All Entries Tagged With: "reimbursement"
Will readmission reduction hurt your hospital’s bottom line?
The Hospital Readmission Reduction Program (HRRP) will reduce reimbursement to hospitals with high readmission rates to encourage them to prevent patients from returning after discharge. However, a new study suggests that hospitals will see an even bigger reduction in reimbursement if they experience fewer readmissions.
The issue is simple math. The current system pays hospitals for episodes of care. If hospitals reduce their readmissions they will have fewer episodes to bill. Fewer bills mean less reimbursement.
Brett Stauffer, MD, and colleagues, is the author of an Archives of Internal Medicine report, which examines the financial impact of reducing heart failure readmissions at a community hospital in Garland, TX. Although the hospital reduced preventable heart failure readmissions by 48%, it also lost an average of $751 for each heart failure patient. The authors estimated that the HRRP will reduce the hospital’s negative financial impact, but by only 10%.
The study raises an interesting question. Although reducing hospital readmissions will save money for Medicare and other payers, what does it mean for hospitals?
“While we are not-for-profit entities, at the end of the day we still have to make payroll,” Stauffer told HealthLeaders Media. “We have bills to pay and have to maintain enough margin to pay for capital expenses, build new facilities and keep them updated, and that’s got to be paid for by somebody,” he said.
The hospital, which does not admit a large number of CHF patients, will continue its efforts to reduce readmissions because it is the right thing to do, said Stauffer. Other hospitals may share this perspective. The report seems to suggest that providing hospitals an incentive might require moving away from a pay-per-episode model and rewarding hospitals for positive outcomes. The Value-Based Purchasing program final rule may prove to be a step in that direction. Stay tuned.
CMS publishes IPPS proposed rule for 2012
Editor’s note: This blog by Kimberly Anderwood Hoy, director of Medicare and compliance at HCPro, Inc., first appeared on the Medicare Mentor blog.
On April 20, CMS put on display the proposed rule for IPPS services and other inpatient initiatives for 2012. This year’s proposed rule contains the widest variety of inpatient clarifications and initiatives we’ve seen in a number of years. It contains something for everyone, from the finance/accounting departments to the quality department, not to mention the coders and billers.
The proposed rule this year contains a proposed payment reduction of nearly half a billion dollars compared to payments in 2011. This reflects a controversial documentation and coding adjustment of -3.15%. This is greater than expected, although CMS indicates that it is required to recoup 3.9% and will recoup the remaining .75% in the future to avoid too great an impact on hospitals in 2012.
The documentation and coding adjustment is supposed to recoup increases in payments due to better coding and documentation, unrelated to real increases in the complexity of patients. However, it’s unclear whether CMS appreciates the increased use of observation in hospitals, resulting in less complex patients being taken out of the inpatient case mixes, causing case mixes to increase related to more complex patients rather than coding and documentation changes.
The proposed rule also includes some new quality initiatives, including a new proposed HAC for contrast-induced acute kidney injury and information on the readmission project required by the health care reform laws (PPACA). The new HAC works slightly differently than existing HACs because it will be triggered by the combination of the diagnosis code 584.9 (acute kidney failure, unspecified) and a procedure code for a diagnostic service using contrast (specific codes are listed in the rule). Current HACs require only the presence of a diagnosis code.
The hospital readmission reduction program will be implemented by an adjustment factor for excess readmissions that will apply to a particular hospital’s DRG base amount. The adjustment factor can be no more than 1% in FY2013, the first year the program will be implemented, and will be phased in until the full adjustment factor of 3% is reached in FY2015. The factor will be based on the excess readmission ratio for each hospital for applicable conditions, defined as acute myocardial infarction, heart failure, and pneumonia in FY2013, and may be expanded by four additional conditions by FY2015. The readmission timeframe is specified as 30 days, and there are exclusions for readmissions unrelated to the original diagnosis, as specified by the National Quality Forum monitoring of readmissions for these three conditions.
Finally, of note, are a number of “clarifications” to existing policies. These should always be read carefully, even if you believe you understand the policy, because simple “clarifications” have all but turned some areas in hospitals upside down recently. The most significant of these clarifications, operationally, is related to the three-day payment window. CMS clarified that the payment window applies to non-provider based, wholly owned or operated physician offices, i.e. hospital-owned freestanding physician practices. At one point during the hospital open door forum, CMS stated that only provider-based locations were included, but there was conflicting authority in a 1998 Federal Register. CMS now states this Federal Register is the correct interpretation of the statute, specifically applying the rule to non-provider-based hospital-owned practices.
Although the rule excludes the professional portion of services in these locations, the overhead portion of these services are included, meaning the hospitals would have to include the overhead on the inpatient claim and the physician’s claim would have to be reimbursed at the lower facility amount. It is unclear how this overhead should be calculated or how the payment reduction to the physician’s payment will be made. CMS indicated it will issue further clarifying instructions in the physician fee schedule proposed rule in August. In the interim, hospitals should apply three-day payment window logic to the diagnostic and non-diagnostic services at any freestanding practices they own. Additionally, I would recommend that these cases are tracked internally until the physician fee schedule rule is issued to ensure hospitals have the information for billing or rebilling the physician portion, as appropriate, under the new guidance in that rule.
Other clarifications that hospitals should consider reviewing include clarifying that IME and DSH provisions don’t apply to hospice patients, clarifying that routine services such as room and board may not be provided “under arrangements” with another provider, and clarifications to the threshold for discounts to devices that must be reported for payment reduction.
As I said, this rule has something for everyone, and some of the proposals are significant and hospitals would be well served to begin to prepare now. Additionally, some proposals will have a significant negative impact and hospitals may wish to comment to CMS on that impact in the hope that CMS will change or mitigate some of its proposals.
Understanding semi-automated RAC reviews
Editor’s note: The following post originally appeared on the Revenue Cycle Institute website.
Providers familiar with automated claims reviews and complex claims reviews by recovery audit contractors (RAC) now face another method of overpayment identification—the semi-automated claims review.
Semi-automated review is essentially a hybrid of the automated and complex methods of overpayment identification recognized in the RAC statement of work. CMS divides this new review process into two parts.
The first involves automated review of claims data to identify billing aberrations with a high index of suspicion of improper payment.
“The first part of the new process is essentially the data mining the RACs have done all along using their proprietary systems, and is very similar to automated reviews,” says Kimberly Hoy, JD, CPC, director of Medicare and compliance at HCPro, Inc.
“The only exception being that identified claims only contain possible errors, rather than assumed errors, as in a standard automated review,” she says.,
The second part includes a notification letter sent to the provider explaining the potential billing error and giving the provider 45 days to submit documentation to support the original billing, according to CMS. This is the same time frame for submitting documentation for claims selected for complex review.
Semi-automated reviews may lead to additional burdens for providers, says Elizabeth Lamkin, MHA, partner/CEO at Pace Healthcare Consulting, LLC, in Hilton Head Island, SC.
“We’ve known all along that automated reviews could turn into a complex review, and now they’ve added a formalized process,” she says. “This really emphasizes the risks of automated reviews because the RACs can scan unknown numbers of records for issues to be used for “mining vulnerabilities,” she says. “These could then become complex reviews and be used for identifying issues for extrapolation. This could be the tip of the iceberg as contractors become more sophisticated.”
Revenue Cycle Institute releases 2010 RAC Preparedness Benchmark Report
The results of HCPro’s second annual “RAC Preparedness Benchmarking Report” are in, and case managers continue to be a large part of RAC preparedness efforts.
A total of 459 providers responded to the survey, representing facilities of all sizes from each of the four RAC regions.
According to the results, many facilities have had minimal contact with their RAC. More than 50% of respondents have not had recoupments related to automated audits, and nearly 40% had not received a record request for complex audit.
Despite the lack of contact with RACs, a greater percentage of facilities have a formal RAC program; 90%. That’s up 20% from 2009. More than half of the respondents (63%) have also designated a RAC coordinator. The most common background for RAC coordinators is HIM/coding (29%), followed by case management (18%).
Looking toward the future, 41% of respondents said medical necessity and one-day stays are their main focus for RAC preparations going forward. Case managers play a key role in determining medical necessity and will no doubt continue to be a large part of RAC preparation efforts.
Download the entire “RAC Preparedness Benchmarking Report” at The Revenue Cycle Institute website.
Tailor discharge instructions to your patients’ needs
The issue of readmissions isn’t new, but the attention it’s receiving is. With new regulations, incentives for reducing preventable readmissions are not only aligned, but imperative for providers.
Preventing unnecessary 30-day readmissions is a complex issue. The solution should be formulated with evidenced-based best practices. Next, the team must identify those patients at greatest risk for readmission. Key success factors include the following:
- Effective communications between healthcare delivery team members
- Proactive discharge planning between the care team and the patient
- Customized discharge instructions that are meaningful to the patient’s unique needs and lifestyle
Communication is an obvious component of discharge planning. Caregivers may communicate the correct information repeatedly to patients, but if patients can’t comprehend or apply the information to their own situations, it’s like speaking another language.
We, as caregivers, should take time to read our patients’ body language. Is the patient engaged and connected to what we are sharing with respect to their discharge needs or are they more focused on having their IV access removed and securing a ride home?
Hospital staff must deliver discharge instructions in a way that the patient can comprehend and comply with. This may require being very creative, depending on the patient’s needs. Hopefully, a standardized technology solution will soon enable us to tweak discharge instructions based on patients’ learning levels and specific needs.
An innovative start – Before our time
In 1995, while serving as a Nursing Director for several inpatient units, I developed a unit based council (UBC) of 10–12 highly respected RN. The UBC ultimately became the decision-making body for the 32 bed nephrology inpatient unit of a large medical center. They obtained feedback from the unit’s staff and made decisions that best served the patients and met the needs of the staff, physicians, and other customers.
After we implemented other initiatives, for example, working with the physicians to change the time that vital signs were taken to minimize interruptions to the patients, it was time to address the high rate of readmissions. The organization didn’t have a case management program, so the UBC and I decided to convert a 0.8 RN fulltime equivalent position into an outpatient (OP) case manager role. After reading various articles regarding OP case management and disease management, the UBC and I drafted a job description and program goals. [more]
CMS announces RAC education calls, posts RAC video
The Centers for Medicare CMS is ramping-up its Recovery Audit Contractor (RAC) education efforts.
Earlier this month, CMS posted an internet video titled “Recovery Audit Contractor Program Overview (RAC 101)”.
In the video, Connie Leonard, director of the CMS Division of Recovery Audit Operations, and Commander Marie Casey, deputy director of CMS’s Audit Division, give an overview of the RAC program and answer questions from the audience.
CMS also announced it will hold a series of nationwide calls also titled RAC 101. These calls will take place as follows:
- April 28, 2010 1:00pm – 2:30pm EST: Nationwide RAC 101 Call, 1-877-251-0301
- May 4, 2010 1:00pm – 2:30pm EST: Nationwide RAC 101 Call for Home Health and Hospice Providers, 1-877-251-0301
- May 5, 2010 1:00pm – 2:30pm EST: Nationwide RAC 101 Call for DMEPOS, 1-877-251-0301
- May 12, 2010 1:00pm – 2:30pm EST: Nationwide RAC 101 Call for Physicians, 1-877-251-0301
View the RAC 101 video on YouTube.
For all the latest RAC information visit the Revenue Cycle Institute.
Medical necessity—It’s a physician thing
Medical necessity for inpatient hospitalizations—or lack thereof—is a contentious topic that case managers face on a daily basis. The patient’s clinical presentation to the ED, severity of illness, physician assessment, or proposed plan of care does not always establish medical necessity.
When the patient meets the parameters of medical necessity at admission, he or she often reaches medical stabilization, thus meeting criteria for safe discharge. However, physician resistance can sometimes stand in the way of an appropriate discharge. Physicians may wish to watch the patient an additional day or may acquiesce to a patient’s desire to stay one more day.
Competing forces
While case managers and physicians have long battled over adherence to reasonable standards of medical necessity, several factors have made promoting efficient use of hospital resources through physician education all the more important:
- Dwindling third party-payer reimbursement
- More aggressive insurance company nurse reviewers
- Increasing numbers of uninsured or underinsured patients presenting to the hospital
However, competing financial incentives make it challenging for case managers to instruct physicians to adhere to medical necessity standards and use resources efficiently.
Physicians receive payment for their evaluation and management (E/M) services, while placing providers at financial risk through the admission and continued stay process, regardless of medical necessity. Physicians account for up to 20% of the healthcare dollar expenditures through face-to-face patient encounters. They also account for up to 90% of dollar expenditures through orders for services such as home health, physical therapy, and radiology and laboratory tests. [more]
Understanding CERT helps address clinical documentation deficiencies
Persuading physicians to document thoroughly and effectively is often a lesson in futility. Physicians have a natural instinct to believe they are either doing a proficient job of documenting or assert that they are too busy to document more than what is currently in the record. The physician typically does not recognize that this viewpoint can significantly impact his or her finances.
There appears to be a misconception in physicians’ minds that clinical documentation is for the benefit of the hospital in MS-DRG assignment. However, nothing can be farther from the truth. Physicians are subject to increasing numbers of pre- and post-payment audits in an effort to circumvent the “pay and chase” payment process that currently exists for paying physician service claims.
A Medicare initiative that immediately comes to mind is the Comprehensive Error and Review Testing (CERT) Program. Under the CERT program, CMS selects a random sample of claims from each Medicare contractor and requests medical records from the providers who submitted those claims. These records are then reviewed to determine if the claim was submitted and paid appropriately.
CMS utilizes two contractors for the request and review of medical records: the CERT Documentation Contractor (CDC) and the CERT Review Contractor (CRC). The CDC is responsible for requesting and obtaining the medical records. The CRC reviews the supporting documentation for compliance with Medicare coverage, medical necessity, coding regulations, and billing rules.
Addressing mental health issues improves patients’ physical health
Only five percent of the patient population is complex, yet they account for more than half of healthcare costs, according to Cartesian Solutions, Inc.™. Of that five percent, two-thirds have concurrent mental and physical health issues.
Poor communication between physicians who treat physical issues and providers who treat mental problems can cause complex patients to consume more resources. The lack of communication is due to the reimbursement model; it pays for physical treatments and mental treatments separately
Before the advent of managed care, physicians managed a patient’s physical and mental health problems. Some physicians owned treatment centers for the treatment of alcoholism, eating disorders, and other behavioral health issues, says Rebecca Perez, RN, CCM, CPUM, president and owner of Carative Health Solutions. However, payers realized that those resources were abused and have separated physical and mental health reimbursement, thereby limiting access to mental health treatment.
Limited access has caused a segment of the patient population to remain untreated, potentially causing them to seek more physical health treatment, thereby consuming more resources.
Perez is part of a growing movement addressing that issue by striving for a more integrated care management model that assesses patients’ physical and mental health issues simultaneously.
“The thinking is coming full circle again where we need to treat the patient as a full person and not a disease,” says Perez.
Perez and Roger G. Kathol, MD, CPE, president of Cartesian Solutions, Inc.™, train case managers to assess a patient’s mental health as part of their interaction with that patient. This enables case managers to ensure the patient’s plan of care includes services that address the patient’s behavioral and psychological needs.
Recognizing how patients’ mental health can contribute to their physical health will go a long way in preventing readmissions, improving patient satisfaction, and enhancing overall quality of care.
Case Management Monthly will cover this topic in more detail in the April issue.
Medicare helps beneficiaries understand level of care
In December 2009, CMS released an informative pamphlet for Medicare beneficiaries that explains how level of care determinations affect Medicare reimbursement.
The document, titled Are You a Hospital Inpatient or Outpatient? If You Have Medicare – Ask!, provides basic level of care information. The document uses common hospital scenarios to show the difference inpatient status and outpatient status and what that means to the patient’s wallet. The pamphlet also explains how level of care determination can affect the patient’s SNF coverage.
Beneficiaries also learn about their guaranteed rights and who they can contact if they have questions, concerns, or grievances.
The information may seem basic to most seasoned case managers, but it could be a useful educational tool for those who frequently explain level of care to patients.
