CASE STUDY
Cost Savings Analysis
Utilization Management Assessment
Section One
Assessment Report
An assessment of the Utilization Management division of The Client was conducted onsite at The Client office. This assessment is limited to the Utilization Management department concurrent review process, with limited review of appeals. This assessment is based on interviews with management, staff and direct observation. A file review of 30 inpatient cases was also conducted.
Leadership interviewed were Regional Administrator, Director of Hospital Operations and Care Continuum; and the Medical Director of Hospital Medical Management.
The health plan has experienced a significant amount of change in the past 9-12 months. This has resulted in changes in leadership and organization structure for the Utilization Management department. The changes and re-organization continue, creating some uncertainty for leaders and staff. As noted by one person: “We’re changing the wings on the plane as we’re flying.”
The leaders of the department are relatively new to their positions and have assumed responsibility for areas that have historically been under-performing, lacking in oversight and accountability, and not operating to standards or guidelines. None of the leaders have previous managed care experience, which hinders their ability to see what changes are needed and how to implement them. The leaders appear to be willing to make needed changes and have actively sought the input from this consultant and others on the consulting team.
There is a lack of direct supervisory management within the department, with few or no supervisors or middle managers, which makes it difficult to monitor adherence to standards or changes in process. In addition, the department is severely limited in access to robust, reliable data that would assist in managing the department; and we are unable to rely on the data that have been shared with us regarding admissions and bed days per thousand or average length of stay. All of the data we have seen appear to be inaccurate, from unknown data sources, and with undefined parameters. For example, the most recent data from finance indicate there are 176 bed days/1000 for the commercial members. This appears to be a very low number, given that the state commercial bed days/1000 is 225.
The health plan, in general, and the department specifically, are not organized in a traditional structure that one expects to see in a health plan. There is no Chief Medical Officer, no Vice President of Health Services, no plan Medical Directors, and there are numerous siloed functions reporting to different parts of the Plan, that would usually be included in the Medical Management department. There is no complex case management function and no structured disease management function. The Population Health department has some functions named case management, but it is not a true case management department, as it only focuses on diabetes management for HEDIS/5-star purposes and there is no connection to the Utilization Management team. The UM team is siloed in and of itself, with the prior auth team not integrated with the concurrent review team, and post-acute teams reporting through a separate department lead and siloed from the rest of the team. Behavioral Health is not integrated with the physical health team. Other functions, such as transitions of care/discharge planning have recently been added to the team. There are 2 RNs, 1 LCSW, and 1 MA on this team at present. The Client is still defining their interactions with the concurrent review team.
There is no identified formal Quality Assurance process for the UM program to monitor and assure staff are following department protocols. There is no dedicated Medical Economics/Medical Informatics team for the department which impacts their ability to obtain real time data based on authorizations and continued stays.
Review of the policies and standard operating procedures noted many gaps in what is required for a UM department by NCQA and CMS standards. Of the Client’s policies reviewed, (described as SOPs and not policies) most have critical information missing, such as definitions of terms within the policy, and none of the existing policies submitted for review have standards or regulations cited within the document.
The concurrent review nurses appear to be clinically competent, but are lacking in standard practice in applying Milliman Care Guidelines (MCG) and in presenting cases/information to the Utilization Management MDs. They are not assertive in the review process, in that they are not, in general, citing criteria and recommending a case disposition from the MDs proactively. Presentations in rounds are not crisp and concise--no script/standard order of review. The nurses hand off hospital physician interaction to the UM MDs and do not appear to be assertively informing the hospital case managers or physicians as to when the last covered day is to occur. They are reluctant to use the criteria in the rounds report-out. One nurse stated that they know the criteria, so there is no need to cite in during rounds. There seems to be some confusion among all as to the difference between proactively notifying the hospital and patients of the last covered day and issuing a denial. Overall, the review process is not efficient in the way it is executed. This results in wasted human resources and potentially missed opportunities to impact the course of the hospitalization.
Suggested Staffing Ratios
Staffing for both nurses and physicians for the plan appears to be low. Industry standard of practice would suggest the following ratios for staffing:
Commercial:
1 RN concurrent reviewer to 25,000 members
1 MD to 100,000 members (MDs are expected to have other duties besides concurrent review)
Medicare:
1 RN concurrent reviewer to 15,000 members
1 MD to 100,000 members
Medicaid
1 RN concurrent reviewer to 8,000 members
1 MD to 50,000 members
The industry standard average daily case load for each nurse (encompassing all lines of business) is between 25-30 reviews.
Section Two
Admissions
Once the existing backlog was reduced to current cases, the Toney staff were assigned admission review in the two DRG hospitals, for commercial members only. They do not review any pre-certified surgical cases per instructions from the Manager of Utilization Review. The Toney staff nurses then began processing the 900 cases that were current. Again, the nurses were only conducting review on the admissions and not conducting any concurrent reviews. Utilizing the MCG criteria, the Toney nursing staff determined if the admission met Inpatient criteria. When the case did not meet criteria to approve an Inpatient admission, the Toney Nurses contacted the UR departments at the respective hospitals to negotiate the change of the inappropriate admissions from Inpatient to the more appropriate Observation status, and in some cases to an Emergency Department stay. In most cases the hospital Utilization Review nurse agreed to change the case to Observation and bill as such. This is a practice that was not previously done by the Health Plan Staff nurses. In the cases that were not changed by agreement with the hospital Utilization Review department staff – those cases were sent to the Health Plan MD for denial of the Inpatient as a status variance.
One Hundred (100) cases of the 2740 that were reviewed were inappropriate for Inpatient and eighty-seven (87) of those cases were changed to Observation by Toney staff nurse to hospital Utilization Review department agreement – therefore there was no need for involvement by Health Plan MD. Of the remaining thirteen (13) status variance cases that were sent to the Health Plan MD for status variance review, four (4) were denied Inpatient and changed to Observation. The other nine (9) that did not meet the MCG inpatient criteria were approved as Inpatient by the Health Plan MD.
Calculated Cost Savings
Utilizing the Client’s claims department, Cost saving based on average cost of Observation stay for :
Hospital A at $4326
St Joe at $3826
vs the average cost of an inpatient stay at
Hospital A at $11,809
Hospital B at $18,006
There were two cases that were changed from Inpatient to ED at a cost savings of Hospital A $2343 and Hospital B $3237.
This is based on the average cost of the 5 levels of ER vs the average cost of the Inpatient stay at the two hospitals.
Savings calculated during a one-month period from just these two facilities for conversion of Inpatient to Observation or ER is $1,021,792.00.
Section Three
Concurrent review
For Hospital A and Hospital B, the Toney nursing staff have been asked by the Manager of Utilization Review to only review for Delay in Discharge and Inappropriate LOS but were advised not to send the cases that fall outside of the MCG clinical criteria for appropriate length of stay to the Health Plan MD review for denial. This is a pilot that Client initiated to gather the data to present to these two facilities as to the reasons for the Delay or Inappropriate LOS. These are DRG facilities, so calculating the cost savings for the delays and inappropriate LOS is not available for this report. The Toney Staff indicated why patients were not discharged within the appropriate MCG clinical criteria guidelines. They have also indicated the re-admissions for the cases with thirty (30) days of original discharge. This could also be indicative of additional savings if the re-admission policy was in place. The Toney nursing staff is also indicating the potential admission avoidance if Case Management had been put in place for these high-risk patients.
This Pilot was stopped by the Manager of Utilization Review on 12/10/19 with the retirement of several health plan nurses. These retirements caused a critical shortage in staff which caused the Inpatient Admission queue to raise to a higher than acceptable level. The Toney nurses were then re-deployed back into admission review of cases.
Summary
The Toney Senior Clinical Consultant provided the Client with program descriptions, program workplans and all policies the plan was deficient in. The Client was also provided with organizational structures to integrate UM teams for more efficient use of resources to better serve the Client’s members. SOPs were developed and all UM letters were rewritten to meet Federal and State requirements.
The Senior Clinical Consultant provided in-depth clinical review and MCG application training to the UM nursing staff as well as case review training to the part-time medical directors assigned to the health plan.
The Toney Utilization Review nursing staff conducted Inpatient admission review on specific assigned hospital and determined the MCG clinical criteria for appropriate admission versus observation stay. They negotiated directly with the respective hospital Utilization Review departments for agreement in adjusting the status of the admission to the appropriate level of care. They submitted the outliers to the Health Plan Medical Directors for status variance and denial of the inpatient admission.
The Toney nursing staff conducted concurrent review on assigned hospitals and documented accurately within the cases. The Toney nursing staff averaged 20-25 cases per day. After auditing the completed cases and the documentation the Toney nurses processed, there was demonstrated a less than 5% error rate in MCG criteria selection.
Due to the system limitations, it was not possible to calculate typical Utilization Review statistics such as Turn Around Time on cases.
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