Pilot Program Shows Savings Associated With Reducing Unnecessary Hospital Admissions

A pilot program at Florida Hospital Orlando designed to achieve better congruence between what level of care evidence-based pathways said a patient should be placed at and what actually happened, resulted in an estimated cost-savings of $274,400 and found that the use of case managers in the emergency department reduced admissions, according to an American’s Health Insurance Plans webinar presented by Eugene Truchelut, MD, medical director, clinical performance department, Florida Hospital Population Health Service Organization (PHSO).

The Florida Hospital PHSO led the development and implementation of the program aimed to reduce inpatient utilization and avoid readmission at Florida Hospital Orlando, a 1217 bed facility that admits more than 16,000 patients annually. 

Pilot Program - Arm 1

The pilot program, called “Sta-Obz,” took place over a 4-week period, and focused on 6 emergency department (ED) beds that were cordoned off from others. A performance review committee was tasked with addressing appropriate placement, assessing opportunities with placement, and evaluating the role of care management in both ED and Observation settings for the patients assigned to this unit. 

Over the course of the 4-week study, there were 105 admissions. One hundred percent would have been admitted to inpatient treatment, 69% were ultimately discharged from the Observation Unit where there was a 21% reduction in length of stay (19.8 hours vs 25 hours). There were 255.5 saved beds during the program timeframe and an estimated cost-savings of more than $274,400 using an estimated length of stay at 3.5 days, with an average cost of $800/day.

Pilot Program - Arm 2

In the second arm of the study, a registered nurse case manager (RNCM) and social worker collaborated in real time with the ED doctor, assisting in triaging rather than acting primarily as a consultant after the fact. This program lasted for 4 months and RNCM coverage was 24 hours a day. Additionally, RNCMs and doctors experienced in utilization management reviewed all admissions for (1) admission criteria via InterQual, (2) social components of ED visit, and (3) payer status. 

Over the course of the program, there were 98 avoidable admissions, none of which met InterQual Level of Care criteria for Observation of Inpatient. 

“That’s important to know because if you’re looking at avoidable admissions or inappropriate admissions, and ones that shouldn’t be there, a lot of third party payers are using some evidence-based guidelines or criteria to decide whether or not they are going to pay,” Dr Truchelut said. 

The payer mix for this population included commercial (7%), Medicaid HMO (17%), Medicare (32%), Medicare Managed Care (19%), self-pay (20%), and VA (3%). 

During this pilot there were an estimated 343 saved bed days and a cost savings of $274,000 using an average length of stay of 3.5 days at $800/days. Dr Truchelut noted that exact complete savings is difficult to calculate due to cost of ancillary services, provider charges, and cost of appeals, among others.

The Cost of Readmission 

Dr Truchelut emphasized that avoiding unnecessary admissions is the right course of action for everyone involved. “Everyone loses when patients get unnecessarily admitted to the hospital,” he said. 

During the second arm of the pilot program, a major concern was that none of those admitted met the InterQual criteria. “Payers would’ve denied these admissions if they were using InterQual criteria,” he said. “Medicare could’ve come back and said we’re not paying for this...certainly your third-party payers, your private insurance companies, they’re going to do the same thing.” Retrospective reviews would’ve resulted in Medicare asking for their money back as well, he said.

Dr Truchelut said that hospitals will almost always appeal these decisions, although it is usually “fruitless and will lead to more time and labor and effort for everyone involved,” especially the payers appeal department. 

Payer Incentives 

During the webinar, Dr Truchelut discussed how payers could possibly incentivize facilities to explore this type of approach.

“If you are a payer—a third-party payer, a commercial payer—and you saw the results of this [pilot program] and have a similar kind of hospital large enough, you could say maybe it will be worth it to us to launch a pilot like this,” Dr Truchelut said. Payers could fund a number of case managers to be in the ED and see what the return on investment is. “If it works like it did here then I expect you’re going to be paid back amply for whatever the initial expenditure is,” he said.—Kelsey Moroz