Practice Management

What hospitalists need to know about health care reimbursement and denial prevention


Generally, private payers do not follow the Two-Midnight Rule, and instead utilize evidence-based MCG guidelines,11 InterQual® criteria12 or internal criteria to determine if an inpatient admission is “medically necessary.” Hospital utilization review nurses often use MCG and/or InterQual® to aid admission status decisions and may request secondary review by a physician if medical necessity for an inpatient admission is not clear-cut.

The role of physician advisors

Considering the rising financial pressure and growing complexity of private and public payers’ rules and regulations, many hospitals turned to physician advisors to help prevent and reduce denials. Typically, physician advisors perform concurrent secondary reviews to help determine the most appropriate level of care, participate in peer-to-peer discussions with payers, and write formal appeals to overturn clinical denials.

“Physician advisors are generally not in the business of critiquing clinical practice, instead they review whether the chart documentation supports initial and continued hospitalization,” said Charles Locke, MD, senior physician advisor at the Johns Hopkins Hospital and president of the American College of Physician Advisors (ACPA). “However, physician advisors should seek additional information and provide feedback in those cases where the documentation does not support medical necessity for hospitalization.”

Many physician advisors are current or former hospitalists. Chris Shearer, MD, chief medical officer for remote advisory at Sound Physicians Advisory Services, says that “hospitalists are the natural physician advisors as they have a working knowledge of what patients need to be inpatients and which are less sick and likely to be discharged quickly.”

The role of physician advisors extends beyond reviews to include physician engagement and education. Physician advisors are a critical link between physicians, utilization review nurses, case managers, and clinical documentation integrity (CDI) and revenue cycle teams, and are increasingly involved in hospital-wide denial prevention efforts.

Physician advisors are invaluable in identifying and validating root causes for clinical denials and generating potential solutions, as they bring to the table:

  • Clinical expertise.
  • Understanding of clinical workflows.
  • Knowledge of the most current public and private payers’ regulations.
  • Insight into hospital-specific clinical documentation opportunities (for example, by diagnosis, procedure, service line, and provider).
  • Understanding of payers’ reasons for clinical denials through peer-to-peer discussions

The role of hospitalists in preventing clinical denials

I asked three experienced physician advisors – Dr. Locke, Dr. Shearer, and Deepak Pahuja, MD, chief medical officer at Aerolib Healthcare Solutions – what hospitalists can do to prevent clinical denials. The experts had the following five recommendations:


The best tool in combating denials is well-documented clinical judgment that outlines:

  • WHY the patient requires hospitalization, based on severity of presenting signs and symptoms, comorbidities, and risk of complications.
  • WHAT the plan of care is, including diagnostic tests and/or interventions.
  • HOW LONG you anticipate the patient will be in the hospital, including potential implications of social determinants (for example homelessness, active drug use) on discharge planning.


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