COVID-19 continues to have detrimental effects not only on health of people, but also on the economy and businesses in general. Included in these businesses are hospitals which have been expected to be fully supplied, staffed and ready to provide cutting edge care throughout the pandemic. According to a new report released in February from Kaufman Hall and commissioned by the American Hospital Association, “Hospitals could lose between $53 billion and $122 billion due to the lingering effects of COVID-19, depending on the speed of vaccine distribution and complete recovery of patient volumes.” 1
The report goes on to say, “Under an optimistic scenario, hospitals would lose $53 billion in revenue this year. The loss would primarily come from a $27 billion decline in outpatient revenue and $17 billion for inpatient as well as $9 billion in emergency department revenue.”
In order to survive, some hospitals have had to, and continue to, cut budgets from valuable departments such as utilization review services and payer denials management services whose role it is to recover millions of dollars in potential lost revenue. This is a temporary solution that will prove a precipitator of continued lost revenue in the long run and may result in payer denials being accepted by default. The result is significant loss of appropriate hospital reimbursement. “Whether recovery from COVID-19 in 2021 is relatively rapid or relatively slow, America’s hospitals will face another year of struggle to regain their financial health while providing necessary care and services to a nation that is continuing to experience the effects of an unprecedented pandemic,” the KH report said.
One approach to help this dire situation is maintenance of appropriate revenue through intensive utilization management. Strong utilization management involves open lines of communication between clinical and payer interfaces to ensure cases not meeting criteria receive secondary review and reconsideration. In addition, denials by payers should continue to be counteracted in peer-to-peers by the payer and a treating or advisor physician to attempt to recover revenue. Unfortunately, denials and write-offs are too often accepted without communication between the clinical and insurer interfaces. In 2019, “Navigant research shows up to 60 percent of hospitals never appeal denials, which, for a mid-sized hospital with 350 beds currently adds up to about $3 million in losses per year.” 2 With strain from the pandemic, clinical utilization review was further reduced as treating physicians were engrossed in frontline work and the denials team lessened.
Although hospitals recognize the importance of utilization management even during these trying times, it is difficult to put emphasis here while the pandemic continues to drain so many of their resources. Having a trusted partner in utilization review who can assist with the revenue cycle can be a lifeline for hospitals. Secondary clinical review that can go through the keen eye and judgement of a physician advisor, an expert on evidence-based national guidelines is just as, if not more, proficient than reviews done by non-UR physicians. Relaying the process of communication with insurers for peer-to-peers to a third party is beneficial as the conversation receives an expert opinion and expert leverage over insurer guidelines.
It is obvious the burden the COVID-19 pandemic is placing on hospitals throughout the country no matter their size or location. As hospital CMO’s and CFO’s fight to keep the doors of the hospital open in the face of the financial losses, hospital staff fight for the health of our population. Recognizing the importance of utilization review services during these unknown times and even partnering with a utilization review partner can help fight against severe hospital revenue loss down the line and pick-up the revenue cycle’s vigor while hospitals can continue to perform their best for their patients.