be quick to deny your claim for missing a deadline, be sure the contract specifies that if they do not complete their review within a specified time period, they must approve and pay the claim.

Insist that the contract specify what criteria are used to determine approval of inpatient admissions and how the criteria are used. Many MA plans use commercial screening criteria such as InterQual or MCG, but misinterpret them by using the criteria as a black-and-white decision tool, when in fact they are are only screening criteria that should only be a first step (followed by secondary physician review if the case does not “pass criteria”). So also insist that secondary physician review be permitted. And while discussing criteria, insist that if they approve an admission concurrently, they cannot retroactively deny payment unless the information presented during the concurrent review is substantially different than what was recorded in the medical record.

Review the denial appeal process, both for inpatient admissions and outpatient testing, and insist on a fair process. While fee-for-service Medicare has a clearly spelled-out process with independent reviewers, many MA plans review all appeals internally, representing a clear conflict of interest, with no opportunity for independent review. Medicare and commercial insurers also are auditing outpatient services, including advanced imaging and cardiac testing and procedures, more often than in the past. In most cases, it is the responsibility of the physician to provide clinical information and obtain authorization for outpatient services, so insist that payment to the hospital not be denied if the outpatient service was authorized by the physician.

Insist that billing and payment for readmissions are clearly outlined as well. Medicare’s fee-for -service readmission reduction program imposes a penalty for readmissions within 30 days for specified diagnoses, but as noted, the hospital should bill for and get paid for the full DRG for the second admission unless it is on the same calendar day for the same diagnosis (or if the initial discharge is determined to have been “premature”). Many MA plans impose their own arbitrary rules on payment for readmissions, denying payment for any readmission for any diagnosis within their own arbitrarily set time frame.

Also ask for a list of their contracted post-hospital providers and the criteria they use to approve patient transfers to those levels of care, including home care, skilled nursing facilities (SNF), and acute rehabilitation centers, and review that list with your case managers to ensure that these are providers to which they would feel comfortable referring patients. Review these facilities’ ratings using the CMS Compare web tools; it will reflect poorly upon you if your patients only can be sent to a SNF or home care company with a poor rating.

While case management professionals are usually not well-versed in contract negotiation techniques, their input is invaluable. Use these tips and the list in Table 1 as a guide to help you get the payment you deserve while maintaining your standards of care.

Contract Considerations

  • Does the plan have a provision for concurrent admission reviews?
  • Are the authorizations for admission binding?
  • What admission criteria are used?
  • What is the time frame for retrospective reviews?
  • Is there any limit to the number of charts in audits? If so, is it absolute or a percent?
  • Is any payment made to the hospital to copy charts?
  • What are the appeal processes, the timeline, and time limits?
  • How long do you have to submit the records and for them to respond?
  • If they miss a deadline, is the case automatically approved?
  • If not, what are the consequences for them?
  • How many steps of appeal are there?
  • Who performs the appeal reviews?
  • Can you rebill as outpatient if an inpatient admission is denied?
  • Can you bill for observation hours on a rebilled inpatient claim even without an order for observation?
  • Is arbitration available?
  • Do doctors get paid if the hospital is denied?
  • What are the criteria for acute rehab, LTACH, and SNF, and what providers are contracted?
  • What home care and DME agencies are in network?
  • What tertiary centers are in network?
  • What is the readmission payment policy?

About the Author

Ronald Hirsch, MD, FACP, CHCQM is vice president of the Regulations and Education Group at Accretive Physician Advisory Services at Accretive Health. Dr. Hirsch’s career in medicine includes many clinical leadership roles at healthcare organizations ranging from acute care hospitals and home health agencies to long-term care facilities and group medical practices. In addition to serving as a medical director of case management and medical necessity reviewer throughout his career, Dr. Hirsch has delivered numerous peer lectures on case management best practices and is a published author on the topic. He is a member of the American Case Management Association and a Fellow of the American College of Physicians.

Contact the Author 

Comment on this Article

Share This Article