Turning UM Data in Revenue Opportunities
Exploring the balance between care and cost
Utilization management (UM) data analysis transforms revenue cycle and care management practices, yielding greater earnings to support hospital and health system operations and sustainability while improving the timely delivery of quality care.
UM balances the delivery of the right care at the right time in the right setting. Providing the right, or medically necessary care, depends upon providing patients with treatment needed to achieve the best possible medical outcome without over- or under-utilizing services. The complexity of the cost structure in the U.S. healthcare system adds another hurdle. Even though medical necessity is the foundation upon which UM rests, it does not exist in a vacuum. It is intricately linked to cost. Achieving a utilization management balance can improve a hospital’s quality of care while at the same time reducing costs.
Physician advisor services work behind the scenes throughout a patient’s hospital stay to ensure that the balance between care, timing and setting takes place. Physician advisors help treating physicians determine the appropriate patient status upfront to optimize reimbursement. The data collected throughout the care status determination process plays an equally important role in balancing the cost-care equilibrium. By analyzing UM data, insights into a hospital’s reimbursement practices are illustrated, which can aid in the root cause identification of denials, highlighting areas that require more attention and education.
Translating the Data into Revenue
It is critical that hospital revenue cycle managers actively and consistently review and analyze utilization management data to uncover strategies to achieve the best financial results. Time matters. Therefore, reviewing utilization management analytics should be a routine practice, paired with discussions focused on developing strategy. Using this approach, hospitals can make informed decisions about utilization management practices.
Breaking down the data within utilization management reports into three revenue categories simplifies the analysis. The examples in this paper are just a few of the various ways to categorize data. The three categories used here represent how AppriseMD captures utilization management data to reflect revenue optimization, revenue integrity and revenue recovery.
The Physician Advisors' Role
Before mining data, hospitals should examine how their physician advisory services work within the utilization management process. The Healthcare Financial Management Association supports the physician advisor’s role in this process, stating that “aid in status determinations through secondary reviews of observation cases and can assist the utilization management team and physicians throughout the process.”1 The physician advisor is an integral part of both the care cycle and revenue cycle for any healthcare system looking for a consistent approach to utilization management with increased accuracy.
Revenue Optimization
Is your data capturing your return on investment?
Healthcare revenue cycles look at ways to maximize revenue growth, which can include an analysis of the operational, financial, and clinical functions of the organization touching every area of the hospital. Utilization management teams help organizations get the highest amount of revenue up front in the cycle by assuring the patient is being treated at the appropriate level of care and that payment denials are avoided by addressing them early when reconsideration is possible. This ensures that hospitals get the most return out of the resources they are utilizing and that they are following payer guidelines. “Healthcare organizations need to commit to UR to be sure that what needs to be done is getting done, within the time frame necessary to meet regulatory and insurer requirements.”2
Physician advisor services are a critical part of the utilization management process. They assist in level of care determinations and in overturning admission denials early to avoid payment denials. Given that physician advisor services are a vital component of utilization management and the revenue cycle, determining a return on investment (ROI) for these services is crucial. Although measuring this ROI is often not straightforward, there are still some ways of determining their financial benefits. The most basic way to calculate ROI is by using the number of denied inpatient admissions overturned through the use of physician advisor services. This uses a formula encompassing a “standard inpatient case that may be reimbursed at about $6,500 based on CMS regulations, compared with $2,000 for a standard observation.” 3
Revenue Integrity
Is your data showing you where you can prevent revenue leakage?
Whereas revenue optimization examines quantitative data to measure ROI and the potential impact of denial management, revenue integrity uses qualitative data to understand why revenue leakage happens. This descriptive data captures the reasons and barriers to realizing maximum reimbursement. For example, looking at what prevented denied admissions from being reviewed gives hospitals a way to take immediate action and adjust processes to improve the revenue cycle.
Consider, for example, the payer reconsideration review period for denied admissions. This is a brief window of time that closes quickly. “When an admission is denied, the reconsideration review period is the closest thing to a gift from a payer that a hospital will ever get,” Franklin Baumann, MD, the CEO of AppriseMD said. Having a process in place to handle these denials efficiently and promptly can produce measurable reimbursement dollars.
WHAT IS REVENUE INTEGRITY?
The National Association of Healthcare Revenue Integrity defines REVENUE INTEGRITY as preventing “the reoccurrence of issues that can cause revenue leakage and/or compliance risks through effective, efficient, replicable processes and internal controls across the continuum of patient care, supported by the appropriate documentation and the application of sound financial practices that are able to withstand audits at any time.” 4
The detailed information provided in reporting can be used by hospitals not only to examine internal processes but also to have “meaningful conversations with their payers about improving claims-paying performance.”6 Often payers utilize different time periods for the reconsideration review periods. For example, one payer may count weekends and holidays in the reconsideration review period that allows a hospital to facilitate a denied admission discussion with the payer, also known as a payer peer-to-peer (P2P), but another payer may not. Knowing why denied admissions are never reconsidered and answering the questions of why cancellations, errors or refusals happen gives payer contracting teams at the hospital meaningful data to work with during contract negotiations. Preventing the “reoccurrence of issues that can cause revenue leakage”4 improves revenue integrity.
What can non-completion insights show?
Hospital system Q2 2023 data example
Total numbers
296 – Denied admissions sent to AppriseMD to overturn during Q2 2023
265 – Denied admissions AppriseMD reviewed & discussed with payer in bid to overturn
31 – Denied claims not completed
Why? Examining the root cause of why 31 cases were not able to be reviewed
| 18 | Payer Refused | Identifies payers that may not be following their contractual agreement with the hospital |
| 3 | Payer Error | Captures the payers who fail to show up at the scheduled time |
| 9 | Hospital Error | Highlights administrative denials and cases that are sent after the reconsideration window has closed |
| 1 | AppriseMD Error | Singles out the times we failed to meet the payer deadline |
Revenue Recovery
Is your data identifying where you can recover revenue by reducing long observation stays?
Revenue recovery data can give hospitals the chance to focus on, and aggressively approach, problematic issues impacting the revenue cycle. One common and costly issue plaguing many hospitals is long observation stays.
Inappropriate, long observation stays can negatively impact a hospital in several ways, including patient satisfaction, length of stay, and reimbursement. For example, observation status can mean higher copays and – if they need to be discharged to a skilled nursing facility – Medicare coverage of their post- discharge care may be affected”7 so the higher patient copay is going to negatively affect patient satisfaction. Length of stay is equally impacted with more aggressive use of observation LOC because patients inappropriately triaged to observation who should have been inpatient level of care cannot be used to offset the hospital’s length of stay numbers. These appropriately triaged inpatient stays would tend to be shorter, thus improving the hospital’s average length of stay statistics that are scrutinized by payers. Finally, there is a direct loss of revenue when hospitals continue to utilize costly resources, yet the reimbursement continues to be based on observation level of care. In this situation, hospitals may fail to recognize that patients who are appropriately admitted to observation and then fail to progress can often be converted to inpatient level of care based on length of stay.
Identifying the appropriate level of care from the start is key to positively impacting a hospital’s revenue cycle, which affects reimbursement. Reimbursement is an area that physician advisors can positively impact, especially when it comes to managing long observation stays. Patients who fail to improve within the observation time frame typically require inpatient admission, which is why AppriseMD takes a focused approach to managing these extended observation stays. Again, timing matters, so having a process in place to address these cases is crucial. Part of AppriseMD’s approach involves tracking the long observation cases that are sent for second level review, as well as monitoring and appealing the denials associated with cases in which our physician advisors recommended inpatient level of care when the patient failed to progress in observation level of care .
Actionable Insights
Arming your revenue cycle team with utilization management data on a consistent basis leads to improved utilization review, better care, and increased revenue. AppriseMD schedules quarterly review meetings with hospital partners to present the data and ensure their clients understand it so they can take steps to improve their revenue cycle. The value of data insights and the opportunities it uncovers can be significant for a hospital’s bottom line, especially when it leads to immediate adjustments that reduce loss. Additionally, hospitals can utilize reporting data to measure ROI.
When working to balance the delivery of the right care at the right time in the right setting, converting data into useful information clearly equals increased reimbursement. AppriseMD utilizes a dedicated team to handle these reconsiderations. The team’s reporting data includes an analysis of why the denied admissions expired during the payer reconsideration window. Understanding why the cases were not completed helps address and eliminate barriers.
SOURCES
1. How to determine appropriate patient status and navigate observation-level care, Healthcare Financial Management Association.
2. Bragg, Lisa and Koroly, Amanda, “Utilization Review: 5 Reasons Hospitals Lose Revenue,” Healthcare Financial Management Association. May 29, 2019.
3. Goode, Jeffrey, MD; Burke, Dan; Harper, Ben; and Richards, Barton S, “How to determine appropriate patient status and navigate observation-level care,” Healthcare Financial Management Association. March 16, 2023.
4. “NAHRI Definition of Revenue Integrity,” National Association of Healthcare Revenue Integrity,
5. Hall, Colleen O. CPC, CPMA, CIRCC; and Patel, Shinal, MHSA, “From Insights to Action: New Approach to Revenue Integrity,” Healthcare Connection. April 20, 2021.
6. Hall, Colleen; Ruiz, Ken and Szaflarski, Matt, “10 best and worst states for provider claims payment,” September 11, 2023, Crowe.
7. Getting a Handle on Observation Status Patients, Kaufman Hall.