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Over-Utilization Denials, the Ultimate Monday Morning Quarterback

Over-Utilization denials are like going to a restaurant, ordering dinner and eating it. And then when the bill comes, American Express decides that a desert wasn’t needed so they won’t pay the bill.  In this blog post our President Sam Donio talks about addressing why hospitals need to fight these denials.

A note from our President, Sam Donio

Sept 2021

One of the most frustrating parts of dealing with managed care organizations is the whole concept of medical necessity and who pays for over-utilization of services.  We’re in a healthcare environment where the person who orders the care (the doctor) and the person who consumes the care (the patient) are both exempt from the consequences of over-utilization.  Why is this you may ask? Well, when the third-party processor of the claim decides that the care wasn’t needed and denies the claim, it’s the hospital that pays, the entity that provides the service in good faith.

If would be like going to a restaurant, ordering dinner and eating it. And then when the bill comes, American Express decides that a desert wasn’t needed, so they won’t pay for it, leaving the restaurant high and dry.

Think about it. What the managed care payers are doing is making the hospitals responsible for what care the doctors are ordering and what care the patients are requesting.  For this, the managed care companies are taking a fee for adjudicating the claim and giving themselves a bonus.  Why the bonus? Managed care companies request discounts (reduced rates) from hospitals for the privilege of doing their job, which is to find ways not to pay hospitals for services provided.

So what can you do? The place to start is when you are negotiating your contracts. Instead of accepting the world as it is in terms of denials for over-utilization of services, it’s time to renegotiate how and when these denials can be used. Here are two things to fight for in negotiations. And by being firm, you will be able to extract concessions during your negotiations.

The first is that there are no over-utilization denials to the hospital for services provided, period. If the service is unnecessary then the managed care company should go to the doctor who ordered it; it shouldn’t be a hospital’s job to police the doctors.

Second, if the patient should not have presented themselves at the emergency room, then that should not be a hospital’s problem either.  If patients choose to seek care when they are not in the right venue, and if the managed care company wants to get the money back, then the managed care company should go to the patient. Let’s see how they do with that scenario!

Ok. I know that these are difficult points to negotiate, but they are key. You need to hold firm in how over-utilization is dealt with. With the right negotiation strategy, you will be able to gain concessions that will put your organization in a more advantageous position. If the service was provided it should be paid for, end of story, no give backs at a restaurant once you have eaten all of your dinner with gusto.

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