Integrating Disparate Revenue Cycle Functions in a Multi-hospital System:

Integrating Disparate Revenue Cycle Functions in a Multi-hospital System:

Making the Case for Utilization Management 360®

By John Zelem, MD, FACS 

Problem Statement:

Revenue cycle management (RCM) in the healthcare industry continues to operate at decreasing profit margins and is in dire need of increasing efficiencies and preserving net patient revenue. With increasing costs to provide services to patients, other challenges confront those responsible for RCM management, including the need for accurate physician documentation, an atmosphere of increasing payer audits and denials, and the addition of the global healthcare pandemic.  Solutions seem to be evasive. Overtime, the major components of the RCM function seem to have evolved into an unintended mindset of silos and territorialism.

The commonality amongst these components is that stakeholders are all looking at the same medical record  documentation. Yet, each sees the same documentation through their own lens with the unintended consequence of collaboration remaining out of reach without a focused communication partnership.

Case in point: a 3,739-bed, 12-acute care hospital system needed to establish a focused communication partnership between and within stakeholders of their revenue cycle, break down the silos that were impeding collaboration within the system and identify the missing pieces in their workflow.

The key to solving this problem would be to provide a holistic approach to foster standardization and accountability across the enterprise in order to achieve patient-centered clinical and financial strategies.

Moving forward, the hospital system, in recognizing their own unique situation, provided specific targeted areas for evaluation. These included the following:

  • Evaluate the utilization review (UR) process to ensure compliance with the Conditions of Participation (CoP)
  • Review the utilization of physician advisors (PAs) and indications for referrals for second level case reviews
  • Analyze the Vice Presidents of Medical Affairs (VPMA) of each facility in their role of being the UR committee physician for downgrades in the Condition Code 44 and CoP process, leveraging the clinical knowledge base used for making these decisions, along with reviewing efficiency, capacity, motivation, timeliness, and understanding of federal rules and regulations
  • Identify areas of standardization of physician education across the enterprise with special focus on orthopedics
  • Evaluate the Integrated Care Management (ICM) department to assess standardized duties and functions, general knowledge of the UR process, and where there were disconnects and mis-understandings
  • Identify challenges, processes, and solutions to building a comprehensive, best practice PA program across the system

An indication of success in this project was simple: to integrate all of the involved areas into a collaborative, unified team, with standardization and accountability—a 360-degree approach to utilization management (UM)—a rigorous approach that is part of Utilization Management 360®


This project initially started with conversations including RCM and physician leadership to outline specific goals and objectives. The Utilization Management 360® approach examines the complete spectrum of a patient episode of care beginning with the initial review for appropriate level of care all the way to the results of submitting a correct claim. There are typically five major components to the Utilization Management 360â concept:

  1. Utilization Review (UR)
  2. Integrated Care Management (ICM)
  3. Clinical Documentation Integrity (CDI)
  4. Physician Advisor (PA)
  5. Coding/Compliance

Aspects of the project included the following:

  1. Interviews with key leadership in their defined roles and also individual and group interviews of staff and managers, based on questions were developed and standardized prior to the interviews
  2. A randomized 25 chart selection for review of documentation quality for medical necessity, coding, and level of care decision making. This was extremely important in the surgical and orthopedic areas
  3. Extensive data reviews were conducted for physician engagement in the UR process including:
    1. Physician responses to remote and onsite PA reach-outs for additional clinical information for level of care recommendations
    2. Timeliness for completion of VPMA reviews, second level and Conditions of Participation (CoP) required reviews for level of care downgrade compliance with Condition Code 44. (There was a need to see if this should be removed from the VPMA’s responsibility.)
    3. Review overall process for completion and number of Condition Code 44’s and Condition Code W2’s which can have significant impact on receipt of appropriate revenue for services provided
  4. Examining areas for improvement


  1. In this hospital system, UR is a centralized process that uses Interqual criteria for first level review across the entire system. Following a compliant process, when a patient does not meet criteria, the case was sent to a PA for a second level review. Presently the hospital system uses a remote service for these reviews and one onsite physician advisor OSPA.
    1. Approximately 85 percent of the time the initial physician order was correct for the level of care (LOC) based on first level reviews requiring no further action
    2. For those cases requiring a second level review, the PA would reach out to the attending physician for additional information to make a recommendation for LOC
        1. This typically happens for an observation (OBS) case
        2. 62 – 74 percent of the time where the attending physician responds to the PA reach-out, there would be enough information provided to upgrade the patient to Inpatient
        3. Over a one-year period, throughout the hospital system, there was a 37 – 80 percent “no response” rate from the attending physicians for these reach-outs
        4. In Medicare Fee for Service (FFS), a patient is kept in observation (OBS), but might have qualified as an inpatient (IP), the annualized revenue loss is $745,330 – $1,719,880 based on the delta between Medicare reimbursement for OBS versus. IP across the system
          1. If this happens more than once a day, the multiplication factor is obviously higher
          2. In addition, there is an increased financial burden to the Medicare beneficiary
        5. If 50 percent of the “no response” referred observation accounts could be converted to inpatient, based on the conversation between the physician advisor and attending, there would be an annualized increase in revenue of $79,148 – $239,152 depending on the facility.
  1. On occasion, a patient with an initial order of IP is downgraded to OBS, based on the review, this results in a Condition Code 44 situation and the change in the level of care must be accomplished prior to discharge
    1. According to the CoP this requires a UR physician to get involved if the attending physician agrees and this is relegated to the VPMA of the appropriate facility in this system.
    2. If the attending physician disagrees, two UR physicians must get involved
    3. Frequently it was found that these decisions were delayed significantly, and after discharge, resulting in a Condition Code W2 and a potentially non-compliant process
    4. Both situations result in decreased Medicare FFS reimbursement for that episode of care
  2. Integrated Care Management (ICM) was found to lack standardization, accountability, integration, understanding of their roles, and an overarching understanding of the role of UR. Also, a previous consultant had recommended that ICM only get involved with 65 percent of the patients. This was instituted without explanation to the staff and left a potential gap in continuity of the navigation of care for all patients. Also, it was identified that ICM staff was responsible for clerical tasks that interfered with their ability to complete their duties.
  3. Since this is a multi-hospital system, each facility had its own UR committee, and plan. There was no uniformity in committee meeting protocols and reporting.
  4. The CDI department was siloed with its own manager reporting to Nursing and operating independently of RCM. The manager was astute enough to get away from a task-based environment and move towards outcomes, resulting in accuracy, reducing denials, and increasing revenue preservation.
  5. The chart review revealed inconsistencies in the knowledge-base for medical necessity determinations, capacity, timeliness, willingness to perform these duties, and knowledge of federal rules and regulations to be providing consistent, compliant, timely, and appropriate, defendable LOC recommendations from VPMA’s regarding Condition Code 44 reviews.
  6. There was already an OSPA pilot project in place with some of the following duties and results:
    1. Provide second level reviews for that facility as needed
    2. Physician response rates were increased by 91 percent compared to the remote teams
    3. Worked collaboratively with UR, ICM, and CDI
    4. Increased physician relationship building
    5. Participated in the UM Committee and other committee
    6. Provided standardized physician education opportunities


  1. Establish a system-wide OSPA program with the remote teams as backup for times when the onsite PA is busy or not available. Historically, communication with attending physicians with remote PA’s for second level reviews is poor for numerous reasons. OSPAs tend to have better communication as they are known by the doctors.
    1. Establish standardization and accountability throughout the system-wide OSPA program as these two elements were of significant importance to RCM. Along these lines, what will be important to this goal was to outline a program where physician advisors received the same training, utilized the same logic for making second level recommendations, with consistent, sustainable, defendable, and uniform recommendations. The OSPA would be accountable to the management of that entity, the facility VPMA, and RCM of this healthcare system and held to reportable metrics.
  2. Establish a standardized system for notification of downgrades in accordance with regulations, CoP.
    1. Notifications must be given to the patient, physician, and facility
    2. Will involve timeliness of a second UM physician agreement to be done prior to discharge when possible
    3. Will reduce CC 44 and CC W2 rates, potentially increasing revenue
  3. Rebuild the ICM from the top down, starting with leadership.
    1. Encourage leadership to shadow their staff to learn what their duties included
    2. Focus on outcomes achieved, not tasks performaned
    3. Standardize duties, look at staffing and patient ratios
    4. Identify areas of focus, such as Length of Stay, avoidable days
    5. Utilize clerical staff to allow other staff to function at the peak of their license
    6. Become unit based, not outlier based
    7. Provide standardized interdepartmental training, not necessarily in depth but overarching for understanding
  4. Standardize UR Committee Meetings
    1. Uniformity of the overall agenda
    2. Individualization for the needs of the community of that facility
  5. In accordance with the Utilization Management 360 concept, bring CDI under the purview of RCM. This was actually in progress during this project
  6. Establish a Best Practice System-Wide OSPA program
  7. Utilizing processes established from the OSPA pilot, outline a five- year plan for establishing an OSPA program for each of the other facilities including:
    1. Ongoing evaluations
    2. Standardized training
    3. Accountability metrics
    4. Assisting with hiring appropriate individuals
    5. Onsite onboarding initially and providing continuing mentoring and management

Program Results:

This is a project that is still a work in progress. Recommendations have been delivered and programs to put them in place are underway. The pandemic has caused deliverables to be delayed but leadership is planning on moving forward in a shorter period of time than recommended in the report.

To date:

  1. Budgeting and hiring of the next set of Physician Advisors started

CDI has been brought under the umbrella of Revenue Cycle Management