Hometown Health

Sustaining a Financially Healthy Critical Access Hospital

June 15, 2015

Agenda• Critical Access Hospital (“CAH”) and PPS Hospitals

– CAH Payments– IP Admissions– Reasonable Cost Payment Principles That Do NOT Apply to CAHs

• What is a denial?• Denials matter to a “cost reimbursed” CAH• What are Types of Denials?• Where are your denials coming from?• Tracking and Trending Denials• Why do we expect denials to increase with ICD-10?

– Denial Remittance Advice Remark Codes – Denial Claim Adjustment Reason Codes

• Prevention is Key

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What Are We Talking About In This Session?• The title of this session is Sustaining a Financially Healthy

Critical Access Hospital• How do you do that?• You need to get paid fairly for the excellent services you

provide– We don’t want to be over or under paid, just properly paid

• How do you do that?• Limit or eliminate denials • How do you do that?• Find out why they are happening and prevent them from

recurring

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PPS and Critical Access Hospital (“CAH”)• Let’s first define the difference between Critical Access and PPS

Hospitals• PPS Hospitals are reimbursed prospectively based on DRGs,

APCs, Fee Schedules, etc.• Critical Access Hospitals are reimbursed on a Cost Based

Reimbursement methodology

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Inpatient Admissions• To receive payment under Part A, a hospital IP admission

must include a physician certification that includes the items listed below no later than 1 day prior to when it submits the claim for payment:– An order in which the physician reasonably expects the patient

to require a stay that crosses 2 midnights and involves medically necessary inpatient services

– The reason for inpatient services – Estimated time the patient will require in the hospital – Plans for post-hospital care, if appropriate; and – Certification that the patient may reasonably be expected to be

discharged or transferred to a hospital within 96 hours after admission to the CAH.

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What is a denial?• Total denial of payment• Partial denial of payment• Underpayment

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Denials Matter to a CAH• While CAH are reimbursed based on cost incurred from

Medicare, the cost based reimbursement is reduced by accounts that have been denied

• Commercial accounts are not reimbursed based on costs and therefore any total or partial denial reduce reimbursement

• Both of these impact Sustaining a Financially Healthy Critical Access Hospital

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What are Types of Denials?• Pre-certification denials• Pre-payment denials• Medical Necessity denials• Line item denials• Retrospective denials• Medicare• Medicaid• Medicare Advantage• Medicaid HMO• Commercial• HMO• PPO

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Do You Know the Answers to the Following?• What data/reports do you have available that include all types

of denials?• Do you have enough resources to manage our denials?• What do you need to effectively manage our denials?• Do you have specific reserves for denials in your financials?• What is your basis for these reserves? • Do you have supporting documentation for the reserves?

• What if I don’t know what’s going on with my denials?

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Tracking and Trending Denials• In order to know if your denial management process is

working and you have control of your denials you need to Track and Trend denials

• By Physician• By DRG• By line item• By reason code• By remark code• By Coder• By Case Manager• By Biller

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Why do we expect denials to increase with ICD-10?

• Denials are expected to increase after ICD-10 due to:– Increase in codes leads to increased specificity– Increased specificity allows for ease in automated denials– Payor spends same amount of labor costs and quadruples

the denials– If your coders are not well trained and ready for ICD-10– invalid codes can occur if coders forget to assign sufficient

characters or don’t query appropriately– invalid codes can occur if coders forget to include a

placeholder for certain injury and fracture codes– Coders may not recognize when a code is incomplete or

invalid

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Why do we expect denials to increase with ICD-10?

Denial Claim Adjustment Reason Codes• 39 - Services denied at the time authorization/pre-certification was

requested• 170 - Payment is denied when performed/billed by this type of provider• 171 - Payment is denied when performed/billed by this type of provider

in this type of facility• 228 - Denied for failure of this provider, another provider or the

subscriber to supply requested information to a previous payer for their adjudication

• A1 - Claim/Service denied. At least one Remark Code must be provided (may be comprised of either the NCPDP Reject Reason Code, or Remittance Advice Remark Code that is not an ALERT.)

• P13 - Payment reduced or denied based on workers' compensation jurisdictional regulations or payment policies, use only if no other code is applicable.

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Why do we expect denials to increase with ICD-10?

Examples of very specific Denial Remittance Advice Remark Codes that will make it easy to deny – e.g. accident codes• N305 - Missing/incomplete/invalid accident date• N409 - This service is related to an accidental injury and is

not covered unless provided within a specific time frame from the date of the accident.

• N576 - Services not related to the specific incident/claim/accident/loss being reported

• N622 - Not covered based on the date of injury/accident.

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Prevention is Key • Need root cause of denial• Example:– Dr. ED 1 has bridge/admitting privileges and admits

everyone as an Inpatient regardless of criteria

– Action: – Conversation with Dr. ED 1 and explain inpatient vs. obs

criteria

• YOU CAN’T PREVENT without Knowing the root cause

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You Need A System To Manage Denials• MedPerformance has created iMAD to effectively

manage your denials• iMAD will show your team where the denials are

coming from and provide reports that will help you understand the financial impact

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Rebecca Corzine TarrOwner

MedPerformance LLC

MedPerformance.comBeckyTarr@me.com

(813) 786-8974

Questions/Comments?

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