With the announcement of the nursing home minimum staffing rule, I asked myself the same question as operators nationwide: how on earth are we going to pay for this?
Even if nursing homes could find RNs and LPNs, the financial strain would remain. Facilities are struggling to compensate and retain their current staff, let alone hire more. We’re all familiar with many of the reasons: an aging nurse workforce, nurse burnout, a diminishing pipeline of new nursing students, and The Great Resignation, among many others. But another significant factor, and one that deserves even more attention, is the growth of managed care plans.
How managed care impacts facilities
Managed care plans emerged in the late 1990s as a solution to high healthcare costs and the demand for more efficient delivery of services. But while the motivation to reduce patient costs and avoid overpayment was valid, there are two big problems with managed care:
1. Low reimbursement rates: Managed care plans often negotiate and set lower reimbursement rates compared to traditional fee-for-service Medicare. According to the National Investment Center, traditional Medicare amounts to nearly $600 per resident day in revenue, while Managed Medicare pays only $468 per day. That’s 22% less revenue despite higher costs of providing care and in many cases, higher acuity residents.
2. Enormous administrative burden: As managed care plans have proliferated, so has the administrative workload of the facilities. Each plan comes with its own set of prior authorization requirements, documentation procedures, timely filing deadlines and billing stipulations. For a single facility, this could mean navigating the intricacies of anywhere from five to twenty-five different plans, most of which are more complex than traditional Medicare.
Today, managed care plans are the dominant delivery systems for Medicaid and Medicare enrollees, and their numbers are only growing.
Managed care isn’t changing – so we need to change!
Advocacy groups and government officials are working to alleviate the administrative burden of managed care plans but so far, they haven’t dramatically moved the needle. The reality is that we need to get better at managing our managed care.
Is it unfair that payors have stacked the deck against us? Yes. But it is also true that managed care claims are claims that we CAN get paid if we apply the right processes!
Top strategies to better manage your managed care billing
Here are three managed care strategies that I used as a biller, taught my team as an operator, and now champion as a revenue cycle management partner to facilities across the United States:
1. Focus more resources on verifying coverage and keeping track of re-authorizations
The first strategy to increase your managed care collections rate is to invest more in the tools, people and processes to manage a resident’s financial journey. Whether it’s your EHR or an insurance verification form, we need to accurately collect the key details of each resident’s managed care plan from the outset: co-pay amounts, deductibles, co-insurance obligations, authorization requirements, coverage requirements and timely filing deadlines as examples.
Admissions, case management or the business office are usually responsible for initial collection. However, the process continues beyond admissions. For example, if a resident has a 7-day authorization, who is keeping track of its expiration and will handle reauthorization? Is it the MDS nurse? Another nurse? The BOM? When are you talking about and planning for re-authorizations? Is it during your weekly IDT meeting? During your daily stand-up? If it is hard to answer those questions, sit down with your team and take a closer look at your processes, your tools for documentation, and where there are gaps.
Claim denials often stem from issues related to authorizations, changes in payors, and a lack of understanding regarding eligibility data. To mitigate these challenges, consider creating a designated position responsible for tracking managed care admissions. This individual would oversee each resident’s financial journey, verifying admissions information (including eligibility, enrollment, and authorizations). Additionally, they would follow up with hospitals if qualifying stay information is incomplete. Furthermore, this role involves monitoring managed care plan requirements, such as re-authorization dates, and assisting families and residents in understanding their plan coverage.
2. Track your denials and use them to make upstream improvements
We all know the quote “Insanity is doing the same thing over and over again and expecting different results.” Einstein wasn’t talking about managed care denials, but he could have been. Tracking your denials and leveraging them as insights for upstream billing improvements is one of the best things you can do to improve your managed care collections, and your collections overall! It’s also a win for reducing operational costs when the average cost of reworking a single claim can be almost $50 per hour. By analyzing trends in denials, you can identify recurring issues and implement targeted improvements in areas such as eligibility verification, authorization procedures, documentation completeness, and service coverage verification.
3. Appeal your denials: Don’t back down if you have a case
MCOs are very effective at discouraging nursing homes from following up on denials, but don’t give up! If you believe you’ve billed a claim correctly, and MCO mishandling led to a timely filing error, if there is anything you can identify that kept you from getting a valid claim paid, then follow the plan’s appeal process. There isn’t a lot of publicly available data on appealing denials, but let’s take prior authorization denials as a proxy. According to KFF, in 2021 just 11% of prior authorization denials were appealed. However, nursing homes won a whopping 82% of those appeals!
If you are not getting anywhere with the managed care plan and need an additional escalation point, remember you might be able to file a complaint with your state insurance commissioner. The authority and scope of the commissioner’s investigation will vary by state, but it’s worth looking into since the commissioner’s job is to serve as a consumer protection advocate.
It takes a team
If you find yourself thinking, “This all sounds great, but we don’t have the time or the back-office staff,” remember it’s okay to ask for help. It could mean bringing on short-term assistance, hiring a company to clean up your old accounts receivables, looking into additional training, or even outsourcing your billing.
The bottom line is this: you can get these claims paid. You’ve delivered exceptional care, and you need to be reimbursed to continue doing so. We should be vocal and proactive in ensuring that managed care payors honor our contracts and maintain the transparency that Medicare and Medicaid provide.
Kristy Brown is the Director of SNF Strategy for Quality Healthcare Resources, a long-term care revenue cycle management and financial services company. Kristy has over 30 years of experience in long-term care billing and operations, including owning and operating a facility. In 2023, she received a McKnight’s Long-term Care News Pinnacle Award in recognition of her industry achievements and contributions.
The opinions expressed in McKnight’s Long-Term Care News guest submissions are the author’s and are not necessarily those of McKnight’s Long-Term Care News or its editors.
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