Follow these sure-fire tips to sort through data and measure outcomes in your department
Use step-by-step instructions, and demonstrate your value to administration
By Toni Cesta, PhD, RN, FAAN
Senior Vice President
Lutheran Medical Center
Brooklyn, NY
[Editor's note: This is the second part of a multi-part series on demonstrating the value of case management to your organization. Last month, we discussed the vast array of financial and clinical outcome measures to evaluate the effectiveness of your department as well as to demonstrate its impact on the bottom line of the organization. This month, we discuss the tremendous amount of data that can be collected and used for performance improvement, within the department and across the institution. Next month, examples of case management report cards will show how to present this data in a usable format.]
The process for setting up your outcome measures requires careful thought and consideration. Consider the purpose and use for the outcomes you are selecting. Some example of these purposes and uses are:
- for internal evaluation of the department;
- for internal evaluation of specific employees;
- for communication to senior management;
- for communication to the organization;
- to justify staffing or the addition of staffing;
- ad hoc reporting and specific requests.
Once the department has selected its outcome measures, you should identify the benchmarks that correlate to those outcomes. You then can measure the department's outcomes against these benchmarks.
Benchmarks are standard measures against which you can evaluate your own outcomes. Each outcome should also have a timeframe associated with it. Some outcomes might need to be measured monthly; some might need to be quarterly. The decision as to the frequency of measurement should be based on the sensitivity of the measure. Sensitivity has to do with how frequently the measure changes and to what degree. If you are unsure as to how often you might want to report a specific measure, you might want to discuss it with your finance or decision support staff. You can change it later if needed.
National benchmarks can be found in many publications and organizations including The Joint Commission, the Centers for Medicare and Medicaid Services (CMS), the Healthcare Financial Management Association's (HFMA's) publications, and your own state's quality and financial indicators. (See graphic, below.) When possible, update your benchmarks as the literature changes so that you remain as current as possible.
Financial Benchmarks | |
Length of Stay | Medicare |
Average Cost per Day/Case | National Rates |
One-Day Stay Patients | Identify Types |
Case management financial benchmarks
As discussed in part one of this series, the most common financial outcome measures include third-party payer denials, length of stay (LOS), average cost per day/case, and one-day LOS patients.
When reporting on third-party payer denials, denial rates can be reported in several ways. The denials should be reported in days and cases. By reporting in days, the hospital can determine the impact of these non-reimbursed days on capacity management and throughput. Cases are also important, as Medicare, Medicaid, and many managed care contracts are paid on a case-rate basis. Case reporting is easier to correlate to actual dollars lost.
Finally, the denials should be reported as a percentage of patient days. This metric places the denials in a more accurate competitive basis as it demonstrates the loss to the bottom line in terms of patient days in which care was rendered. If 4% of patient days were denied, then the hospital knows that 4% of the care provided was not paid for. This is more accurate a measure than just saying that 100 days were denied or 30 cases were denied, because these numbers don't provide a context or correlation with the overall performance of the hospital.
In addition to final denials, you also will want to report denials recovered on appeal and the number of appeals written. These are indictors of the performance of your department in the appeal recover process and can be translated to actual dollars, which is always a helpful benchmark. (See graphic, above below.) Examples of clinical denials would include admission denials, continued stay, and any other reasons that fall into the medical necessity category. Technical or administrative denials are non-clinical and typically relate to denials associated with the hospital not meeting its contractual obligation to the third-party payer. Examples of these denials would include clinical information not provided, medical record not provided, and billing errors.
Denial/Appeal/Recovery Benchmarks | |
Denial/Recovery Rates | Benchmarks |
Overall Denial Rate | < 4% of Patient Days |
Clinical Denial Rate | < 5% of Patient Days |
Technical Denial Rate | < 3% of Patient Days |
Appeals overturned Rate | 40-60% of Submitted Appeals |
Source: Healthcare Financial Management Association, 2005. | |
Additional financial benchmarks
LOS is one of the earliest and most traditional outcome measures used in case management. It still is considered one of the most important tracking tools, and it is used as one of the baseline indicators for virtually all case management departments.
While it is a common indicator, there remains a lot of variation in terms of how it is categorized and monitored. Even if your hospital's LOS is within your expected benchmark, there still might be some opportunity within a specific diagnosis, DRG, or physician practice. Therefore, monitoring indicators for LOS might need to be more specific than they might have been in the past. Consider any of the following categories when monitoring your LOS:
- by diagnosis related group (DRG);
- by payer;
- by ICD-9 code;
- by service line;
- by physician.
When looking at DRG or payer benchmarks, the LOS targets should be adjusted according to the indicator. Different payers will and should have different LOS targets. For example, Medicare's LOS targets likely will be longer than the targets for commercial managed care, and Medicaid might be somewhere between the two. Your state should be able to provide you with benchmarks for your state's DRGs, if used in your state.
When looking at LOS by DRG, remember that DRGs are heterogeneous and contain a variety of diagnoses within any one DRG, which might have different LOS targets. This information is important to know because any corrective actions aimed at reducing the LOS will need to address the specific causes of the increased LOS in that particular DRG.
Service line measures also are important because your targets for surgery, medicine, or OB/GYN will vary considerably. Always remember that the more specific you are, the easier it will be to determine how to improve the particular benchmark. Once you have looked at your budgeted targets for medicine, for example, you then might want to determine which DRGs or diagnoses within medicine present with the most opportunity for improvement. (See story on case mix index, below.)
Key to understanding case mix index By Toni Cesta, PhD, RN, FAAN The case mix index (CMI) is an average of the relative weights for the hospital's diagnosis related groups (DRGs) for a given period of time. Each hospital is assigned a base rate that determines how much the hospital will be paid per 1.0 relative weight. The base rate is based on your hospital's location, overhead costs, graduate medical education costs, indigent patients served, etc. Variation in the base rate allows for the significant swings in costs associated with different parts of the country. The base rate is multiplied by the relative weight for the DRG, and this number determines the amount of reimbursement to the hospital for that discharge. CMI usually is monitored by the finance department. Small reductions in CMI can have a large affect on the finances of the hospital. It is an example of an extremely sensitive outcome measure. In the sample CMI analysis, right, you can see an example of the financial impact of a change of 0.1 in CMI for a sample hospital with a base rate of $4,500 per relative weight. (See story on tracking cost avoidance, below.) |
CMs should track cost avoidance By Toni Cesta, PhD, RN, FAAN Case managers (CMs) should quantify the interventions made that result in cost avoidance and length of stay (LOS) savings to the hospital. Case management departments spend time intervening on issues that would otherwise have resulted in longer stays or higher costs for specific patients. These interventions require time and expertise on the part of the department.
In this first example, the case management department prevented the admission of two patients who did not have any clinical needs, but were unable to care for themselves in the community. Had case management not intervened, they would have been inappropriately admitted to the hospital. These types of admissions are known as social admissions: patients admitted for social rather than clinical reasons. Preventing these types of admissions can be calculated as cost savings. In addition to the dollars saved, preventing these admissions helps with bed capacity and also can avoid a red flag to a recovery audit contractor (RAC). Savings for example one: Two social admissions from the emergency department (ED) per month avoided at an average direct cost of $800/day and LOS of two days equals $38,400 per year. In example two, the hospital paid for services needed for a patient to facilitate a discharge. Examples of such services might include air travel to the patient's country of origin, medications to be used in the community, or even a nursing home bed. The out-of-pocket costs to the hospital can be factored against the cost of keeping the patient in the hospital. Less difficult to quantify are the positive side benefits of freeing up a bed for an acute patient and the inappropriate use of resources, as well as the exposure of the patient to the acute care setting. Savings for example two: Two patients per month with expedited discharge (up-front expense to facilitate disposition) at an average direct cost of $800/day and decrease in LOS of 2.5 days equals $48,000 per year. Remember to aggregate the cost and then delete the cost of the service provided (airfare, medications, etc.). (See story on clinical benchmarks, and story on service and productivity benchmarks, below.) |
Measure benchmarks for service, productivity By Toni Cesta, PhD, RN, FAAN Patient satisfaction benchmarks should be based on the internal expectations of the hospital and should represent an improvement over current performance. Because all hospitals measure patient satisfaction, an assessment of the questions your hospital is using is important. Check to see if the questions truly reflect the work of case management. If they do not, you may request to have specific questions added to your questionnaire. In terms of staff and physician satisfaction measures, if the hospital does not have previous data for physician or staff satisfaction as it relates to case management's performance, then the department should monitor changes in these scores over time. Productivity benchmarks should be generated internally for the department's specific use. These measures reflect the volume of work done. They should not be used as outcome indicators, but rather should be used as a way of tracking the volume and complexity of the work being performed. Examples of these include number of patients discharged with specific services, such as home care, sub-acute, nursing home, etc. Benchmarks must reflect an improvement in these numbers over time. One of the most important benchmarks that every case management department should be tracking is the number of patients discharged without services. This number should be reduced over time. For example, you would like to see an increase in the number of patients referred to home care. With increased focus on reduction of readmissions and inappropriate admissions, a more stringent approach to referrals to home care can have a positive affect on these numbers. Determine your baseline and then set an improvement target from there. The target should be to reduce the number of patients discharged without any continuing care services and increase the number of patients discharged with home care or other services. This target might indicate that the department is accessing and intervening on behalf of a greater number of patients. Other productivity measures might include the number of clinical reviews completed by case manager. These measures can be difficult as they are driven by the payer mix, something outside the control of a case manager. If the case managers in your department are responsible for identifying and intervening on avoidable delays, this measure might be another one to track as a productivity benchmark. Some case managers might do a better job on collecting this information than others, so this measure can be an important one in terms of how well they are identifying and correcting patient flow issues. |
Don't forget clinical benchmarks By Toni Cesta, PhD, RN, FAAN Case management crosses the clinical as well as the financial arenas; therefore outcome measures must include both categories. Some clinical outcome indicators are less tangible than financial indicators, but they are no less important. Benchmarks for these indicators should reflect national standards. Readmission benchmarks can be included in the clinical category. Readmission benchmarks should be based on the readmission timeframe in question. While the Centers for Medicare and Medicaid Services (CMS) calculates a readmission as one occurring within 30 days, some states might calculate the readmission cut-off with a shorter time frame such as 15 days. In addition, you might want to take a look at your readmissions that are same day or next day as well, as these probably indicate a problem with the discharge plan. Your hospital's definition of long-stay patients, another quality indicator, will be dependent on your overall average length of stay (LOS). Long-stay patients should represent those that are at least two standard deviations from your average LOS. Your finance department can help you make this calculation. Turn-around times (TATs) are another quality indicator. These are internal benchmarks and relate to service delivery. For example, the case management department should know the expected TAT for results of a CT scan, MRI, or any diagnostic test. Time frames might be different for a preliminary versus final results. For example, if the radiology department's TAT for results reporting of an MRI is 12 hours, anything beyond that time is outside the benchmark. |