Optimizing your revenue cycle management process is a key component for addressing a multitude of industry trends such as changes in regulations, consumerism and new reimbursement structures.

Today’s patient centric revenue cycle requires the right systems to drive performance; however, employing systems based solely on their robustness does not guarantee success.  Optimal financial performance is only achieved with a careful balance of people, processes and technologies.

Revenue cycle performance in healthcare is particularly challenging due to the complex nature of services to be billed, the large number of employees contributing to the process, the array of systems and tools used to process billing, the evolving interactions with patients and their growing payment liabilities due to an increased responsibility for the costs of care.

Performance Metrics and Sustainability

The revenue cycle can be broken down into two main areas: pre-service or what is considered financial clearance and post-service, typically referred to as financial settlement.  These functions include registration, bill estimation, case management, discharge billing, post-service billing reconciliation and collections.

Revenue cycle performance in these domains is only sustainable with unremitting efforts to maintain accuracy and measure performance.  Identifying and measuring overall outcomes offers general benchmarking information but is not actionable.  Adjusting revenue cycle activities for optimal outcomes are required with the specific actions that should be pursued.  The foundation for best practice revenue cycle management begins with selecting metrics based on existing best practices.  These best practices should present guidelines for the most efficient or prudent course of action and reflect the preferences and financial priorities of the organization.

Revenue cycle metrics can be broken down into two types: operational and strategic.  Operational performance metrics require consistent monitoring and should provide ample information to drive operational improvement and quality, and validate sufficient progress toward workflow goals.  Strategic metrics comprise financial, operational, customer service and quality measures that give executives a high level overview and track trends by month or current fiscal year.

High-performing healthcare organizations that operate best practice revenue cycles use the revenue cycle to continually enhance their day-to-day operations and improve patient experiences and financial recoveries.  These best practices give organizations looking to make positive changes in revenue cycle management numerous areas in the revenue cycle on which to focus their attention.

25 Keys to Patient-Centric Revenue Cycle Performance

Today’s healthcare environment of increased regulations, growing patient payment liability, and risk-based pay-for-performance models and diminishing reimbursements necessitates revenue cycle strategies that meet industry standards.  From pre-schedule to accounts receivable payment and cash posting, revenue cycle processes must be aligned in order to secure proper reimbursement from payers and patients.  The following are 25 Keys to a Patient-Centric Revenue Cycle which, when implemented, will drive positive financial results and improve the patient’s overall experience.

  1. Implement an all-encompassing strategy that measures collection goals, workflow benchmarks, policy adherence and key performance indicator milestone attainment.
  2. Post and communicate to patients the hospital’s financial assistance, discount and prompt payment policies.
  3. Remind patients of their payment obligation and attempt to collect the patient portion when performing appointment scheduling confirmation calls.
  4. Educate patients to be prepared to pay for services upon arrival at the hospital or clinic.
  5. Utilize integrated scheduling and registration tools to handle patient visits and accurately move patients through the billing process.
  6. Use a registration quality and scoring technology to accurately classify self-pay patients at point of service to improve collections.
  7. Employ real-time technologies that notify registration staff of Red Flags Rule irregularities and fraud alerts.
  8. Help patients understand what they will owe at pre-registration, registration and patient check out with an effective bill estimator.
  9. Partner with a vendor who offers a cost-effective, unlimited-use real-time insurance eligibility verifying program to check eligibility of patient accounts at any point throughout the revenue cycle collection process.
  10. Introduce a comprehensive program to help patients apply and qualify for various state and federal financial assistance programs.
  11. Install a web-based patient intelligence platform to analyze real-time workflow performance.
  12. Leverage call center technology to manage call volumes, improve customer service, improve time efficiencies and increase first call resolutions.
  13. Post patient financial services staff in the emergency department to collect co-pays, deductibles and self-pay balances.
  14. Collect a pre-determined deposit from emergency room patients during quick registration and reconcile total estimated payment due through a bill pay estimator.
  15. Preauthorize credit cards and checks at the time of scheduling, registration or any other collection checkpoint.
  16. Apply a self-pay point of service collection strategy for collecting previous and current balances.
  17. Use a self-pay collection scoring technology that creates workflows through algorithms that estimate the ability and propensity of payment.
  18. Implement a self-pay charity scoring workflow that estimates charity and financial discount write-offs before bad debt placement.
  19. Use an integrated scanning technology to maintain accuracy while improving the identification and proper storage of patient records.
  20. Implement an advanced technology to collect credit card, debit card and Automated Clearing House (ACH) payments.
  21. Offer a web-based payment portal for patient bill pay.
  22. Implement e-cashiering to give patients additional options to pay.
  23. Utilize a predictive dialer that blends inbound and outbound calls, closely monitors right-time calling analytics and sends out-patient friendly statements.
  24. Provide ongoing face-to-face and web-based collection and customer service training with the goal of ensuring that all self-pay patients are treated with respect, dignity and professionalism.
  25. Offer continuous training programs to educate staff on their responsibilities.

An important part of any well-balanced and productive revenue cycle is ensuring that there is a clear understanding of how to serve the patient and meet their wants and needs so that their healthcare encounters are less stressful and more clinically productive.  Closing the revenue cycle loop with patient satisfaction surveys gives healthcare stakeholders the feedback required to build and operate an efficient and patient-friendly revenue cycle.

Summary

To maximize revenue cycle efforts, healthcare organizations need suitable technology, adequate internal work processes, experienced people and appropriate metrics.  Without these pillars, organizations will struggle to operate efficiently.  Focusing inward on revenue cycle best practices is crucial for maintaining operational excellence without losing sight of the impact of a positive patient experience on revenue cycle performance.

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Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog and serves as the Vice President of Marketing Strategy for MiraMed, a healthcare revenue cycle outsourcing company.  As an executive leader, he is responsible for creating and executing sales and marketing strategies which drive new business development and client engagement. Phil has over 25 years’ experience consulting on a broad range of healthcare initiatives for clinical and revenue cycle performance improvement.  He has worked with industry’s largest health systems developing executable strategies for revenue enhancement, expense reduction, and clinical transformation. He can be reached at philcsolomon@gmail.com

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The Centers for Medicare and Medicaid Services has estimated that the House-passed American Health Care Act (AHCA) would reduce insurance coverage by 13 million people by 2026—10 million less than the Congressional Budget Office’s (CBO’s) prediction.

The actuary estimated that average net premiums paid by consumers in the individual insurance market in 2026 would be about five percent higher than under current law, and that average cost-sharing amounts would be about 61 percent higher.  These approximations represent a marked difference from the CBO’s estimates.

The CMS report estimated the AHCA would reduce federal Medicaid spending by $383.2 billion from 2017 through 2026.  The cost reductions would come mainly from repealing the Affordable Care Act’s (ACA’s) Medicaid expansion to low-income adults.  That is far less than the $834 billion in Medicaid cuts projected by the CBO.

Which organization’s estimate (the CMS or the CBO) will be the closest to the correct number when the analysis period is completed?  It is hard to tell.  Neither organization’s analysis on other projections has proven to be infallible.  In fact, both organizations’ estimates have historically been incorrect.  Performing forward flow financial analysis estimates is extremely difficult, even with granular data.  Market dynamics and changing conditions can have a material impact on the assumptions made in all projections making accurate budgetary estimates for legislations virtually impossible.

What is the CBO?

The CBO, established in 1974 is a nonpartisan government agency that reports economic and budgetary data to Congress.  The CBO was formed and signed into law by President Richard M. Nixon.  The goal of the CBO is to provide timely, accurate reports delivered in a nonpartisan and objective manner about proposed legislation and current law that concerns federal programs funded by U.S. taxpayers.  They also guide the Joint Committee on Taxation and the Department of Treasury regarding the fiscal considerations of legislation, as well as the national debt.

The CBO employs more than 230 professionals and maintains a departmental budget of approximately $47 million.  All positions within CBO, including the directorship, are hired without regard to an individual’s political affiliation, and all employees are expected to remain expressly nonpartisan.

The CBO director is a joint appointment from the Speaker of the House of Representatives and the President Pro Tempore of the Senate.  The director is appointed to a four-year term.

CBO’s Projections for the AHCA

The CBO reported on the cost and coverage impact of the House Republicans’ bill to repeal and replace the ACA.  The following are 15 key projections compared to the current law:

  1. Reduce the cumulative deficit by $119 billion by 2026; the prior version of the AHCA would have cut the deficit by $150 billion.
  2. Increase the number of uninsured by 14 million in 2018, growing to 23 million by 2026; the previous bill would have raised the number of uninsured by 24 million in 2026.
  3. Result in a total of 51 million uninsured in 2026, compared with 28 million under current law.
  4. Significantly increase the number of uninsured among people ages 50 to 64 with income under 200 percent of poverty.
  5. Lower federal Medicaid spending by $834 billion over ten years.
  6. Reduce the number of people on Medicaid by 14 million in 2026, a 17 percent decrease.
  7. Save $290 billion over ten years by replacing the ACA’s premium and cost-sharing subsidies with less generous age-based premium tax credits, reducing spending from $665 billion to $375 billion.
  8. Increase Medicare disproportionate-share payments to hospitals by $43 billion over ten years due to a jump in uninsured patients.
  9. Prompt states where half the U.S. population lives to seek waivers from the ACA’s individual insurance market rules on minimum essential health benefits, use of pre-existing conditions for setting premiums and guaranteed issue.
  10. Reduce individual-market premiums in states that did not seek waivers by about four percent in 2026, mainly because younger, healthier people and fewer older, sicker people would buy coverage.
  11. Create individual-market instability in states seeking fuller waivers where one-sixth of the U.S. population lives; premiums for people seeking to buy comprehensive plans would become unaffordable.
  12. Reduce individual-market premiums overall while sharply increasing premiums for older, low-income people.
  13. Substantially increase out-of-pocket costs for people in states that waived ACA requirements on essential health benefits, particularly for maternity, mental health and substance abuse services.
  14. Prompt a few million people to use premium tax credits to buy plans that don’t cover major medical costs.
  15. Result in four million more people in employer-based health plans by 2026, mainly because employers would see the individual market as a less desirable option for their workers.

What is the CMS Office of the Actuary?

The CMS Office of the Actuary (OACT) annually produces projections of healthcare spending for categories within the National Health Expenditure Accounts.  These projections track health spending by source of funds (for example, private health insurance, Medicare, Medicaid), by type of service (hospital, physician, prescription drugs, etc.), and by the sponsor (businesses, households, governments).  The latest projections begin after the latest historical year (2015) and go through 2025.

The OACT is led by Chief Actuary Paul Spitalnic.  He is responsible for meeting the functional responsibilities of the OACT.  Those responsibilities include:

  • Conducting and directing the actuarial program for CMS and directing the development of and methodologies for macroeconomic analysis of healthcare financing issues.
  • Performing actuarial, economic and demographic studies to estimate CMS program expenditures under current law and proposed modifications to current law.
  • Providing program estimates for use in the President’s budget and reports required by Congress.
  • Studying questions concerned with financing present and future health programs, evaluating operations of the Federal Hospital Insurance Trust Fund and Supplementary Medical Insurance Trust Fund and performing microanalyses for the purpose of assessing the impact of various healthcare financing factors upon the costs of federal programs.
  • Estimating the financial effects of proposals to create national health insurance systems or other national or incremental health insurance reform.
  • Developing and conducting studies to estimate and project national and area health expenditures.
  • Developing, maintaining and updating provider market basket input price indexes and the Medicare Economic Index.
  • Analyzing data on physicians’ costs and charges to develop payment indices and monitor the expansion of service and inflation of costs in the healthcare sector.
  • Performing actuarial reviews and audits of employee benefit expenses charged to Medicare by fiscal intermediaries and carriers.
  • Publishing cost projections and economic analyses, and providing actuarial, technical advice and consultation to CMS components, governmental components, Congress and outside organizations.

CMS Estimates for the AHCA

The OACT has estimated the financial and coverage effects through 2026 of selected provisions of the AHCA (H.R. 1628), which was passed by the House on May 4,2017.  Here are ten key estimates listed in the OACT estimated impact report.

  1. CMS estimated there would be eight million fewer people covered by Medicaid in 2026 compared with current law.  The CBO projected a Medicaid coverage decline of 14 million by 2026.
  2. The CMS actuary said the AHCA would reduce federal spending by $328 billion over ten years, mainly due to lower Medicaid expenditures.  The CBO projected that the bill would reduce federal deficits by $119 billion.
  3. CMS estimates there will be fewer insurance coverage losses than those projected by the CBO. However, those losses could be in the millions.
  4. By 2026, the CBO says 43 million people would be uninsured, compared with 31 million estimated by the CMS.
  5. The CMS actuary predicted that 25 percent of states would seek waivers under the AHCA from Obamacare’s requirements that all insurers offer essential health benefits and not consider applicants’ pre-existing conditions in setting premiums.
  6. The OACT said it is possible that such waivers “could result in a deteriorating or possibly failing market depending on how a state chose to implement the waiver.”
  7. That is consistent with the CBO’s prediction that waivers could create instability in the individual insurance market, make premiums unaffordable for people seeking to buy comprehensive health plans, and substantially hike out-of-pocket costs for people seeking maternity, mental health and substance abuse services.
  8. The AHCA’s per capita cap on total federal Medicaid spending would lead to a 0.5 percent cut per year in federal payments to the states, according to the actuary.
  9. The reduction from the per capita cap would total $64.9 billion over ten years, while the decrease from the repeal of Medicaid expansion funding would total $274.8 billion.
  10. Also, the AHCA would cause the Medicare Hospital Insurance Trust Fund for inpatient care to become insolvent in 2026, two years earlier than under current law.  That is because the AHCA would repeal the ACA’s additional Medicare payroll tax on wealthy Americans and increase Medicare disproportionate-share payments to hospitals for serving more uninsured patients.

Summary

The House Republicans and the White House are now waiting on the Senate Republican leadership to work out their differences on the latest release of a draft of its long-awaited healthcare bill.  The legislation—called the Better Care Reconciliation Act of 2017—would roll back much of the ACA, the healthcare law better known as Obamacare, including various tax provisions.

The Senate legislation contains key differences from the AHCA, the House GOP’s legislation to repeal Obamacare.  The differences could be sticking points if the two chambers have to compromise on the bill, which they would have to do before it could reach President Donald Trump’s desk.

The legislation faces an uncertain future as the Senate deliberates, and the House, the President and the people, wait impatiently to view the final results of the AHCA or Better Care Reconciliation Act.  Will the Senate gain enough votes to pass their legislation?  Only time will tell.

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Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog and serves as the Vice President of Marketing Strategy for MiraMed, a healthcare revenue cycle outsourcing company.  As an executive leader, he is responsible for creating and executing sales and marketing strategies which drive new business development and client engagement. Phil has over 25 years’ experience consulting on a broad range of healthcare initiatives for clinical and revenue cycle performance improvement.  He has worked with industry’s largest health systems developing executable strategies for revenue enhancement, expense reduction, and clinical transformation. He can be reached at philcsolomon@gmail.com

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Announcing New Webinar: HCC Reimbursement Strategies

Do you have risk-adjusted physician services contracts for your Medicare Advantage patient? Then read on…you may be leaving money on the table by missing proper and inaccurate HCC coding.

Don’t miss this opportunity to learn about risk adjusted HCCs and the strategies that will keep you in compliance and make sure that you maximize the reimbursement due to you.

Register today: HCC Reimbursement Strategies Webinar

You will learn:

  • Trends affecting the healthcare industry
  • What is risk adjustment HCCs and how are they reimbursed?
  • Why is risk adjustment important for compliance and reimbursement?
  • HCC types and programs
  • Calculating the financial ROI for properly identifying and coded HCCs
  • Strategies for HCC compliance and reimbursement improvement

Presenters:

Amber Broadwater – MBA, RHIA, LHRM, ICD-10 Trainer – Vice President of Client Services, Coding Division at MiraMed Global Services.

Phil C. Solomon – Vice President of Marketing Strategy and Thought Leadership at MiraMed Global Services

Save Your Spot – Register today: HCC Reimbursement Strategies Webinar

For more information, contact Phil Solomon at phil.solomon@miramedgs.com

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Medical billers and coders typically don’t make headlines but they are imperative to the success of any medical facility. Carrington College has submitted the following infographic which describes how the coding process translates from an encounter to billing of a claim.

Translating Care into ICD-10 Codes

There are over 140,000 codes used to denote different types of examinations, tests, and treatments a patient may receive when seeking medical care. The medical coder will know which ones to use at any given time, enabling providers to draw up bills without undue delay.

Working with Insurance Agencies

Medical billers handle the challenging task of creating claim requests for health insurance agencies. An appropriate claim enables insurance agencies to handle the paperwork in a timely manner, so that the patient can be informed about any out-of-pocket costs as soon as possible.

Medical billers and coders work for hospitals, clinics, private practices, and even the federal government. Their hard work, expertise, and dedication allow medical professionals to focus on the care of patients rather than administrative duties.

 

 

 

 

 

 

 

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Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog and serves as the Vice President of Marketing Strategy for MiraMed, a healthcare revenue cycle outsourcing company.  As an executive leader, he is responsible for creating and executing sales and marketing strategies which drive new business development and client engagement. Phil has over 25 years’ experience consulting on a broad range of healthcare initiatives for clinical and revenue cycle performance improvement.  He has worked with industry’s largest health systems developing executable strategies for revenue enhancement, expense reduction, and clinical transformation. He can be reached at philcsolomon@gmail.com

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MiraMed webinarJoin us for our upcoming free webinar:

Improve HCC Reimbursement with Risk Adjustment Coding Strategies

June 22, 2017 | 2 pm – 3 pm EDT

Register Now: Improve Reimbursement with Risk Adjustment HCC Coding Strategies https://attendee.gotowebinar.com/register/4600147017512814083?source=sm-1

Medicare Advantage makes up 31 percent of total Medicare spending, serves over 17 million enrollees and it is expected to double in size by 2024. The Medicare Advantage HCC model has become a lightning rod of interest among physicians and healthcare leaders.

A patient’s wellbeing requires proper clinical documentation and that requires correct coding to reflect accurate HCCs. Why wait until year end to review that you are capturing HCCs properly? This webinar will offer you the insight needed for proper documentation, compliance and revenue capture.

Learning Objectives:

  • Trends affecting the healthcare industry
  • What is risk adjustment HCCs and how are they reimbursed?
  • Why is risk adjustment important for compliance and reimbursement?
  • HCC types and programs
  • Calculating the financial ROI for properly identifying and coded HCCs
  • Strategies for HCC compliance and reimbursement improvement

Presenters:

– Amber Broadwater – MBA, RHIA, LHRM, ICD-10 Trainer – Vice President of Client Services – Coding Division at MiraMed

Amber is the executive leader in charge of all HIM, coding and auditing functions at MiraMed. For over a decade, Amber has held various positions throughout the revenue cycle continuum in administration, implementation, operations, product development, compliance and strategic planning for several of the largest healthcare companies in the industry. She has experience serving HHS, as a committee member on the Healthcare Technology Standards and Interoperability Framework and is an ICD-11 contributor for the World Health Organization.

– Phil C. Solomon – Vice President of Marketing Strategy and Thought Leadership at MiraMed

Phil is the publisher of Revenue Cycle News and serves as the Vice President of Marketing Strategy Services for MiraMed, a revenue cycle outsourcing company. He has over 25 years experience consulting on a broad range of healthcare initiatives for revenue cycle performance improvement by developing executable strategies for revenue enhancement, expense reduction, and clinical transformation.

Register Now: Improve Reimbursement with Risk Adjustment HCC Coding Strategies https://attendee.gotowebinar.com/register/4600147017512814083?source=sm-1

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The Centers for Medicare and Medicaid Service’s (CMS) Hierarchical Condition Category (HCC) risk adjustment model calculates risk scores, which will adjust capitated payments made for aged and disabled beneficiaries enrolled in Medicare Advantage (MA) and other plans.

The CMS-HCC model design uses two risk segments with separate coefficients to reflect the cost patterns of beneficiaries.  The community model represents those who live in the community less than 90 days as opposed to an institution.  Beneficiaries residing in an institution for 90 days or more fall into the long-term care category, which incurs an additional risk adjustment.  By design, both models predict healthcare costs for beneficiaries.

The CMS-HCC risk adjustment model looks at prospective data to predetermine the cost for the next year.  CMS pays a per-member per-month fee to the payer based on the prospective years’ risk scores.  Providers must identify all chronic conditions and/or severe diagnoses their patients have in a given year to substantiate a “base year” health profile for each patient that predicts costs in the following year.

The Path to Gaining Incremental Revenue

Few providers have the resources and are proficient enough in risk adjustment modeling to mitigate all of the compliance risks that they face.  This creates a problem for providers because there are significant dollars at risk for their enterprises.  In order to reduce risks, providers either hire expert HCC auditors as an internal resource or look to outside firms who are experts at executing risk adjustment and HCC auditing.  Many companies are capable of providing this

In order to reduce risks, providers either hire expert HCC auditors as an internal resource or look to outside firms who are experts at executing risk adjustment and HCC auditing.  Many companies are capable of providing this service however; the best practice approach is to work with a company who can guide provider’s to keep up with CMS’s requirements for compliance while monitoring healthcare outcomes.

It is important to maximize revenue and increase the bottom line.  HCCs are one area that can have an immediate positive financial impact for a provider. I recommend you look into HCC coding auditing to be sure you are being reimbursed accurately.  If you have questions, I can be reached at phil.solomon@miramedgs.com or at 404-849-8065.

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Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog and serves as the Vice President of Marketing Strategy for MiraMed, a healthcare revenue cycle outsourcing company.  As an executive leader, he is responsible for creating and executing sales and marketing strategies which drive new business development and client engagement. Phil has over 25 years’ experience consulting on a broad range of healthcare initiatives for clinical and revenue cycle performance improvement.  He has worked with industry’s largest health systems developing executable strategies for revenue enhancement, expense reduction, and clinical transformation. He can be reached at philcsolomon@gmail.com

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A physician’s responsibility is to provide the best possible care for sick patients.  A key for delivering quality healthcare is open communication between the physician and patient to discuss issues and develop a care plan.  Today, providing quality care is becoming more difficult due to increasing patient loads and administrative challenges.  This dilemma has become a catalyst for the growth of medical scribes (often referred to as scribes).

Scribes help physicians by documenting the patient encounter and retrieving diagnostic results, nursing notes and other information recorded in the patient’s electronic record.  The introduction of electronic health records (EHRs) has created an overload of documentation. The associated clerical responsibilities slow physicians down and take them away from one-on-one patient care.  To relieve their documentation overload, physicians have turned to scribe services for assistance.

The Rules Governing Scribes

Scribe companies operate with few requirements.  There are virtually no regulations required outside of the healthcare industry and the main bodies that regulate healthcare. The Centers for Medicare and Medicaid Services (CMS) and The Joint Commission (TJC), have no rules or guidelines that limit, endorse or prohibit the use of scribes.  TJC permits scribes to document previously determined and approved physicians’ dictation and activities but does not authorize scribes to act independently, except obtaining past family social history and a review of systems, a technique providers use to gain the patient’s medical history.  CMS does not provide official guidelines on the use of scribes and does not bar non-physician providers, such as physician assistants, nurse practitioners and clinical nurse specialists, from using scribes.

With few rules governing scribes, the value proposition for physicians is enticing; however, using scribes is not without risk.  When a physician is removed from a part of the care continuum, it opens the door to miscommunication that can negatively affect patient care.  Since the industry is minimally regulated, and with only a high school diploma required, scribes are not required to have medical backgrounds or to become certified.  That said, there is a potential for scribes to misinterpret a physician’s instructions and make documentation mistakes that would negatively affect patient care.  However, even with these risks, the industry segment has grown rapidly, and physician acceptance has been high.

The Role of a Medical Scribe

A medical scribe is a paraprofessional who specializes in charting physician-patient encounters in real time during medical examinations.  They are called clinical scribes, emergency room or emergency department scribes or just scribes.  A scribe can work on-site at a hospital or clinic or remotely from an HIPAA-secure facility.  Medical scribes who work at off-site locations are known as virtual medical scribes.

Scribes can generate referral letters for physicians, manage and sort medical documents within the EHR system, and assist with e-prescribing.  Essentially, scribes are data care managers who enable physicians, medical assistants and nurses to focus on patient intake and care.  By managing data for physicians in real time, scribes free the physician to spend more time with the patient and improve productivity.

A scribe must be trained in health information management technologies to support their work.  They follow a physician through their work day and chart patient encounters using a medical office’s EHR.  EHRs can be shared across various healthcare settings and made available through network-connected information systems or other information networks and exchanges.  They include an array of data, including demographics, medical history, medication and allergies, immunization status, laboratory test results, radiology images, vital signs and personal data, such as age, weight and billing information.

The role of a scribe entails more than shadowing a physician and capturing patient interactions. According to the American Healthcare Documentation Professional Group, scribes:

  1. Accurately and thoroughly document medical visits and procedures as they are being performed by the physician, including, but not limited, to:
  • Patient medical history and physical exam;
  • Procedures and treatments performed by healthcare professionals, including nurses and physician assistants;
  • Patient education and explanations of risks and benefits;
  • Physician-dictated diagnoses, prescriptions and instructions for patient or family members for self-care and follow-up; and
  • Referral letters as directed by the physician.
  1. Prepare referral letters as directed by the physician via dictation or summary of the medical record. Also, they ensure that letters are mailed or faxed on a daily basis to all physicians involved in a patient’s care, research contact information for referring physicians, coordinate referrals and prepare operative reports.
  2. Provide quality control oversight by spotting mistakes or inconsistencies in medical documentation. Since information documented in the medical record must be approved by a physician, scribes must ensure that all clinical data, lab or other test results and the physicians’ interpretation of the results are recorded accurately in the medical record.  Scribes must comply with specific standards that apply to the style of medical records and to the legal and ethical requirements for preparing medical documents and for keeping patient information confidential.
  3. Scribes collect, organize and catalog data for the physician quality reporting system (PQRS) and other quality improvement efforts and assist in developing and maintaining systems to track patient follow-up and compliance.

Physicians Cope with EHRs Added Administrative Tasks

In the 1980s computers became a mainstream addition to small business operations.  Physicians, typically operating as a small business, initially pushed back on the concept of using computers to help run their practices because of their cost, complexity and lengthy learning curve.  However, price compression and the creation of Windows-based, user-friendly interfaces quelled their concerns.  Small business computers became widely accepted by physicians to help them manage the vast demands of providing patient care.

During that same decade, computer systems for medical applications began evolving into fully automated EHRs.   EHRs became available to physicians to manage the clinical side of their businesses.  Like all computerized technologies, EHRs have experienced rapid transformation over the past 20 years. Improvements in the technology have greatly accelerated since the January 2009 passage of the Health Information Technology for Economic and Clinical Health Act (HITECH), a $30 billion effort to transform healthcare delivery through the widespread use of EHR technology.

For decades, physicians hoped EHRs would help them manage the overwhelming demands of practicing medicine.  Instead, for some physicians, EHRs have become more of a hindrance than a solution to the problem they set out to solve.

Today, the administrative tasks associated with EHRs are cutting into the physicians have to spend with patients. According to a time-motion study conducted by the American Medical Association (AMA) and published in the Annals of Internal Medicine (AIM), nearly half a physician’s work day is now occupied by EHR data entry.  Also, from 2011 to 2014, 54 percent of study participants said they experienced some signs of burnout, an increase of 46 percent over the three-year period. Today, the administrative and clerical burden of working with EHRs is widely recognized as a leading cause of physician burnout.

Physicians are coping with their new administrative duties, but they are not happy about it.  The demands of data capture with EHRs have become a real impairment to practicing medicine.  In 2004, only 20.8 percent of physician offices used EHRs.  As of 2015, nearly 9 in 10 (87 percent) of office-based physicians had adopted an EHR system.  The expansion of EHRs is not indicative of the satisfaction level of the physicians who use them.  A 2013 study, Factors Affecting Physician Professional Satisfaction and Their Implications for Patient Care, Health Systems, and Health Policy, published jointly in October by the AMA and RAND Corporation, found that EHRs were a major contributor to physician dissatisfaction.

The study indicated that for many physicians, the current state of EHR technology significantly worsened their professional satisfaction.  The factors associated with EHRs that were a common source of frustration included poor usability, time-consuming data entry, interference with face-to-face patient care, an inefficient and less fulfilling work environment, the inability to exchange health information and disintegration of clinical documentation.

Summary

The financial implications for the use of medical scribes in care delivery are substantial. Physician services are 21 percent of health expenditures in the U.S. and are the catalyst for the care cycle. They are highly compensated individuals who are being asked to do more with declining reimbursement.  Any change that improves physician productivity and efficiency (without impairing quality or physician or patient satisfaction) should have significant financial benefits for physicians, patients and the entire healthcare system.

EHRs enable the electronic documentation of diagnosis and treatment plans for patients.  They offer the ability to capture information that meets the requirements of meaningful use and value-based care reimbursement models.  Conversely, EHRs have added a new level of administrative burden on the physician’s shoulders that has taken a toll on physicians.  Scribes have rapidly emerged to relieve physicians of much of this administrative responsibility. Using scribes offers the opportunity to increase physician productivity and reduce job dissatisfaction and burnout.   The use of scribes could help physicians maximize the value of EHRs, improve their financial returns, and ultimately, enhance the quality of patient care.

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Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog and serves as the Vice President of Global Services for MiraMed, a healthcare revenue cycle outsourcing company.  As an executive leader, he is responsible for creating and executing sales and marketing strategies which drive new business development and client engagement. Phil has over 25 years’ experience consulting on a broad range of healthcare initiatives for clinical and revenue cycle performance improvement.  He has worked with industry’s largest health systems developing executable strategies for revenue enhancement, expense reduction, and clinical transformation. He can be reached at philcsolomon@gmail.com

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Interesting Facts About The Business of Healthcare

If you have a question about the hospitals and the healthcare industry, you will probably find the answer here.  This article will give you some interesting facts about the industry in 2017.

Healthcare makes up a large part of the Gross Domestic Product (GDP) in the US.  It is a monetary measure of the market value of all goods and services produced in a year is a primary indicator used to gauge the health of a country’s economy.  Healthcare’s economic system has a profound effect on business in America.

Healthcare spending increased 5.8 percent in 2015 to a total of $3.2 trillion, according to CMS’ Office of the Actuary.  Healthcare spending accounted for 17.8 percent of the (GDP) in 2015, up from 17.4 percent in 2014.  Compare that to healthcare spending in 1960, when the GDP was 5.2 percent and where total spending was just $27.5 billion. When broken down to the individual consumer level, between 1960 and 2014, healthcare spending in the United States increased from an average of $146/person per year to $9,532 (by 65 times).  Things have changed quite a bit in 55 years.  These statistics demonstrate just how big an impact healthcare has on the country’s economy.

Source: CMS.gov

Healthcare Spending Defined

It is made up of all monies paid to health care providers—hospitals, outpatient centers, Veterans Affairs, doctor and dentist practices, physical therapists, nursing homes, home health services and on-site care at places such as schools and work sites.

Also, retail sales of prescription and nonprescription drugs, premiums paid to health insurers, and revenues of makers of medical devices, surgical equipment, and durable medical equipment.  Spending also includes the escalating amounts paid by consumers for out-of-pocket payments for insurance premiums, deductibles, and co-payments, along with costs not covered by insurance.

Hospitals by the Numbers

The American Hospital Association (AHA) conducts an annual survey of hospitals in the US.  The data below contains a sample of statistics from the 2015 AHA Annual Survey.  The AHA is the industry’s complete source for aggregate hospital data and trend analysis.  The data below encompasses information about for-profit and not-for-profit hospitals.

 

  Total Number of All U.S. Registered * Hospitals 5,564
         Number of U.S. Community ** Hospitals 4,862
               Number of Nongovernment Not-for-Profit Community Hospitals 2,845
               Number of Investor-Owned (For-Profit) Community Hospitals 1,034
               Number of State and Local Government Community Hospitals 983
        Number of Federal Government Hospitals 212
        Number of Nonfederal Psychiatric Hospitals 401
        Number of Nonfederal Long Term Care Hospitals 79
        Number of Hospital Units of Institutions
(Prison Hospitals, College Infirmaries, Etc.)
  10
  Total Staffed Beds in All U.S. Registered * Hospitals 897,961
        Staffed Beds in Community** Hospitals 782,188
  Total Admissions in All U.S. Registered * Hospitals 35,061,292
        Admissions in Community** Hospitals 33,260,348
  Total Expenses for All U.S. Registered * Hospitals $936,531,524,400
        Expenses for Community** Hospitals $851,514,523,144
  Number of Rural Community** Hospitals 1,829
  Number of Urban Community** Hospitals 3,033
  Number of Community Hospitals in a System *** 3,198
  Number of Community Hospitals in a Network **** 1,677

The following includes excerpts from Becker’s Hospital Review report: 50 things to know about the hospital industry in 2017, US News & World Report Best Hospitals Rankings and Statista’s Statistics and Facts about US Physicians.

Hospital Mergers and Acquisitions (M&A) and the Hospital Marketplace

Combined M&A activity experienced a reduction in 2016 compared to 2015.  There were 102 hospital transactions announced in 2016 compared to 112 in 2015.  The mergers and acquisition activity seems fitting because many healthcare organizations have concerns about their financial viability in the marketplace.

Of the 102 reported mergers and acquisitions, 75 involved nonprofit hospitals and 27 involved for-profit hospital buyers.

The five largest for-profit hospital operators, based on the number of hospitals, include:

  • Hospital Corporation of America (Nashville, Tenn.) — 169
  • Community Health Systems (Brentwood, Tenn.) — 158
  • Tenet Healthcare (Dallas, Texas.) — 79
  • LifePoint Health (Brentwood, Tenn.) — 72
  • Prime Healthcare Services (Ontario, Calif.) — 44

The five largest nonprofit hospital systems, based on the number of hospitals, include:

  • Ascension Health (St. Louis, Mo.) — 141
  • Catholic Health Initiatives (Englewood, Colo.) — 103
  • Trinity Health (Livonia, Mich.) — 92
  • Baylor, Scott & White (Dallas, Texas) — 48
  • Adventist Health Systems (Altamonte Springs, Fla.) — 46

The top five states with the most hospitals, according to Kaiser Health Facts, are:

  • Texas—404
  • California—342
  • Florida—210
  • Illinois—188
  • Pennsylvania—186

The following health systems own the short-term acute care hospitals in the United States.  They are:

  • HCA (Nashville, Tenn.) —167
  • Community Health Systems (Franklin, Tenn.) — 149
  • Department of Veterans Affairs (Washington, D.C.) — 141
  • Ascension Health (St. Louis) — 84
  • Tenet Healthcare (Dallas) — 62

Top Hospitals in the US

For 27 years, US News & World Report has published its best hospitals rankings to help patients make informed health care decisions.  They compared nearly 5,000 medical centers nationwide in 25 specialties, procedures and conditions.

This year, the Mayo Clinic led the field as the number one rated hospital in the country.  Below is a listing of the top 20 hospitals in 2016-2017.

  1. Mayo Clinic, Minnesota
  2. Cleveland Clinic, Cleveland
  3. Massachusetts General Hospital, Boston
  4. Johns Hopkins Hospital, Baltimore
  5. UCLA Medical Center, Los Angeles
  6. New York-Presbyterian University Hospital, New York
  7. UCSF Medical Center, San Francisco
  8. Northwestern Memorial Hospital, Chicago
  9. Hospitals of the University of Pennsylvania-Penn Presbyterian, Philadelphia
  10. NYU Langone Medical Center, New York
  11. Barnes-Jewish Hospital/Washington University, St. Louis
  12. UPMC Presbyterian Shadyside, Pittsburgh
  13. Brigham and Women’s Hospital, Boston
  14. Stanford Health Care-Stanford Hospital, City of Stanford
  15. Mount Sinai Hospital, New York
  16. Duke University Hospital, Durham
  17. Cedars-Sinai Medical Center, Los Angeles
  18. University of Michigan Hospitals and Health Centers, Ann Arbor
  19. Houston Methodist Hospital, Houston
  20. University of Colorado Hospital, Aurora

Hospital and Clinical Expenditures

Hospital expenditures increased by 4.1 percent to $971.8 billion in 2014, up from the 3.5 percent growth in 2013, according to CMS.  Physician and clinical services expenditures rose 4.6 percent to $603.7 billion in 2014, higher than the 2.5 percent growth rate in 2013.

Payments and Revenue

The average cost per inpatient day in state/local government hospitals across the U.S. was $1,974 in 2014, the latest year for which data is available, according to Kaiser State Health Facts. The average cost per inpatient day was $2,346 in nonprofit hospitals and $1,798 in for-profit hospitals.

For 2012, the latest data available, the average operating margin for a nonprofit hospital was 2.6 percent, according to Moody’s Investors Service.

In 2015, government payers underpaid hospitals for medical services by $57.8 billion, according to the American Hospital Association.  That year, under Medicare, hospitals received payment of 88 cents on the dollar for time spent caring for Medicare patients.  Under Medicaid, hospitals received payment of 90 cents for every dollar for Medicaid patients.

From 1990 through 2015, US hospitals’ uncompensated care costs totaled $704.7 billion, according to a recent American Hospital Association report.  From 2000 to 2015, National uncompensated care costs reached a high of $45.9 billion in 2012, which represented 6.1 percent of total expenses.  In 2015, total uncompensated care costs were $35.7 billion, representing 4.2 percent of total expenses—the lowest level in 26 years.

A greater number of hospitals and health systems are engaging in alternative payment models with the goal of fully transitioning to a value-based care reimbursement system.  Nationally, hospitals reported about 50 percent of reimbursement relate to a form of value measurement in 2016, up 4 percent from 2014.  Of hospitals involved in value-based contracts, 22 percent reported meeting their goal to reduce administrative costs, 26 percent reported meeting goals to reduce healthcare costs, 30 percent reported meeting care coordination goals and 40 percent reported meeting goals for improving patient outcomes.

Physicians in the US

In 2015, there were 809,845 active doctors of medicine in the US.  This figure included approximately 150,000 inactive and some 50 unclassified physicians.  Washington DC, Massachusetts and Maryland have the highest number of physicians per civilian population.  Among specialists, psychiatrists are the most prevalent physicians.  Roughly, one-quarter of all active physicians is educated abroad.

Compensation for physicians varies across specialties.  Orthopedics and Cardiology include the highest-earning physicians with salaries of $440,000 and $410,000 annually.  The highest-paid physicians live in the north-central part of the country, where the mean compensation is near $300,000 per year.

Even with high earning potential, there are physician shortages in certain areas of the country.  The Association of American Medical Colleges (AAMC) estimates that the US physician shortage will be as high as 94,700 by 2025.

Physician shortages are anticipated to come from three broad categories: primary care, medical specialties, and surgical specialties.  By 2025, AAMC estimated a shortfall of between 14,900 and 35,600 primary care physicians.  Non-primary care specialties many also experience a shortfall as high as 60,300 physicians.

One area that affects physicians is burnout.  It has become increasingly prevalent among US physicians.  Nearly 50 percent of physicians reported frequent or constant feelings of professional burnout in the past year, according to a 2016 survey by Merritt Hawkins.  Physicians who experienced burnout attributed their job dissatisfaction to two major sources: EHR data entry and increased clerical requirements under ICD-10.  There is a good reason for their concerns.  On average, 50 percent of their time is spent entering data into Electronic Health Records and completing clerical work.  They spend only 27 percent of work hours interacting with patients, according to a 2016 study in Annals of Internal Medicine.

Summary

Delivering healthcare is “not what it used to be.”  There have been major business model changes over the past 20 years as we have moved from lower cost insurance plans, to volume-based care and recently towards value-based and patient-centric care.

Increasing health insurance premiums and out-of-pocket patient liability have put a strain on patients, physicians, and the entire healthcare system.  These changes have left the public and policy makers wondering how health reform is going to affect the industry in the future.  With our aging population, costs increases and the American Health Care Act implementation, it is anyone’s guess what new challenges the country will face.  Many believe there is light at the end of the tunnel.  Many are skeptical of that.  No matter what people think, everyone can agree on one thing; they hope the light isn’t an oncoming train.

________________

Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog and serves as the Vice President of Global Services for MiraMed, a healthcare revenue cycle outsourcing company.  As an executive leader, he is responsible for creating and executing sales and marketing strategies which drive new business development and client engagement. Phil has over 25 years’ experience consulting on a broad range of healthcare initiatives for clinical and revenue cycle performance improvement.  He has worked with industry’s largest health systems developing executable strategies for revenue enhancement, expense reduction, and clinical transformation. He can be reached at philcsolomon@gmail.com

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American Health Care ActThe House proposal to “repeal and replace” the Affordable Care Act (ACA), the landmark and controversial legislation that is a signature of President Barack Obama’s administration, indicates that the nation’s healthcare system could be heading for yet another upheaval.  March 21, 2017 marked the seventh anniversary of the ACA.  Although there is still a high degree of uncertainty regarding what the final repeal-and-replace legislation will look like, or when it will appear, any changes to the ACA will have important implications for hospitals, health systems, healthcare professionals and patients.

It is too early to know how the American Health Care Act (AHCA)—the proposed legislation adopted by the two House Committees of jurisdiction on March 9, 2017 and passed out of the Budget Committee on March 16th—will impact healthcare organizations.  (The ACA certainly had its own share of controversies before it became law.)  We provide the following summary of the proposal’s major provisions and responses from organized medicine, healthcare policy experts and the hospital industry primarily to keep you informed, and we will continue to provide updates as new developments arise.

The Hard Numbers

A report by the nonpartisan Congressional Budget Office (CBO) released on March 13, 2017 offers an independent analysis of how the legislation would affect health insurance coverage and access to healthcare for millions of Americans.

The CBO and the Joint Committee on Taxation together estimate that, in 2018, 14 million more people would be uninsured under the legislation than under current law. Most of that increase would stem from repealing the penalties associated with the individual mandate.  Some of those currently covered would choose not to have insurance because they choose to carry coverage under current law only to avoid paying the penalties, and some people would forgo insurance in response to higher premiums.  According to the CBO, by 2026, the replacement bill would reduce the federal budget deficit by $337 billion, but leave 24 million Americans uninsured.

“The largest savings would come from reductions in outlays for Medicaid and from the elimination of the Affordable Care Act’s (ACA’s) subsidies for nongroup health insurance,” the report stated.  The savings would be even greater if it were not for the AHCA’s increasing spending in other areas:  “The largest costs would come from repealing many of the changes the ACA made to the Internal Revenue Code—including an increase in the Hospital Insurance payroll tax rate for high-income taxpayers, a surtax on those taxpayers’ net investment income, and annual fees imposed on health insurers—and from the establishment of a new tax credit for health insurance.”

In a statement, Tom Price, MD, recently appointed secretary of Health and Human Services, questioned the assumptions used in the CBO analysis—including the CBO’s estimates of how many Americans would drop insurance coverage if the individual mandate were repealed.  Secretary Price argued the AHCA would give patients “meaningful access to care” by enabling market forces to lower the cost of care and reduce premiums and deductibles. These market forces would ultimately give patients the coverage and access they need and that their doctors recommend, he said. President Donald Trump said “more competition and less regulation will finally bring down the cost of care, and bring it down significantly.  Unfortunately, it takes a while to get there because you have to let that marketplace kick in.”

The CBO acknowledged the uncertainty, without going so far as to assume that healthcare prices to consumers would be forced downward, and qualified its estimates by noting that:  “The ways in which federal agencies, states, insurers, employers, individuals, doctors, hospitals and other affected parties would respond to the changes made by the legislation are all difficult to predict, so the estimates in this report are uncertain.  But CBO and [the Joint Committee on Taxation] have endeavored to develop estimates that are in the middle of the distribution of potential outcomes.”

In a response to the CBO report, House Speaker Paul Ryan stressed that the plan “is not about forcing people to buy expensive, one-size-fits-all coverage.  It is about giving people more choices and better access to a plan they want and can afford.  When people have more choices, costs go down.  That’s what this report shows.  And, as we have long said, there will be a stable transition so that no one has the rug pulled out from under them.”

Key Provisions

In brief, the American Health Care Act (AHCA), as the bill is called, proposes to:

  • Eliminate the individual mandate requiring people who can afford it to purchase health insurance. The individual mandate, a cornerstone of the ACA, was designed to keep health insurance costs lower for sicker and older individuals by creating the broadest possible risk pools.  Under the Republican bill, people who choose not to purchase insurance would not pay a penalty.  However, the plan would provide an incentive to purchase and maintain coverage by imposing a penalty, payable to the insurer, for lapses.
  • Repeal the employer mandate of the ACA, which requires businesses with 50 or more full-time equivalent employees to provide health insurance to at least 95 percent of their full-time employees and dependents up to the age of 26, or pay a penalty.
  • Repeal subsidies provided under the ACA to help lower-income patients cover the cost of deductibles and co-payments.
  • Retain the ACA’s expanded Medicaid coverage (which raised the eligibility cutoff to 138 percent of the poverty level) in 30 states until 2020.
  • Cap federal Medicaid funding per enrollee beginning in 2020, based on state Medicaid expenditures in 2016.
  • Distribute tax credits to offset the cost of premiums and deductibles using age, rather than income, to calculate how much people receive.  Individuals earning less than $75,000 per year and households earning less than $150,000 per year would receive tax credits.  These credits would be $2,000 for an individual under the age of 30 and twice that for individuals over the age of 60. Unlike subsidies, they would be payable in the year following the year of coverage.  These numbers contrast with the ACA provisions, which provide upfront subsidies to enable households earning up to 138 percent of the poverty level to purchase insurance on the health exchanges.  The bill would also expand the health plans that qualify for subsidies.  An analysis by the Kaiser Family Foundation indicates that these changes could have significant implications for different populations.
  • Promote the use of health savings accounts as a means of paying for the costs of medical care by increasing annual limits to $6,550 for individuals and $13,100 for families starting in 2018 (an increase from the ACA limits for 2017 of $3,400 for individuals and $6,750 for families).
  • Increase the amount that insurers can charge older Americans.  The bill allows insurers to charge older Americans five times as much as younger ones, compared with ACA’s provision, which allows insurers to charge older Americans only three times that of younger beneficiaries.
  • Retain the following provisions of the ACA: prohibitions on annual and lifetime limits; dependent coverage until the age of 26; coverage for pre-existing conditions; and provision of 10 essential health benefits, including maternity care and preventive services.
  • Eliminate the Prevention and Public Health Fund.
  • Repeal taxes on drug manufacturers, insurers, medical device manufacturers and high-income households.  The Congressional Joint Committee on Taxation estimates the repeal of these taxes would result in revenue losses for the federal government over 10 years of approximately $25 billion, $145 billion, $20 billion and $270 billion, respectively.

Strong Opposition

The AHCA has drawn widespread concern and criticism from multiple quarters.  Conservative groups, including Heritage Action, the Cato Institute, Americans for Prosperity, FreedomWorks and the Tea Party Patriots all oppose the bill on the grounds that only complete repeal of the ACA will suffice, without replacement.  The medical and healthcare communities, which have zeroed in on the large number of Americans who, the CBO analysis indicates, would become uninsured, are resolute in their opposition, at least for now.  Many believe the proposal would benefit the wealthy at the expense of the poor, and that these disparities would create an enormous burden for hospitals and healthcare providers.  Proponents feel ongoing improvements in the U.S. economy and higher employment rates would offset these potential problems.

Criticisms revolve primarily around the bill’s reduced tax credits for individuals purchasing private plans and the proposed per-capita limit on federal contributions to state Medicaid programs, which could stretch state resources and reduce or eliminate healthcare services for many low-income and unemployed Americans.  Many provider organizations have gone public with their concerns.  The bill “would dramatically reverse progress we’ve made in controlling healthcare costs and assuring quality care, and it would gut patient protections, investments in prevention and access to care for the most vulnerable Americans,” George C. Benjamin, MD, executive director of the American Public Health Association, said in a statement.  The American Nurses Association also strongly opposed the proposal.

In a letter to Congressional leaders, James L. Madara, MD, executive vice president and CEO of the American Medical Association, acknowledged problems with the ACA, but said those problems must be addressed.  “We cannot support the AHCA as drafted because of the expected decline in health insurance coverage and the potential harm it would cause to vulnerable patient populations,” he stated.

A letter from Rick Pollack, president and CEO of the American Hospital Association echoed the AMA’s concerns.  “It appears that the effort to restructure the Medicaid program will have the effect of making significant reductions in a program that provides services to our most vulnerable populations, and already pays providers significantly less than the cost of providing care,” he said.  The AHA suggested the expanded use of Medicaid waiver programs to help states expand coverage and develop innovative models of care to improve services.  (Medicaid waiver programs allow patients who would otherwise be in an institution, nursing home or hospital to receive long-term care in the community.)

AARP®, which represents 38 million Americans over the age of 50, also came out against the bill, citing a report showing that the Medicare Part A Trust fund is solvent until 2028 largely due to the ACA, and that the current bill, which would remove these provisions, would increase costs and reduce benefits for many older Americans.  The organization estimates the bill’s tax credit changes and age rating could increase premiums by as much as $3,600 for a 55-year-old earning $25,000, $7,000 for a 64-year-old earning $25,000 and $8,400 for a 64-year-old earning $15,000 annually.

A January article on the Health Affairs blog warned that the large increase in uninsured Americans would remove coverage for substance abuse treatment and prevention from millions, creating a gap in services that could worsen the opioid epidemic.  “In the three states with the highest drug overdose deaths—Kentucky, New Hampshire and West Virginia—a repeal would about triple the uninsured rate,” noted Lisa Clemans-Cope.

Clearly, the AHCA has reopened an intense national debate about whether healthcare should be a right or a choice.  Based on the analyses we’ve seen thus far, providers could potentially find themselves caring for a larger number of uninsured and under-insured patients.  The CBO analysis points to two populations that could fuel this trend: young, healthy individuals who opt not to purchase health insurance and an increase in uninsured low-income patients.

You will find this post and other communications on the MiraMed website. Please note that this post is for your information and education only and does not represent a position either for or against the proposal.

________________

Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog and serves as the Vice President of Marketing Strategy for MiraMed, a healthcare revenue cycle outsourcing company.  As an executive leader, he is responsible for creating and executing sales and marketing strategies which drive new business development and client engagement. Phil has over 25 years’ experience consulting on a broad range of healthcare initiatives for clinical and revenue cycle performance improvement.  He has worked with industry’s largest health systems developing executable strategies for revenue enhancement, expense reduction, and clinical transformation. He can be reached at philcsolomon@gmail.com

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Since the adoption of the Affordable Care Act (ACA) and the subsequent rules changes that have taken effect, comprehending the changes to the healthcare industry has become a difficult task for anyone, let alone consumers.  Keeping up with the transformation is difficult, even for industry insiders.  Recent news reports demonstrate this:

·       Aetna is pulling out of the various state insurance exchanges, as are United Healthcare, Humana and many of the Blue Cross/Blue Shield regional insurers.  Insurance companies are losing big money in the exchanges as their costs are exceeding income by over five percent, according to McKinsey’s Center for U.S. Health System Reform.

·       A federal judge recently squelched Aetna’s $37 billion bid to acquire Humana.  The ruling indicated that combining the companies would stifle competition.

·       Healthcare spending is rising at a faster clip than at any time since the 2007 recession, with costs rising faster than most consumers can handle.  Patients are struggling to pay their medical bills, with no relief in sight.

·       Employers and consumers continue to spend more on healthcare each year, with consumers ultimately paying the price as they deal with rising healthcare costs.

Healthcare Spending – By the Numbers

Americans spent $3.2 trillion on healthcare in 2015, or $9,990 per person.  Healthcare spending increased to 5.5 percent in 2015, which is lower than previous annual growth rates, but slightly higher than the 5.3 percent increase recorded in 2014.  Industry experts at the Centers for Medicare and Medicaid Services (CMS) predict that U.S. healthcare spending will grow at least 5.7 percent annually between 2014 and 2024.

CMS stated that the spending increase in 2015 was mainly due to expanded coverage of individuals who signed up for the ACA insurance coverage program or who took advantage of the expansion of Medicaid.  These factors have created a demand for more hospital and clinic services as well as prescription drugs, which has caused increased spending.

According to governmental actuaries, healthcare spending represents a significant portion of the U.S. economy.  In 2015, it made up 17.8 percent of the gross domestic product (GDP), and experts estimate it will increase to 20.1 percent by 2025.  The   rise in spending has economists worried that appropriate actions are not enough to slow down healthcare’s growth.

While the initial impact linked to the ACA’s coverage expansion is waning, the increase in health spending is in direct correlation with changes in economic growth.  Rising medical costs and services required for an aging population are the main contributors to spending growth.

National Health Expenditures Today and in the Future

In 2015, 28.7 percent of total healthcare spending came from the federal government while consumer households contributed 27.7 percent.  The private business share of health spending accounted for 19.9 percent of total healthcare spending, state and local governments accounted for 17.1 percent, and other private revenues accounted for 6.7 percent.

The totals of National Health Expenditures (NHE) are broken out into seven categories:

1.        Medicare spending grew 4.5 percent to $646.2 billion in 2015 or 20 percent of total NHE;

2.        Medicaid spending grew 9.7 percent to $545.1 billion in 2015 or 17 percent of total NHE;

3.        Private health insurance spending grew 7.2 percent to $1,072.1 billion in 2015 or 33 percent of total NHE;

4.        Out-of-pocket spending grew 2.6 percent to $338.1 billion in 2015 or 11 percent of total NHE;

5.        Hospital expenditures grew 5.6 percent to $1,036.1 billion in 2015, faster than the 4.6 percent growth in 2014;

6.        Physician and clinical services expenditures grew 6.3 percent to $634.9 billion in 2015, a faster growth than the 4.8 percent in 2014; and

7.        Prescription drug spending increased 9.0 percent to $324.6 billion in 2015, slower than the 12.4 percent growth in 2014.

What can we expect for healthcare spending in the future?  CMS outlined its estimates for 2015 to 2025 spending as follows:

·       For 2015-25, health spending is projected to grow at an average rate of 5.8 percent per year.

·       Health spending is projected to grow 1.3 percentage points faster than the GDP per year over this period; as a result, the health share of GDP is expected to grow from 17.5 percent in 2014 to 20.1 percent by 2025.

·       Given the ACA’s coverage expansions and premium subsidies together with population aging, federal, state and local governments are projected to finance 47 percent of national health spending by 2025 (from 45 percent in 2014).

·       Health spending growth is faster than in the recent past due to the effects of the ACA’s coverage expansions, stronger than expected economic growth, and population aging.  Growth is still slower than the growth experienced over the past two decades.

·       After 5.3 percent growth in 2014, national health spending is projected to have grown 5.5 percent in 2015.

·       The persisting effects of coverage expansions under the ACA influenced  spending changes in 2016.

·       Health spending growth is expected to accelerate and average 5.7 percent for 2017 through 2019 because of gradual increases in economy-wide and medical-specific prices.  Projected average growth of 6.0 percent is anticipated for 2020 through 2025.  Growth in spending for Medicare is notably strong as enrollment growth among baby boomers returns to higher utilization rates of Medicare services that more closely resemble their historical average. Those above will drive a 7.6 percent average growth.  Projected average growth of 6.1 percent in Medicaid is driven primarily by the changing profile of that program’s population, as an increasingly higher share of beneficiaries is comprised of comparatively expensive aged and disabled individuals.

Employees Wrestle with Costs that Exceed their Insurance Premiums

Patients are finding that their healthcare costs are rising and there are no short-term solutions in sight.  For most people, out-of-pocket costs including insurance premiums, copays and deductibles have increased to the point that costs for some have largely become unaffordable.  Unfortunately, the growth in out-of-pocket costs comes at a time when wages have remained largely stagnant.

In recent years, the shared cost of healthcare between insurers and consumers has become a growing issue.  Employers have responded to increasing healthcare premiums by sharing more of the costs with their employees and offering new insurance plans that shift more financial risk to workers.  Changes in insurance coverage led to an upsurge in deductibles for people with employer-provided health coverage, from $303 in 2006 to $1,077 in 2015.

Higher insurance costs are financially challenging for the employee as the potential exposure to out-of-pocket costs grows.  To make matters worse, many employees will never reach their deductibles and others may have expenses that far surpass them.  Either way, employees are paying more than ever before.

The growth of employee payments toward deductibles is a key factor of the changes in the cost sharing distribution of payments.  In 2004, deductibles accounted for 24 percent of cost sharing payments, increasing to 47 percent in 2014.  On the other hand, copayments were nearly half of cost sharing payments in 2004, falling to 20 percent in 2014.

The Result of Increased Spending for Consumers

With the changes in out-of-pocket responsibility, many consumers are unable to keep up with their medical bills.  According to a survey from the New York Times and Kaiser Family Foundation, the challenges for patients paying for medical treatments varied based on the actual type of service.  The survey found that of respondents who had problems paying their medical bills, about two-thirds said they were the result of short-term or one-time medical expenses.  Among those who had issues paying their medical bills:

·       65 percent had difficulty paying bills for doctor’s visits;

·       65 percent had difficulty paying for diagnostic tests, such as X-rays;

·       64 percent had difficulty paying for lab fees; and

·       61 percent had difficulty paying for care in the emergency department.

The survey also found that the most common bills that represented the largest share of medical expenses were emergency department visits (21 percent) and hospitalization    (20 percent).

Many patients do not have the financial resources to keep up with their general household bills, let alone their healthcare obligations.  Recent studies                      demonstrate this:

·       Three in four Americans are living paycheck-to-paycheck (McKinsey Quarterly,   May 2015);

·       Nearly half of Americans do not have enough money to cover a $400 emergency expense (Federal Reserve survey);

·       63 percent of consumers cannot afford to pay a $500 car repair or a $1,000 emergency room visit (Bureau of Labor Statistics); and

·       The average consumer who makes under $40,000 per year does not have the            ability to handle any unplanned expense (Consumer Expenditure Survey).

Greater Out-of-pocket Medical Spending Drives Increased Collection Activity

Past due medical bills have become the Achilles heel for consumers.  The result from rising out-of-pocket responsibility is forcing consumers into a head on clash with debt collectors.  If having a medical bill hanging over the head of a consumer isn’t bad  enough, the lack of timely payment can lead to credit problems that can last for years.

A study conducted between December 2014 and March 2015 by the federal Consumer Financial Protection Bureau1 found that past-due medical bills, credit cards and student loans were among the most frequently cited consumer debts.  Of those surveyed, 59 percent reported being contacted by a debt collector for medical services, making  medical debt the most pressing financial issue for most Americans.  To make things worse, they also found that 72 percent of respondents reported that they had two or  more medical debts to pay.

Providers must collect medical debt owed to them while meeting stringent requirements to do so.  The ACA required nonprofit hospitals to take steps to retain their federal nonprofit status2, including establishing written charity care policies. Hospitals must determine whether patients are eligible under their policies and provide it for those who are.  They must follow guidelines outlined in the Internal Revenue Code 501(r), which provides for additional requirements for Charitable Hospitals; such as how much uninsured patients are charged and restricting aggressive billing and collections activities.  Under these rules, nonprofit hospitals are barred from initiating “extraordinary collection actions” (such as reporting to credit bureaus, garnishing wages or placing a lien on property or taking legal action) until 120 days after the first billing statement.  Although the rule does not apply to for-profit hospitals, the regulation introduced an overall federal standard for reporting medical debt.

These guidelines have made it more difficult for providers and their collection agencies  to collect past due medical bills, but it’s no consolation for consumers.  When they are unable to satisfy their medical debts, they can be reported to the credit bureaus.  A credit derogatory can substantially reduce consumers’ credit scores, which can materially affect a patient’s financial standing.  Credit problems created from past due medical bills can often become the last straw for consumers.  Many have no other choice but to file for bankruptcy.

With the trickle down effects from increased healthcare spending and growing patient payment liability, some people have become more reluctant to go for care because of the debt they might incur.  When patients skip medical treatment because of the costs involved, it becomes a contributor for creating a sicker population, which ultimately drives up healthcare spending.

Summary

Patients will continue to face a growing financial burden as their healthcare costs increase and their ability to pay for care declines.  Payment responsibility for medical costs continues to shift from employers to employees and those covered under the ACA struggle to pay co-pays and deductibles.  Higher medical costs and spending have an effect on how consumers pay their medical bills.  The current healthcare environment has placed consumers, employers and healthcare providers in a precarious position, one that is not likely to change in the foreseeable future.

References:

  1. Consumer Experiences With Debt Collection: Findings From the CFPB’s Survey on Consumer Views on Debt, January 12, 2017, https://www.consumerfinance.gov/data-research/research-reports/consumer-experiences-debt-collection-findings-cfpbs-survey-consumer-views-debt/
  2. Additional Requirements for Charitable Hospitals; Community Health Needs Assessments for Charitable Hospitals, https://www.federalregister.gov/documents/2014/12/31/2014-30525/additional-requirements-for-charitable-hospitals-community-health-needs-assessments-for-charitable

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Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog and serves as the Vice President of Marketing Strategy for MiraMed, a healthcare revenue cycle outsourcing company.  As an executive leader, he is responsible for creating and executing sales and marketing strategies which drive new business development and client engagement. Phil has over 25 years’ experience consulting on a broad range of healthcare initiatives for clinical and revenue cycle performance improvement.  He has worked with industry’s largest health systems developing executable strategies for revenue enhancement, expense reduction, and clinical transformation. He can be reached at philcsolomon@gmail.com

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