Last, but not least, OhioHealth focused on process improvements in key focus areas. The primary areas for improvement were selected based on largest financial impact. A few of the focus areas are:
- Managed-care inpatient and outpatient precertification/authorization/medical necessity denials: Prior to fiscal 2010, OhioHealth appealed denials in a decentralized approach. There were four separate appeal groups, one per hospital. Because of decentralization, OhioHealth was not as effective or efficient in successfully appealing denials. OhioHealth made the decision in fiscal 2010 to centralize the process and outsource to a vendor who specialized in appeals. As a result, the vendor was able to successfully overturn more denials.
- Many payers require a precertification for outpatient radiology services. If a precertification is not obtained before the delivery of the service, the claim results in a denial. In fiscal 2010, OhioHealth adopted the policy to require a precertification for all elective services.
- Timely filing denials: Process improvements were introduced to the OhioHealth central business office to ensure problem claims were escalated in a timely manner to the payer or patient before the account became a timely filing issue. If a primary payer denied a claim for coordination of benefits after the filing limits of the secondary payer, the central business office appealed the secondary payer and overturned many of these denials.
- Medicare outpatient medical necessity denials: Medicare has many medical policies for outpatient services. In order for Medicare to pay for an outpatient service, the reason for the test must meet the medical necessity criteria.
Radiology outpatient medical necessity denials presented a material opportunity for OhioHealth. The radiology directors at each hospital, CFOs and revenue cycle joined forces to ensure the service provided was supported by the reason for the test as required by Medicare.
The key stakeholders formed a work team. The team identified and implemented work-flow improvement. Ordering physician practices were educated on the Medicare requirements to support medical necessity. All scheduled and walk-in radiology services were thoroughly screened for medical necessity. If the service erred for lack of medical necessity, an advanced beneficiary notice was issued or additional calls were placed to the physician office to have a revised order sent to the hospital.
The central business office edited for medical necessity in the backend claim editing system. If a claim failed the edit, the claim was resent to the health information department for a second coding review for medical necessity.
The cost to implement was immaterial. The resources used were internal. The outsourcing initiative mentioned above was expense-neutral because of a staffing reduction.
The total denial gross write-offs in fiscal 2009 were $18 million or 0.44% of gross patient revenue. The fiscal 2010 goal was 0.24% of gross patient revenue. Fiscal 2010 actual denial write-offs as of June 30, 2010, were $8 million or 0.18% of gross patient revenue. This result was a $10 million decrease in denial gross write-offs year over year.
Margaret Schuler is cycle administrator at OhioHealth, Columbus.