Managed care enrollment seems to be growing at an astronomical rate. Private insurance companies are aligning themselves with Medicare and/or Medicaid to provide a lower-cost product to the public. People are choosing these alternative plans due to the decreased overall cost to the consumer.

In order to keep their costs down, these insurance companies and the Centers for Medicare and Medicaid Services’ (CMS) Audit Recovery Program are performing managed care audits and skilled nursing facility (SNF) audits. This is why it is more important than ever to know exactly what your contractual obligations are. Each company has different contract requirements; some are Resource Utilization Group (RUG), some are based on levels, some require you to follow Medicare guidelines, and some do not. There are more variations than I can possibly count. Ultimately, it is up to the facility to read and understand all of the provider agreements and insurance contracts.

Once you have reviewed all of your managed care contracts, your SNF is ready to set out on the path to success for defending against managed care audits. Remember: The best defense is a good offense. When you are developing your defensive strategy, you should incorporate the following into your overall plan: case management, admission practices, documentation, billing requirements, payer verification, and preauthorization. A brief explanation of these components follows.

Preadmission case management plays an important role in today’s world of managed care. The case manager:

• Collaborates with the individual, family, health care team, payers, community agencies, providers, and legal representatives to ensure continuity of the individual's care through all health care settings.
• Promotes effective communication among health care team members, including the individual, family, payers and the employer when appropriate.
• Provides routine verbal and written documentation of the initial assessment and progress of the individual to the referral source and/or others as appropriate on a timely and regular basis.
• Projects future costs and needs and provides cost analysis to the referral source as appropriate.

Admission practices need to change to keep pace with the times. We can no longer afford to take every resident sight-unseen. This has become a costly mistake for many facilities. Rather, we need to be diligent about reviewing the coverage contract and the needs of the resident prior to admission. Oftentimes, if you have a high cost item, you can ask the insurance company to “carve out” the cost prior to admission. Make sure you get this type of agreement in writing to cover anything above and beyond the existing contract. Some areas that may incur high costs are:

• Special durable medical equipment (DME) the resident may need for nursing or therapy (e.g., bariatric items)
• High-cost medications prior to admission (e.g., cancer medications, IV antibiotics)
• Respiratory treatments and equipment (e.g., trach supplies, c-pap, bi-pap, oxygen)
• Ambulance transport for follow-up appointments (e.g., wound clinic or dialysis)
• Ostomy or supplies
• Wound care supplies (e.g., dressing, ointment/salve, wound uum)

Preauthorization—don’t forget it! Without a preauthorization, you are taking a huge risk as to whether you are going to get paid for the stay. Preauthorization should always be obtained prior to the resident being admitted.

Second, it is crucial that all team members are aware of the contact conditions at the time of admission. So often, we see that the contract only allows for RV minutes and the therapist treat them at RU level. If you utilize contracted therapists, it is imperative that you have a discussion with them on the day of admission to outline what the contractual obligations are in no uncertain terms. There is no room for ambiguity—tell them exactly what the contract states. If the therapy department over-treats, the facility will still be liable for paying them unless you have a process in place to prevent this from happening.

I recommend a written form of communication to inform all departments of contractual obligations. If you have in-house therapy, follow the same process as above. All departments need to know upon admission what the expectation is—otherwise, you have the potential to waste precious man hours that could be better allocated to other residents or projects.

There are also some components of documentation that are paramount to successfully surviving managed care audits. Having policies and procedures in place to ensure that these items are complete and timely will greatly improve your overall audit outcomes. These components include:

Skilled Documentation

• You must include the reason for skilled services.
• You must have skilled documentation at a minimum of once daily.

Certs/ Recerts

• These should be completed as if the resident is covered under the Medicare program. Remember—this is the only document that is not appealable if medical review denies your payment.

Care Plan

• Ensure the care plan is comprehensive and has clear, objective and measurable goals. Discharge planning should begin on the first day of admission.

Physician Orders

• Ensure that all physician orders are signed in a timely manner.
• Include all physician orders for the date range requested when submitting records for medical review.

Therapy plan of treatment

• Ensure that the plan of treatment is signed by the physician or nurse practitioner (depending on state regulation).
• Ensure that there are orders in place to substantiate the therapy provided.
• The auditing entity should be provided therapy care plans for the date range requested, all rehab notes and actual therapy minutes.

Diagnosis Management

• Ensure that all active diagnoses are in the resident chart.
• Ensure that diagnosis records are correct with dates and diagnosis information.
• Ensure the correct diagnoses are pulling onto the UB04 claim form.

Incorporating these key points into the organizations’ daily activities will improve your documentation practices and ultimately provide better outcomes in the case of managed care audits.

Contact Richter Healthcare Consultants

If your organization is facing a managed care audit defense challenge, please call Richter's clinical healthcare consultants at 866-806-0799 to schedule a free consultation. Our team has saved our clients millions of dollars already—put us to work for you.

Jennifer Leatherbarrow, RN BSN, RAC-CT, QCP, CIC is a Clinical Consultant with Richter Healthcare Consultants.