Reducing Inpatient Psychiatric Unit Denials: A Case Management Quality Improvement Project

The purpose of the inpatient psychiatric unit denials reduction project was to establish a taskforce to analyze denials data for root cause and identify an effective solution to prevent denials through improved provider documentation.

The development and implementation of the project occurred at Stanford Health Care, a nonprofit Level 1 trauma hospital, with a 29-bed inpatient psychiatric unit containing both open and secured levels of care. The project was led by the Utilization/Denials Management team, which is subteam within the Case Management Department. Team members are Nurse Case Managers specializing in the management of denials and appeals, data analysis and trending of denials, denial avoidance, and reduction of financial risk.

Denials data analysis revealed the Psychiatry Service Line was responsible for over 70% of payer denials within the Length of Stay Write-offs category. In early 2019, the Utilization/Denials Management team initiated a quality improvement project using A3 Lean Approach methodology and evidence-based practice to guide the implementation. The partnership and collaboration included Case Management, Revenue Cycle, Clinical Documentation Improvement, Technology and Digital Solutions, and Psychiatry Service Line leadership that had an interest in reducing payer denials.

Outcomes measured for the project were based on denials data for (fiscal year) FY19, the preintervention period, compared to FY20 and FY21, the postintervention period. From FY19 to FY20, revenue loss decreased by 42%. The downward trend continued from FY20 to FY21 with a recorded decrease by 69%.

The most important implication of the project was improved physician documentation and medical necessity supporting the severity and intensity of inpatient psychiatric level of care, and medical justification for the inpatient stay not only to prevent medical necessity denials but to accurately reflect the care that was provided. High-quality documentation correlates to the high quality of care being provided. This project is far reaching not only for psychiatric units but also reproducible for other acute hospital service lines. Case Management is a multidisciplinary role, and this work is most meaningful for a Nurse Case Manager engaged in care coordination, including utilization and denials management.