Case Study

MEDSTAR HEALTH SYSTEM

The Situation
MedStar Health System, a seven-hospital healthcare system in the Baltimore/Washington area, asked Vertical Claims Management, LLC (VCM) to perform a critical audit of a sampling of malpractice claim files.

"I heard Clare speak at a presentation on captives, and I was really impressed with both her knowledge of healthcare claims as well as that of the healthcare industry," says Larry Smith, vice president, Corporate Risk Management at MedStar.

MedStar’s claims handling is currently decentralized. When claims arise at each facility, corporate MedStar offices are alerted. A file is then opened at both the hospital and the corporate offices, but the investigation is performed at the hospital level.

Working collaboratively, VCM and MedStar developed a customized audit plan that would:

- Determine whether a subsequent, full audit of all open files was necessary

- Review reserving

- Review panel counsel’s handling of cases

- Review internal claims management process

Smith believed that the claims audit could help the organization pin point its strengths and weaknesses in the claims audit processes, which would allow them to merge more seamlessly from individual hospitals into an integrated healthcare system.

VCM’s Approach
A claims audit was conducted over a two-day period using a file sampling of 10 percent of open files. For a beginning-to-end review, one closed file was also reviewed. VCM conducted interviews with MedStar’s corporate director of Claims Management, corporate vice president of Risk Management and a risk manager to obtain an overview of processes in place.

"VCM treated our employees in a professional and supportive manner that actually allowed all of us to enjoy the audit process," says Smith. "They were respectful of the work being done in our hospitals, and it gave us a reflective perspective on our jobs."

Data was compiled and totaled, and VCM provided the health system with a detailed, measurable report. In addition, VCM incorporated observations, based upon experience from and comparison with other claims management systems, from interviews and file reviews. The final report from VCM to MedStar included:

- An overview of the current claims management process

- The strengths of the existing program

- Recommendations

Results
"I knew that an outsider’s view about our system could be beneficial, but VCM hit the nail on the head, giving both positive and negative, no-holds-barred feedback," says Smith.

While VCM found the overall claims product to be complete, MedStar needed to improve their reserving and documentation methods.

As a result, the health system has begun implementing claims management policies and procedures that will help make processes in all MedStar hospitals more uniform. Smith also has requested a more in-depth claims audit and program analysis from VCM in an effort to help strengthen the underlying structures of the merging hospitals.

"VCM provided us with a targeted audit that could be used to implement change," says Smith. "We’re looking forward to continuing to work with them as we begin using those findings as a platform for structural changes in the system."