Everyone and thank you for joining today's webinar Best Practices
of Utilization Review.
My name is Brittany Terman with Optum and I will
be your host today.
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Presenting today will be Doctor Kurt Hobsonberger, vice president of
medical solutions with Optum, and Doctor Robert Waznick, physical physician,
clinical relationship manager with Optum.
And with that, I'm now going to hand the presentation
over to Doctor Waznick.
OK, Well, thank you and good afternoon or good morning,
everyone.
My name is Doctor Robert Woznik.
I'm an internal medicine physician by training and have been
with Optim here for the last boy 13 years.
And Doctor Hoffensberger, would you like to introduce yourself?
Yes, thanks, Doctor Woznik.
Kurt Hoffensberger here.
I'm a neurologist and an attorney and I've been with
Optum for a little over 10 years as well in
the UR space.
And welcome everyone and as as Rob said, good morning
or good afternoon.
OK.
So here is an agenda of what we're going to
try to cover over the next 20 or so minutes
and hopefully leave some time for Q&A at the end.
Why do we have utilization review?
What are some challenges to effective utilization review and some
potential downstream impacts on both hospitals and beneficiaries?
We're going to review some of the statutes, regulations, and
guidance that govern the utilization review process and finally go
over some suggested best practices and key takeaways.
So to get us started here we have a survey
question.
There's no right answer, of course.
I'll give you about 30 seconds to just enter your
your choice here.
But what are some of the biggest barriers you find
to success for your organization?
With utilization review, you can see you know your choices
ranging from staffing or you know gaps in physician knowledge
regarding medical necessity, payer behavior, the changing regulatory landscape.
So if you could just submit your choices now and
we can just take a look to get an idea
of what you're seeing.
OK, All right.
Well, thank you for your submissions.
As this is getting tabulated, why don't we move on
to, oh, there we go.
OK, perfect.
So the biggest barriers to success, physician knowledge of medical
necessity guidelines.
Kurt, does that surprise you in any way?
You know, it does a little and it in some
and it doesn't.
So for commercial plans, for example, medical necessity guidelines can
be all over the map.
But for now, as of January, with the MA plans
and traditional Medicare following the same set of medical necessity
guidelines, I mean, hospitals have been dealing with this for
over 10 years.
Traditional Medicare has been dealing with this for over 10
years.
So I think it really speaks to the fact that
the Medicare and Medicare Advantage rules are still incredibly complex,
incredibly lengthy.
There's so much interpretive guidance, for example, that you have
to know that when I think about it, I'm actually,
I guess I'd say I'm not surprised that that is
such a high-ranking one there as well, just given the
complexity of the subject matter that we're talking about and
which Rob, you're going to you're going to talk about
today when I'm when I'm done here.
But yeah, I guess this really reflects the complexity of
the subject matter.
All right, fair enough.
Well, let's dive in here then.
Much of what we're going to talk about today concerns
Medicare.
And you know, there's a few reasons for this.
A, it's the largest government insurer with approximately 65,000,000 enrollees.
And just for comparison's sake, United Healthcare is the largest
commercial insurer with approximately 70 million covered people.
But also if you get it right for Medicare, you'll
mostly get it right for all plans.
Sorry, if you get it right for Medicare, you'll mostly
get it right for all plans.
Additionally, the the rules for traditional Medicare are both inflexible
and complex, right?
There's a numerous laws and regulations and some regulatory guidance,
open door forms, etcetera, etcetera.
There's a lot to be cognizant about.
Medicare Advantage plans also must follow, of course, CMS guidance,
such as what might be found in the Medicare Advantage
manual.
And many of the rules for Medicare Advantage plans are
largely similar to those that apply to the traditional fee
for service Medicare.
Ultimately, the goal of knowing the rules and all their
complexity is to assure a compliant process which results in
zero false claims and minimizes potential errors found by auditors
and then ultimately upheld by administrative law judges.
As far as commercial insurers go, the rules are mainly
determined via contract negotiation between the hospital and the payer.
But let's come back to original traditional Medicare for the
next few minutes.
A Medicare beneficiary really can have only one of two
statuses ever.
And one way to think of it is a Medicare
beneficiary is always an outpatient except between the time a
valid inpatient order is written straight through until the discharge
is effectuated.
Remember of course, that observation itself is not a status,
but rather a service provided to hospitalized outpatients.
So a Medicare patient can only be an outpatient or
an inpatient as of 2024.
At the slide here says a Medicare beneficiary receiving observation
services would derive a reimbursement of approximately $2600.
In order to receive this comprehensive APC payment, the patient
must spend a minimum of eight hours in observation and
this payment includes everything right from the ER visit to
labs and radiology to the ongoing assessment and reassessment of
that patient.
Of course, as I'm sure some of you or all
of you may know, the, you know, the historical basis
for observation services was to provide hospitals with an alternative
to the previous prolonged ER stays of the past.
So what observation did was provide a mechanism to place
a patient in a hospital bed and provide ongoing assessment
and reassessment with the express purpose of determining whether that
patient could be safely discharged or would require inpatient admission.
One way to kind of think about it is it's
the same decision point that you make a lot of
times in the ER where you're deciding, does this patient
need to be admitted or can be discharged home?
It's just that the time that they need to make
that decision is a little longer for those who cannot
be safely discharged home than that patient should be changed
to an inpatient as long as there's ongoing medically necessary
hospital service needed for treatment and stabilization.
Generally speaking, traditional fee for service Medicare reimbursements are going
to be higher for inpatients than the APC payment for
the same or similar diagnosis.
And this reflects the longer expected time to diagnose and
treat that patient due to the documented increased risk and
complexity of that patient.
So really what it is, is exactly the reasons that
that patient was an inpatient.
The medical necessity that define the patient as an inpatient
is exactly what is exactly what what defines this patient
as an inpatient.
Another key distinction between inpatient versus outpatient is that the
specific reimbursement defines reflects the the diagnosis.
You have your base DRGS of course, but then as
well the ability to add CCS or MCCS, which can
dramatically increase the DRG weight, which then is directly reflected
in the overall payment a hospital can expect.
But there are numerous factors that impact the UR process
beyond simply the binary bundling system of patient status and
diagnosis.
Inappropriate statusing of patients can lead to alterations in hospital
metrics, including a length of stay data and mortality data.
Medicare spending per beneficiary market share calculations cause all of
these are based on the inpatient population.
Additionally, of course there can be impact on beneficiaries in
terms of out of pocket costs or transfer DRG payments.
And you know it's probably salient to many of us
here the skilled nursing facility qualifying stay in the background
of all of this.
There is always the risk of promoting audits or denials,
which then can lead to increased resource utilization on the
part of hospitals to realize expected reimbursement.
And Kurt, I know I've seen hospitals lean into observation,
right, thinking that they're being more conservative or leaning into
inpatient leaving that they'll just weed out the improper inpatient
orders on the back end.
But both of these have their own pitfalls, correct?
Yeah, I think that's right.
So if you talk about inappropriate use of observation, there
are some consequences to that.
Inappropriate use of observation is going to affect all of
these things on this slide here for example.
It's also going to dramatically affect some of the patients.
It's going to affect as you mentioned the three days
skilled nursing facility.
It's going to affect their Co payments as well because
there's no limit to the number of times within a
benefit.
That a patient might have to pay an observation Co
payment of 20 percent, 100% for non coverage services, for
example.
There's a lot of I think like tail or spillover
effects as well for observation.
The other comment I'd just like to make, if you
don't mind, Rob, is, you know, you mentioned case mix
index and I'll talk to hospitals a lot and they'll
have initiatives about increasing their CMI, their case mix index,
for example.
But the entire input as you pointed out to the
CDI process and the coding process is an historical artifact.
It's in patients.
And so if you have a high observation rate, for
example, you might, for example, be influencing your CMI purely
through who is actually an inpatient in a hospital bed
versus not an inpatient.
And similarly, if you've got a very low observation rate,
assuming that's legitimate and those patients that are inpatients are
there, you're going to tend to have a lower CMI
in your hospital.
And so you might find some of your CMI improvement
efforts are kind of not bearing fruit just because of
the inputs of the UR process.
So it's a it's a really complex sort of set
of machinery between all of these factors on this slide
and you are, but you are as you mentioned that
is the common input to almost all of these on
this slide here including auditing risk, market share, CMI, readmission
risk, etcetera, etcetera.
So kind of you are is the cornerstone of it
all all.
Right.
Well, thank you.
And let's, as I mentioned at the outset here, we
tend to focus on Medicare because of the litany of
rules and regulations, all of which are somewhat inflexible, you
know, and abundant.
But what are some of the key statutes, regulations and
guidance that govern a compliant process of utilization review for
traditional Medicare patients?
Well, on the left side of the screen, the Social
Security Act gets right to the heart of medical necessity.
It states, in part, that no Medicare payment shall be
made for items or services that are not reasonable and
necessary for the diagnosis or treatment of illness or injury.
As we discussed earlier, status is a binary bundling system
and precisely what separates an inpatient from an outpatient receiving
observation services is the medical necessity of that patient and,
you know, reasonable and necessary.
It sounds fairly straightforward, but CMS stated that the decision
to admit a beneficiary as an inpatient is actually a
complex medical decision made by a physician after considering numerous
factors, the age, the comorbidities, disease processes, and the potential
impact of discharging that patient home.
Below this is Social Security Act, the False Claims Act.
It's broad, of course, but it certainly would apply to
Medicare claims saying no one shall knowingly, with deliberate ignorance
or reckless disregard for the truth, submit a false claim
for payment to the federal government.
To me, this speaks to the import of having a
compliant process that attempts to properly evaluate and status patients.
But I know the Social Security Act and the False
Claims Act.
These are you.
Know old.
Statutes.
But there's a contemporary example as well, of course, in
the Notice Act, you know, signed by President Obama in
2015 and born primarily out of concern over high cost
sharing for Medicare beneficiaries in observation and a lack of
transparency regarding their observation status.
The moon, the, the, the, the Notice Act, you know,
basically directed hospitals as you know to provide beneficiaries in
outpatient observation, a moon document of Medicare outpatient observation notice
to all patients receiving observation care in excess of 24
hours.
Down the center of the slide, we can see the
conditions of participation there at the top and these outline
the minimum requirements for the UR process.
You need to have AUR committee overseeing AUR plan which
then specifies utilization reviews and this UR plan must provide
for review of Medicare and Medicaid patients respect to the
medical necessity of admissions to the institution, durations of stay
and the professional services furnished.
Review of admissions can be performed before, at or even
after hospital admission and may be conducted on a sample
basis.
If if I can just unpack a few things here
that strike me.
Because of the language of admissions, this refers specifically to
inpatients and by extension, there be no requirement to review
outpatient observation patients.
But let's put a pin in that for the time
being and we'll come up and come back to that
on an upcoming slide.
You may note as well, there is no mention of
specific guidelines for the review and there's no requirement to
review all cases.
But a caveat to that last point is the False
Claims Act itself and I might recommend all inpatient claims
being subject to your utilization review process.
Of course, for definitions of what an inpatient is, the
2014 IPPS, the original to midnight rule as well as
a 2016 OPPS allowing short stay in inpatient admissions on
a case by case basis certainly give some color and
granularity to the medical necessity and time components of what
comprises an inpatient.
Finally, in in terms of the hospital payment monitoring program,
its goal is to protect the Medicare trust fund by
analyzing and identifying any payment errors, whether they be DRG,
inappropriate Dr.
GS or billing errors or even unnecessary admissions.
The work of guidance on UR process states that cases
that fail criteria with whichever criteria you're using, they should
be referred to physicians for review.
For your UM program to screen medical necessity appropriately, the
decision to admit, retain or discharge a patient should be
made by a physician either using physician approved criteria or
through a physician advisor.
And, and Kurt, I know we are just scratching the
surface on this slide, but I, I can't, can't pass
up the opportunity to engage you here as a lawyer
as well as a physician to comment on your views
regarding, you know, any key statutes, regulations and guidance that
you believe impact utilization review.
Well, thanks, Rob.
I'll just mention I think a lot of times.
In the healthcare world, we're surprised at one of The
Who, one of the largest auditors is.
So we're in this world where we have to comply
with statutes, regulations and we should comply with guidance for
example.
But there's also unfortunately the stick.
And I don't want to be too negative about that,
but couple billion dollars or more every single year is
taken back essentially by an auditor we sometimes don't think
about.
And that is whistleblowers.
And so they are the private army of auditors that
the government engages to make sure that we're all compliant.
And obviously any hospital could have a potential whistleblower.
And when you look at the take back amounts that
the Department of Justice announces from whistleblowers just for Health
and Human Services, it is pretty close to what the
racks were doing in their heyday 1213 years ago.
So we all feared the RAC auditors 1213 years ago,
yet the amount of of aggregate take back nationally is
pretty close to that with whistleblowers today, which is an
ongoing and of incentive for compliance as well.
And then one other comment I just want to make
just amplify something you said is some of the guidance
is very, very informative.
You look at just the regulations for utilization review, you'll
see that you have to have AUR committee and has
to be made of certain individuals, for example.
And, and we could certainly answer those questions if you
wanted to chat, but how you actually do the review,
the regulations are actually pretty silent on that.
You just have to review a sample of admissions to
the institution, meaning inpatients.
If you look at some of the sub regulatory guidance
like the HPMP workbook, which it's a little bit old,
but it's never been superseded, amended or contradicted by CMS
in the past.
They lay out specifically how you do utilization review.
They talk about so-called first level review screening tools or
criteria to be used by case managers and they talk
about the role of physician advisors for those cases that
specifically don't meet screening criteria.
And that physician advisor should essentially use physician developed criteria
as well.
So you've got a lot of lot of pieces to
put together, but once you put that together, you will
have a compliant UR plan that also protects you from
the federal False Claims Act.
OK, great.
Well, thank you.
OK, moving on.
So what would be best practices here?
I, I know we had touched on the conditions of
participation earlier and outlined some key points about the UR
process.
You know, as Kurt just said, no requirement to screen
every inpatient case, no requirement to screen any outpatient observation
case.
And I know the top of the screen here says
review all cases occupying and hospital bed and I used
to be similarly dogmatic in terms of that, but I
might amend that to some degree.
I would suggest this.
I would review most patients occupying a hospital bed and
I I say most as observation.
Patients expected to be released the same day may not
need a review, but certainly any observation patient who has
crossed a midnight without clear plans for discharge should probably
be reviewed as a best practice.
This helps limit any of those negative beneficiary and hospital
metric impacts we discussed earlier.
You know that Curt mentioned as well the length of
stay and mortality, market share, sniff benefits, CMI, etcetera.
And it's also going to go a long way towards
protecting against any potential False Claims Act violations while fully
maintaining compliance with the conditions of participation.
If the patient is registered as an inpatient, that, you
know, confirm that the claim indeed should be an inpatient.
And if the patient is registered as an outpatient observation,
confirm that there are medically necessary observation services that are
being given and that the patient is not actually in
inpatient appropriate.
If an order change needs to be made in one
way or the other, you know, consider the Code 44
process if the patient remains hospitalized and has not been
discharged yet or one to one billing.
If that's not the case.
And also if you find the observation patient that you
believe instead through your process should be an inpatient, obtain
that inpatient order prior to discharge being effectuated.
Use criteria to guide and take advantage of that second
chance that a physician advisor can give on cases that
fall into the Gray zone where the acuity and risk
is somewhere between a clear impatient and a clear observation
patient.
And while the overall number of those Gray zone cases
may not be outsized as a proportion of all your
bedded hospitalized patients, appropriately obtaining an impatient order on some
that first level review screening may have missed can have
a significant impact on revenue, integrity and other institutional metrics.
Oh, we have one last survey question here.
OK, so this is what is the most important aspect
of a utilization review partner to help you be successful
and say same as before, just 30 seconds to enter
your choices here.
And I believe this is a single selection for you
here.
So out of all of these, what is the most
important aspect when considering a partner for utilization review?
OK, I see it, it's up now here, so I
apologize.
Just if you could just enter your selection, pricing, technology,
staffing and I believe staffing is speaking to a confidence
in your partner, having sufficient resources to respond to the
workload.
You know that you're that you're sending to your partner.
All right, OK, interesting market experience and investment in keeping
up with the statutes, regulations and guidance.
Well, you know that that is an intro and not,
not one person responded with pricing.
So thank you so much for your responses here.
OK, to to finish us off here, you know, a,
a guiding principle we should keep in mind is that
AUR process ultimately serves to guide recommendations.
The entire status thing of patients ultimately falls to the
attending physician placing that practitioner first and foremost.
So what does that mean?
If the UR process guides to recommend observation and the
attending is adamant that that patient should remain an inpatient,
the only recourse a hospital would have is to perform
a Part B rebuild.
And in the probably less frequent instance where the attending
insists on observation and yet the UR process guides towards
inpatient, there simply is no no recourse.
Ultimately, it is the attending who has control over the
status for their patients.
And Kurt, when you talk to attendings about status, what
do you generally find?
Are are they frequently not understanding the importance of status
or instead maybe they're hyper engaged and disagree with the
recommendations provided by the UR process?
And maybe as a subtext, what what is the best
strategy?
Strategy for maximizing the impact of physician advisors.
Yeah.
No, that's a good question, Rob.
And so you do definitely have attending physicians who they
understand, they put it in an appropriate place in their
mental workflow.
They know that I'm seeing this patient in the emergency
room or this patients come up to the floor.
And one of the decisions I have to make a
status and it's an important decision.
It's not as important as diagnosing and treating the patient,
but it's an important decision.
But as you kind of describe, you do have the
other ends of the spectrum that are still around.
You do have physicians who simply, I'm going to be
blunt, are not interested in patient status at all.
And you do have the occasional physician who is hyper
interested in patient status.
The the latter one, it's very easy because what I'll
usually ask is do you as a physician know more
about status than the specialists who are actually in a
sense acting year status consultants, and by that I mean
case managers, directors of case management may be a physician
advisor or a physician advisor service and they may know
as much, but generally not.
And so I generally advise maybe just like you get
other consultants on the case, maybe you want to kind
of give some deference or listen to the experts in
status rather than having a fixed idea.
The other end of the spectrum is a little more
difficult because if you're just diagnosing, treating patients, you may
say, why do I care about status?
Well, if you just look at the patient out of
pocket difference, especially in the Medicare plans for example, that
can really affect your patients well-being in terms of the
out of pocket expense that they may or may not
be able to afford or they may not be able
to get their budgeted medications or they may not be
able to pay co-pays for therapy they need if the
status is wrong.
And so often I'll say it not only affects the
patients and maybe you should perhaps pay a little more
attention to the patient status and the recommendations you're getting,
but also it directly affects the attendance.
For example, I think on one of your slides, Rob,
you had Medicare spending per beneficiary that includes physician parts
around a hospitalization mortality rates that's tracked by most payers
regarding physicians readmission rates, most payers will track that and
hospitals are tracked that by physicians as well.
And those are all affected by status.
So a physician who doesn't really pay attention to status
is usually short changing themselves as well as the patient.
And when you phrase it that way, I've gotten a
reasonably good response in terms of desire to know a
little bit more about this whole idea.