health care reform and your ar keystone patient accounts management association may 15, 2013 hbcs...
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Health Care Reform and Your ARHealth Care Reform and Your AR
Keystone Patient Accounts Management Keystone Patient Accounts Management AssociationAssociation
May 15, 2013May 15, 2013
HBCS 2013
Jeff Porter –
Member of Illinois AAHAM
HBCS 2013
Presented by: HBCS
Healthcare Reform Summary1
3
4
5 What to Do?
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Agenda
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6
7
Don’t Forget the Patient
…And Finally…
Aging Population
Financial Impact
HIE’s and The Cost of Healthcare
Healthcare Reform SummaryHealthcare Reform Summary
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Health Care Reform – March 23, 2012
• 2,300 pages of text• $938B cost to implement over next decade* • 95% of Americans expected to have coverage
*per Congressional Budget Office
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Goal of Healthcare Reform
■ Provide universal healthcare Take coverage to 95%, by adding apprx 48mm
uninsured■ Reduce healthcare costs
18% of GDP Per service
■ Improve healthcare delivery system and patient safety
How are you doing preparing for this?
Patient Protection and Affordable Care Act: March 23, 2012
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■ Medicare payments becoming value based pricing■ Reimbursement tied to performance indicators■ Fee for quality replaces fee for service■ Began October 1, 2012
■ Creation of state based HIE (not in IL?)■ Prices based on federal poverty level scale■ Three tiered plans set by price: gold, silver, or bronze coverage■ Effective January 1, 2014
■ Expands Medicaid Coverage■ Eligibility based on higher % FPL■ Most likely will reduce payments as Medicaid moves to VBP■ Effective January 1, 2014 ….<9 months
■ No insurance denials for preexisting conditions■ Development of a high risk pool subsidized by the government
■ Insurance becomes required for all■ Tax penalty if decline insurance … who will opt out?■ Effective January 1, 2014
Health Care Reform Recap
Aging PopulationAging Population
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Adults 65+ Population Soars
Administration on Aging 2012
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Medicare changes will be felt system wide
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■ Sequestration – March 1, 2013: 2% Cuts■ Medicare payments tied to quality of care■ Treatment will now be reimbursed by quality of service, not fee for service■ Private Payers and HIE’s expected to follow suit
■ Quality of service based on Medicare Advantage 5 star model■ Readmission rates will be key
■ 30% of Medicare reimbursement scored by patient satisfaction■ If you have patients in your hospital, your entire staff is on stage
■ Wait times■ Pain Management■ Communication: “How can I help?” “Have I answered all of your questions?”■ Noise level in treatment rooms and hospital rooms■ Quality of facility■ Satisfaction with results of healthcare■ Billing and collections
Medicare Reform Impact on Hospitals
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Medicare to Become an Even Bigger Piece
Medicare reimbursement falls per patient, yet overall this segment of your revenue will grow and remain the largest revenue source (in 2011, the first baby boomers turned 65)
40.4 million seniors in 2010 50.6 million seniors estimated by 2020 30k people retiring weekly – for next 20 years
Private payers will morph into Health Insurance Exchanges Self pay classification will fall due to creation of Health Insurance Exchange,
yet will not be eliminated Unemployed still cannot afford any type of healthcare Tax penalty less than the cost of any insurance
Ultimately end up with four categories: Medicare/Medicaid, HIE, Self Pay and Charity Care
Becker’s Hospital Review
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■ 65% patients rate their healthcare experience 9 out of 10, leaving 35% “who don’t”
■ Of those 35%, say 40% revenue is attributable to Medicare■ For a $200mm hospital, then almost $30mm of your
revenue could be in jeopardy…
$200mm x 40% Medicare x 35% “who don’t” = $28mm
Sample Numbers
Financial ImpactFinancial Impact
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■ Medicare changes ■ Medicare services will rise based on local senior population■ Revenue will reflect value based on reimbursements■ Estimate what the net effect will be on your Medicare revenue■ Example: 40.9% in 2011 to 44.8% in 2014
■ Medicaid■ Expanded participation with Reform, yet lower fees expected■ Example of overall reduction of revenue 17.9% in 2011 to 17% in 2014
■ Health Insurance Exchanges■ Example: none in 2011 to 7.5% in 2014
■ Self Pay … will it fall (or rise) – this is debatable■ May fall due to Health Insurance Exchanges■ Example: 4.9% in 2011% to 3.5% in 2014
Reform Changes and Your Hospital Revenue
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One Hospital’s Perspective - $65mm Revenue Decrease
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Estimated Payer Mix in 2014
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The Way We’ve Always Done Things (What Now?)
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Project Your Payer Mix
Estimating Healthcare Reform's Impact on Hospital Revenue
Assumptions 2011 2014
Hospital Bed Size 170 170
Hospital Revenue $132,307,692 $129,333,032
Hospital Costs $128,142,286 $120,152,973
Total Operating Margin 3.3% -7.1%
2011 2014
Total Revenue
Annual Increase/Decrease Payer Mix Hospital Hospital Cost Payer Payer Mix Hospital Hospital Cost Payer
Payer Mix Revenue Cost Recovery Profit/Loss Revenue Cost Recovery Profit/Loss
Medicare 40.9% $54,113,846 $58,186,931 93% -$4,073,085 44.8% $57,941,198 $52,147,078.50 90% -$5,794,120Medicaid 17.2% $22,756,923 $25,569,576 89% -$2,812,653 17.2% $22,245,282 $19,130,942.09 86% -$3,114,339
Private Insurance 30.5% $40,353,846 $28,219,473 143% $12,134,373 20.5% $26,513,272 $31,815,925.87 120% $5,302,654
Exchange Insurance 0.0% $0 $0 0% $0 7.5% $9,699,977 $10,669,975.14 110% $969,998
Self Pay 4.9% $6,483,077 $7,367,133 88% -$884,056 3.5% $4,526,656 $3,983,457.39 88% -$543,199Worker's Comp 2.0% $2,646,154 $2,845,327 93% -$199,173 2.0% $2,586,661 $2,405,594.40 93% -$181,066
Other 4.5% $5,953,846 $5,953,846 100% $0 4.5% $5,819,986 $5,819,986.44 100% $0
100.0% $132,307,692 $128,142,286 103.3% $4,165,406 100.0% $129,333,032 $120,152,973 -7.1% -$3,360,072
HIE’s and The Cost of HealthcareHIE’s and The Cost of Healthcare
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Health Insurance Exchanges
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■ Must purchase insurance as of 2014 or pay tax penalty based upon Federal Poverty Level
■ Average tax penalty estimated to be $1,200 in 2014■ Penalty less than cost of insurance – opt out? (and still use your ED for
primary care*)■ If insurance price is 9.5% of individual’s AGI, then it’s “affordable”
■ Leads to creation of Healthcare Insurance Exchanges■ Web based selection and purchasing similar to travel web sites■ Insurance rates set by FPL■ Three tiers of plans based on coverage: gold, silver, bronze■ Insurance payers will look to new Medicare rates*See 1/23/13 Patient Friendly e-Bulletin for methods of directing non-urgent ED patients to most
appropriate cost care-setting
Reform’s Mandatory Insurance
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What Will Employers Do?
What Will Employers Do?
Companies asking…•Cost?•Which employees have
to be covered?•Ramifications if certain
employees not covered?
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Notes: Health insurance premiums and worker contributions are for family premiums based on a family of four.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2011. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2011. Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2011 (April to April).
Cumulative Increases in Health Insurance Premiums, Workers’ Contributions to Premiums, Inflation, and Workers’ Earnings, 2000-2010
Every Year Since 2000:
Premiums increased between 3 - 13% Earnings increased between 2 - 4% Workers’ contribution: inflation = 5.4x Workers’ contribution: earnings = 4.1x
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Hospital Margins Continue to Fall
Source: Thompson Reuters Action Database 2012
• 750 hospitals studied for 6 years• Hospitals included: major teaching;
teaching; large, medium and small community
• All hospitals in the study had margins between 2.9% and 6.8%
• Major teaching hospitals had the highest profit margins
• Medium community hospitals struggled the most
Cost of U.S. Healthcare
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■ 17.9% of U.S. GDP was spent on healthcare in 2010■ Healthcare is of growing importance on U.S. economy – S&P Dow Jones
Indices replaced Kraft Foods with UnitedHealthcare■ Pressure to bring down healthcare costs as a result of an aging
population■ Extra spending isn’t resulting in longer life expectancies in U.S.
Just the Facts…
Source: Reuters, September 23, 2012
Currently averaging $8,525
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US Healthcare Costs Per Capita
What to Do?What to Do?
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What Does It All Mean to You?
Industry
Stress from the unknown
Increased burden on patient
Higher deductibles / co-pays
Financial
Increasing cost to collect
Cost shift to front-end focus
Costly technology
Business Office
Need to do more with less
New billing requirements/carriers
Large shift/volumes to balance after
insurance
Costly hiring, training, re-hiring
Reporting, processes
Technology
Multiple systems / platforms
System conversions
Data is not information (analytics,
dashboards, scorecards, KPI)
Typical Challenges…
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Factors You Are Faced With…
■ Identify cost to collect (↓AR, ↑Cash)
■ Opportunity costs: what is going untouched? Any low-hanging fruit?
■ Staffing, training, turnover, re-training
■ Tools: Charity Care / Scoring / Segmenting
■ Workflow technology to handle volume and increase efficiencies
■ Reporting requirements
What’s Your Best Path to Meet the Challenges?
Patient-Friendly Collections: In-House Versus Outsourced
Sept 17, 2012 HFMA Patient Friendly Billing e-Bulletin
Cleveland Clinic and Integris
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■ Collecting patient $ is a delicate balance■ Must be patient-friendly/centered■ Patients do not distinguish between excellent care
and collection post-service (must be seamless)
http://www.hfma.org/Publications/E-Bulletins/Patient-Friendly-Billing/Archives/2012/September/Patient-Friendly-Collections--In-House-Versus-Outsourced/
What Is HFMA Saying? Buy or Build: Same Issues and Goals
Taking the Right Approach in Outsourcing
August 2012 – hfm Magazine
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What Else Is HFMA Saying?
■ Finding the right partner:
■ Seamless integration
■ Deep and current experience
■ Broad capacity
■ Patient-centered orientation
■ Cost considerations
■ The right monitoring tools
■ Running a pilot
■ Systematic monitoring
■ Strategies behind outsourcing:
■ Seizing improvement opportunities
■ Remedying staffing inefficiencies
■ Servicing noncore areas of hospital
operations
■ Accessing the latest clinical and
business technologies
■ Taking advantage of the benefits of
outsourcing specialization
■ Seizing investment opportunities
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Crossroad: Buy or Build? (Where Are You?)
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Continuously Measure A/R Outcomes - ScorecardDescription Measurement
Medical Records Days
Corrected Codes Days
System Up Time %
Front-end Accuracy %
DNFB Days
Billing Days
Cash Posting Days
Credit Balances Days
Late Charges Days
Description Measurement
Cash as % of NPR %
Full Adjudication %
Rebilling Days
% of AR Greater than 90 %
Bad Debt Write Off %
Denial Rate %
AR Follow-up by FC Days
Feedback Loop Monthly
Call Center Complaint Rate %
Call Center Answer Rate Minutes
Call Center Wait Times Minutes
Call Center Hold Times Seconds
Call Center Abandon Rate %
Staff Quality Assurance Weekly
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Developing and Keeping Top Revenue Cycle Talent
Healthcare Finance Strategies – October 17, 2012
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■ Demonstrate that accountability starts at the top (you!)■ Culture that prioritizes the revenue cycle – provide a
clear vision for achieving high performance■ Reward those that excel – link advancement opportunity
to achievement of revenue cycle goals■ Specific, measurable, attainable, relevant, timely■ Incentive payments to those that meet certain KPIs
Top 5 Takeaways from HFMA’s 2012 MAP Award Winners (High Performance in Revenue Cycle)
HFMA MAP Takeaways
Don’t Forget the Patient!Don’t Forget the Patient!
The patient (aka, your #1 asset) is still experiencing…
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■ Shift to high-deductible consumer directed health plans (2009 = 7%; 2013 proj. 19% (2012 = 17%). Avg. $1,200 vs. $2,400 deductible). Source: National Business Group on Health, October 2012
■ Increased out-of-pocket maximums
■ Increased share of premium costs
■ Cutting back / delaying medical care
Despite Health Care Reform and Its Unknown Implications
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Is This a Patient-Centric Approach?!
Is This a Patient-Centric Approach?!
Courtesy, Compassion and Respect
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■ When making any contact with the patient – smile (on the phone too!)
■ This may be the first time a patient has received a phone call from you or your outsource partner
■ Accurate patient information (including your understanding of patient’s ability to pay) is a key to collecting payment
What’s Required?
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“There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”
-Sam Walton, Founder of Wal-Mart
Who’s the Boss?!
……And Finally…And Finally…
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Identify all high margin (or any margin) procedures
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■Look at any procedures that are profitable at your hospital■ Break down to CPT codes■ Examine what makes those procedures profitable
■ Insurance, cost of equipment, labor costs?■Duplicate success in procedures involving illnesses with projected growth■Physician Alignment (3/6/13 HFMA’s Healthcare Finance Strategies)…
4 Steps …
1) engage physician leaders as partners
2) employing specialists of choice
3) improving care coordination
4) measuring the results■Maximize Self Pay Collections
Now What?
Individual health will drive personal cost
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■ Healthy lifestyle contract with employer or insurance company■ Health Plan assessment including…
■ Blood pressure■ Body Mass Index■ Cardiac health■ Detrimental personal consumption (smoking, alcohol)
Motivating Americans to be healthier will = COST CONTROL
A Look Ahead
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■ Moving to a very different model – quality based reimbursement vs. fee for service
■ Reduced Reimbursement■ Self Pay problems remain■ Consumer Driven, Market Driven■ Less Employees?■ Physician shortage – Primary care■ Less Utilization? ■ Quality?■ Forced to cut costs – fewer employees■ Prevention and Wellness
Impact Summary
5 Things to Remember…
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What Will Make You Great
Conviction Must be all-in
Flexibility and Nimbleness No crystal ball in healthcare…stay loose
Calm Demeanor Staff is going to be looking at you Say “we can work this out” often
Willingness to understand clinical perspective Quality, patient satisfaction, and safety depends on it
Ability to think long term Redirect frustration with long term focus Sense of humor - makes people more comfortable, more trusting, more willing
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Studies have shown that one of the most significant factors leading to successful change is how leaders manage people. And studies have also shown that failure can most likely be contributed to our natural reluctance to change. Change is the only way to slow or reverse the financial pressures on hospitals
and we are all going to have to begin providing value based products rather that relying on volume based products.
■ Forecast/Model – Now!■ Examine Service Lines■ Community Education – Prevention & Wellness■ Physician Partnering■ Must Cut Costs■ Staff Training & Education■ Leadership■ Strategy for Self Pay■ Quality Measurements■ Clinical Efficiency
Action/Takeaways
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Who Moved My Cheese? Just Ask Jack
“An organization's ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage.” - Jack Welch, Former Chairman of
General Electric
