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Often it seems that hospital administration and medical staffs are not aligned when it comes to billing compliance. Physicians can view billing denials strictly as a hospital problem, and hospitals can see physician documentation (or lack thereof) as a driver of billing denials and poor reimbursement rates. So, can the two stakeholders come together?

Yes, there is a way, but it requires time and effort. Still, the payoff is huge in terms of improved margins, fewer denials and better documentation. There is also a payoff in terms of better relationships and enhanced cooperation. The key is using a systematic approach to education and accountability for both the hospital and the medical staff.

First, a hospital must commit to the organizational structure, processes and people needed to develop the means by which education and accountability can be hardwired into standard operating systems. It starts with commitment and understanding by the board, which is ultimately responsible for overall compliance, including billing compliance. The board must allocate the necessary resources.

Let’s start with structure. A hospital committee structure represents the “highway” needed for sharing information throughout the continuum of organizational components, encompassing all services and functions. At the executive end of the committee structure is the board, and at the operational end are the hospital departments and medical staff departments. The middle of the structure is where medical staff and hospital staff come together in the medical executive committee (MEC).

In a well-functioning hospital, the MEC receives reports from the quality management committee, the utilization management committee and peer review. Because the medical staff is responsible for quality of care, the MEC serves as the oversight body and clearinghouse for these related committees. The MEC reports on these activities to the board, which, again, is ultimately responsible, but still delegates duties to hospital administration and medical staff.

The infrastructure and processes needed to support the committees must be supplied by the hospital. This process is defined as the method for gathering, analyzing and reporting information needed for performance measurement and improvement. This would include chart audits for quality, compliance and/or utilization.

The last piece of a sustainable system relates to people. Both the hospital and medical staff must have the right workers in place to carry out the work. The hospital supplies the staff to support these processes, and the medical staff does the same through committee chairs and committee work.

So let’s apply this approach to utilization management and billing compliance. Typically, the structure, or the utilization management committee (UMC), in partnership with the hospital care coordination and physician advisor programs would spearhead efforts to ensure that physicians are adhering to appropriate utilization of resources. But first, medical staff must be educated on their roles in compliance and documentation. This education could be managed in-house, or there are many third-party educators focusing on clinical documentation and billing compliance.

There are multiple focus areas for utilization, such length of stay or outliers, but for our purposes, we mainly will focus on billing compliance based on bed status.

Physician education may be as basic as outlining what is a valid admission order representing appropriate documentation for a continued stay. If the physician does not write a valid and appropriate admission order, the hospital cannot bill the Centers for Medicare & Medicaid Services (CMS) for appropriate level of care – or, in some cases, it cannot bill at all. As an example, if the order is written simply as “admit,” that is considered an order for inpatient care. If the patient does not qualify for inpatient status, the hospital cannot bill unless a code 44 process has occurred, placing the patient in observation status.

The appropriate order for observation would read “place in observation.” If the patient is placed in observation but qualifies for inpatient status, this is also an inappropriate order and should not be billed.

Physician education should include what incorrect bed status means for the patient. If a patient is placed as observation, it could mean a large increase in the amount of payment the patient will be responsible for, or whether he or she qualifies for a skilled nursing stay upon discharge from acute care. Elder Law1 reported recently on a class-action lawsuit filed on behalf of patients placed in observation care instead of inpatient, and the negative impact to those patients. Both CMS and hospitals are at risk when initial bed status is not correct.

Furthermore, the alphabet soup of CMS-affiliated, post-billing auditors are raking in takebacks because hospitals and physicians are getting admission statuses wrong.

Another key to physician education is a clear explanation of what resources are available from the hospital in terms of care managers and second-level physician reviewers to help get care assignments right. Make contact information for hospital resources easy to access for physicians and their offices. This must be a collegial and collaborative process. Of course, only a patient’s own physician can actually write the order, but it is our experience that if advice is given in the right way, physicians will welcome the help.

So, how can you ensure that all this education translates to appropriate documentation? The only way to do so is through measurement and reporting of compliance by physicians. Start with individual physician scorecards and rankings. Allow physicians to see how they are doing, and help them improve if necessary. Reward and highlight those physicians who get it right. If your medical staff is like most, just receiving this information will change the behavior of the majority of physicians.

After a period of 60 to 90 days of education and reporting results to physicians, make triggers such as medical necessity and valid admission orders part of permanent peer review or ongoing professional practice evaluation (OPPE). Individual physician performance then is reported through the UMC to the MEC and the board through the existing peer review process. By using systems already in place, the process becomes fair and permanent.

In summary, good structure, processes and people, used in a systematic approach to billing compliance, is the key. This process has to start at the top with the board, medical staff leadership and the hospital CEO all working together. The result will be compliance on the front end with fewer denials and bill holds, plus perhaps an improved case mix index based on better documentation.

About the Author

Elizabeth Lambin, MHA, is a partner in PACE Healthcare Consulting. Elizabeth has more than 20 years of C-suite level hospital executive management experience.  Most recently, she was the CEO/Market President for Tenet Healthcare’s Hilton Head Regional Healthcare. Elizabeth holds an undergraduate degree in Business Administration, Cum Laude and a Master’s in Healthcare Administration from the University of South Carolina.

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1. Retrieved February 17. 2013  http://www.elderlawanswers.com/suit-contests-hospitals39-practice-of-not-admitting-patients-prior-to-nursing-home-transfer-9529#

Suit Contests Hospitals’ Practice of Not Admitting Patients Prior to Nursing Home Transfer


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