Managed-care payment denials for emergency care at Providence Saint Joseph Medical Center in Burbank, Calif., used to be a bigger problem for Richard Hayne, the hospital's emergency department manager.
But in August 1995, the 423-bed facility adopted a new clinical triage protocol to identify patients with minor illnesses that shouldn't be treated in the emergency room. The protocol was modeled after the pioneering system devised eight years ago at 474-bed University of California, Davis Medical Center in Sacramento (April 13, 1992, p. 49).
"We believe our new triage protocol has reduced denials," Hayne said. Managed-care denials dropped 38% to 100 per month from 160, he said, although no estimate of overall savings was available. Of the hospital's 40,000 annual emergency room visits, 45% are managed-care patients.
At UC-Davis, emergency room staffers use a list of 51 nonemergency symptoms to determine whether patients should be sent to ambulatory facilities or treated within the hospital. The program has reduced emergency room overcrowding and improved quality and efficiency, officials said.
Following UC-Davis' lead, Providence Saint Joseph has become one of several dozen hospitals nationwide that have restructured their emergency rooms to curtail inappropriate use of the facilities by patients with minor illnesses (See chart, p. 40), said Martin Karpiel, president of Karpiel Associates, a Los Alamitos, Calif.-based emergency and ambulatory-care services consulting firm.
Karpiel said such protocols also can reduce managed-care payment denials, which have become a financial and administrative problem for emergency departments nationwide.
As managed-care populations increase within emergency departments, Karpiel said more hospitals will be forced to adopt similar triage programs to save money. He added, however, that hospitals will spend thousands of dollars to remodel their emergency departments and most likely will experience some short-term revenue losses as paying patients with minor illnesses are referred to outpatient settings.
"In the long run, hospital emergency departments will become more efficient and the revenue loss will be more than made up by the cost savings," Karpiel said.
He said hospitals in states with high HMO penetration are ahead of others in reducing nonemergency visits by developing triage transfer procedures and working with public or private health clinics to reduce costs. Those states include Arizona, California, Connecticut, Massachusetts, Minnesota and Tennessee, he said.
Nationwide, emergency room visits have increased about 5% annually over the past 10 years. However, it's not unusual for states with high managed-care populations to experience annual decreases in visits of as much as 10%, Karpiel said.
The American Hospital Association reported that in 1993-the most recent data available-there were 357 emergency room visits per 1,000 population.
Karpiel said some commercial HMOs in California that have gatekeeper authorization requirements keep emergency room visits as low as 75 per 1,000 population.
A 1993 General Accounting Office study estimated 43% of all emergency room visits are nonemergency cases and could be treated in less-expensive primary-care settings, saving providers and patients about $7 billion annually in unnecessary costs.
Because of high overhead costs within hospital emergency rooms, prices are 50% to 60% lower in primary-care settings, Karpiel said.
Will Congress step in? To address the managed-care payment denial problem, the American College of Emergency Physicians is lobbying Congress to approve a bill that would require HMOs to pay for emergency room care based on symptoms that seem appropriate to a "reasonable and prudent lay person."
The ACEP said the Access to Emergency Services Act of 1995 is needed to stop HMOs from denying legitimate claims by providers for emergency care. Other groups supporting the proposal are the American Ambulance Association and the American College of Surgeons.
An AHA spokesman said the group hasn't endorsed the bill because it has several concerns, one of which being that the bill doesn't require payment to hospitals for mandated medical screening examinations.
The Group Health Association of America, a managed-care trade group, opposes the bill, which is under review in several congressional committees, a spokeswoman said.
"Although the debate over utilization of emergency services continues without resolution in Washington, locally many of our member health plans have developed innovative relationships with hospitals and urgent-care centers to ensure access to emergency medical services," said Carmella Bochino, the GHAA's director of medical affairs.
Karpiel said that while managed-care plans usually don't get involved in developing triage guidelines for hospitals, some HMOs will review the guidelines and give the hospitals feedback.
"They like the fact that hospitals are trying to identify minor-illness patients, call them for pre-authorization and redirect them to other settings," Karpiel said. "But they don't like to be pinned down to any particular list."
Hospitals respond. No comprehensive research exists on the number of hospitals that are restructuring because of managed care. But in a 1994 survey, researcher Leslie Zun, M.D., said 54% of 131 hospital administrators cited integrating with managed care as their top priority (Jan. 30, 1995, p. 31).
Zun, a principal with Milwaukee-based Emergency Resources Group and chairman of the department of emergency medicine at Mount Sinai Hospital Medical Center of Chicago, said many hospitals are looking for new ways to increase efficiencies in their emergency departments.
In Providence Saint Joseph's new triage program, patients who enter the emergency room are medically evaluated as required by federal regulations guarding against patient "dumping." If the patient is categorized as nonemergency, the method of payment is determined and the patient is offered treatment options.
"If the patient belongs to an HMO, we (telephone the HMO with) what we found and give them the ability to approve or not approve," Hayne said. "If (the HMO) approves, we see the patient. If (the HMO doesn't) approve, we tell the patient that we contacted the insurance company and that we would see them but they would be responsible for the bill."
If the managed-care patient declines to pay out-of-pocket, Hayne said the patient is asked to visit the HMO's clinic or primary-care physician. Uninsured patients deemed as nonemergency cases are directed to a public clinic or treated in the emergency room.
"We didn't lose a lot of money on denials," Hayne said. "We would be denied (by the HMO), and we would go after the patient. They would complain to the HMO, and (the HMO most often) would pay. This system puts money in our pocket sooner. The patients are happier, we are happier, and the HMO is happier."
Two other hospitals planning to launch programs this year in response to managed care are Bridgeport (Conn.) Hospital and St. Mary's Regional Medical Center in Reno, Nev.
At St. Mary's, emergency department Director William Michaelson, M.D., said reducing emergency visits and improving quality were the two primary reasons to adopt a variation of the triage model developed at UC-Davis.
St. Mary's will refer nonemergency uninsured patients to the two indigent clinics it operates in underserved neighborhoods or to county public health clinics, Michaelson said.
"We estimate we will send 10% to 15% of our emergency patients away after we perform triage," he said. Michaelson said he based his estimates on UC-Davis, which annually refers about 10% of its 70,000 emergency room patients to primary-care clinics.
Michaelson said managed-care plans will save money as emergency physicians serve as gatekeepers to steer nonemergency patients to primary-care physicians or other more appropriate settings.
"For us, the win is that we won't be receiving retroactive denials," he said. "And for patients, when they hit the door, they won't have the risk of not being covered."
But Michaelson has taken UC-Davis' triage procedures a step further by enlisting the support of Washoe County's other two acute-care hospitals to develop a common approach to emergency triage procedures. An agreement is expected to be signed sometime this year, he said. The other two hospitals are 573-bed Washoe Medical Center in Reno and 138-bed Northern Nevada Medical Center in Sparks.
Changing times for Medicaid. In Connecticut, 502-bed Bridgeport Hospital restructured its emergency department to prepare for the state's conversion to a Medicaid managed-care program. Under the program, which begins in December 1996, Medicaid no longer will pay for nonemergency patients treated at emergency departments. Most hospitals in Connecticut are expected to restructure their emergency departments to avoid financial losses, said a spokesman for the Connecticut Hospital Association.
Connecticut also will pay managed-care organizations that enroll Medicaid recipients 95% of existing Medicaid fees.
Like most hospitals that have restructured to better manage their patient loads and patient care, Bridgeport decentralized registration and support services.
For example, patient registration moved from the front of the department to patient-care areas. In its place, triage nurses and physician assistants will see incoming patients immediately to determine the level of care required.
"For nonemergency patients, we will refer patients out of the emergency department to our primary-care center or to primary-care physicians," said Christopher Cannon, Bridgeport's vice president of ambulatory services.
Cannon said by transferring nonemergency patients out of the department, Bridgeport Hospital will save thousands of dollars in uncompensated-care costs. However, Cannon said the hospital still expects to experience a 2.3% decline in revenues, or $300,000 of total revenues of $12.6 million, because fewer paying patients will be treated in the emergency room.
In Tennessee, high-volume hospital emergency rooms were forced in late 1993 to rapidly innovate in preparation for TennCare, the state's Medicaid managed-care program that began in 1994, said Robert Sweeney, senior vice president for contract services in the Memphis, Tenn., office of Team Health, a physician contract management company.
Under TennCare, Tennessee's 900,000 Medicaid recipients are required to enroll in an HMO. In addition, 500,000 uninsured residents are eligible to join HMOs. The HMOs are paid a capitated annual amount for patients based on several factors, including age and sex.
To save money, Sweeney said Team Health and four of its hospital clients developed triage procedures to refer TennCare patients outside the main emergency room to clinics owned by the hospitals or Team Health.
"We can refer nonemergency managed-care patients there," Sweeney said. "It's probably better than emergency department care because patients get more customer-friendly treatment with a cost of about 50% less than the emergency department.
"It's no worse than a wash for us (from a financial standpoint)," Sweeney said. "For the hospitals, it is a major loss preventer." He estimates TennCare pays less than 30% of the costs to hospitals for emergency care of Medicaid patients.
On the fast track. In general, Karpiel said, hospitals have several choices for where to send nonemergency patients: a fast-track unit within the hospital, urgent-care centers within the community, public clinics and primary-care physicians.
"It depends on what is available," Karpiel said. "Even if your community isn't heavily penetrated by managed care (40% or more market share), you should still develop a fast track."
Under a fast-track system, hospitals employ triage nurses to evaluate patients in the emergency room. Patients deemed nonemergency are sent to the "fast track," an area adjacent to the hospital that is staffed primarily by nurses who administer first-aid care.
Karpiel warns, however, that hospitals with fewer than 30,000 emergency room visits probably would not benefit from developing fast-track systems of care because of the capital and staff costs.
In addition to cost-saving triage programs and fast-track services, hospitals are developing other ways to reduce costs with managed care in mind, Karpiel said. They include 23-hour-or-less observation units and chest-pain clinics to evaluate patients with cardiac problems, he said.
Another tack is to include the emergency department in an integrated information system to track costs and treatment, said Mitchell Curtis, director of healthcare services for American Management Systems, an Arlington, Va.-based systems development consulting firm.
While only about 2% of the nation's 4,700 hospitals with emergency rooms now use integrated information systems, 20% are expected to do so by the year 2000, Curtis said.
Hospitals also are contracting with HMOs to provide enrollees with after-hours care and with local businesses for industrial medicine, occupational medicine and workers' compensation programs, Karpiel said.