Patient Payment Liability Just Ain’t What it Used to Be

Baseball is America’s past-time and Yogi Berra was one of its most colorful heroes.  Berra was an 18-time All-Star, appeared in 14 World Series as a member of the New York Yankees and won 10 championships.  He was a sportswriter’s favorite because he had countless expressions and phrases that were memorable because most of them didn’t make any sense.  A warmhearted personality, he became famous for delivering brilliantly awkward sayings, such as: “90 percent of the game of baseball is half mental” and “the future ain’t what is used to be.”

Today, the future of healthcare just “ain’t what is used to be.”  The development of our healthcare system began in 1901 with the election of President Theodore Roosevelt.  He supported universal health insurance because he believed that “no country could be strong whose people were sick and poor.”1  The efforts to initiate healthcare coverage, however, took place outside of government.  In 1906, the American Association for Labor Legislation (AALL) led the campaign for health insurance.

Today, escalating healthcare costs has become the catalyst for significant changes in the delivery and payment of healthcare services.  The Affordable Care Act (ACA), signed into law by President Obama on March 23, 2010, can take the lion’s share of credit for changing how consumers now pay for health services.  For the past ten years, healthcare costs have exceeded U.S. economic growth by an average of 2.5 percent annually.  The anticipated average annual growth rate for healthcare costs is 5.7 percent per year through 2023, well above gross domestic product (GDP), average wages and productivity gains.2  Improving economic conditions, the impact of the ACA’s insurance coverage expansions and an aging population is expected to continue to drive healthcare expenditure growth.3  Average annual growth of out-of-pocket healthcare expenditures are projected to rise to 5.5 percent by 2023 from 3.2 percent in 2013.4

A growing approach to mitigating the rising cost of healthcare are High Deductible Health Plans (HDHP).  Insurers and employers have initiated these health plans with the goal of reducing their financial exposure.  HDHP’s plans shift the majority of the financial responsibility to the healthcare consumer.

Based on recent statistics listed in a McKinsey Quarterly article, “The Next Wave of Change for U.S. Healthcare Payments,”there has been a ten-fold increase in HDHP plans in the past seven years to more than 11.4 million people, and they are growing.  According to America’s Health Insurance Plans, the growth in HDHPs is a major contributor to current expectations for growing patient payment liability from $250 billion in 2009 to $420 billion in 2015, a 68 percent increase over a five-year period.6

Increasing Patient Liability

The ACA, with its comprehensive health insurance reforms, has initiated a growing trend that has placed more financial accountability on the shoulders of consumers.  Hospitals and health systems are embracing consumerism and are preparing for greater levels of out-of-pocket (OOP) patient liability.

Increased patient responsibility for healthcare services has providers concerned, and for good reason.  Patient liability or self-pay, is now the third largest payer behind Medicare and Medicaid.7   As a result, both patient liability and bad debt are on the rise and healthcare providers are facing unprecedented revenue and margin pressure.

Providers must adjust their financial practices to meet the demands of the growing revenue cycle trend and become more adept at collecting patient liabilities while at the same time improving patient satisfaction.  The growing challenge that OOPs present for providers is just one of many priorities healthcare executives have to juggle.  All stakeholders responsible for solving these challenges must learn to circumnavigate the financial realities of our new healthcare delivery system. Had Yogi Berra worked in healthcare, he might respond to the changes in the industry with another of his famous comments:  “It’s déjà vu all over again.”

As patient accountability increases under HDHPs, patient payment liability has skyrocketed.  Payment responsibility for non-insured patients is now growing at 19 percent per year.8  And, for insured patients, McKinsey Quarterly has estimated that the rate of bad debt is increasing at well over 30 percent each year in some hospitals.9  Consumers now pay more in healthcare costs than employers, and consumer bad debt for medical expenses was $65 billion in 2010 and rising.10

Regardless of whether coverage exists under a traditional or high deductible plan, consumers now shoulder a greater cost burden.  Providers must now collect a high proportion of payments directly from the consumer, not the insurer.  Patients are being billed for costs they normally are not expecting and often for sizable amounts.

Revenue Cycle: A Shifting Paradigm

Our healthcare compensation system has begun to reward providers for delivering more value.  No longer is a provider’s compensation tied to the volume of patients it can service.  This shift impacts how patient care is administered, how physicians and hospitals are paid and how healthcare companies approach the industry.

Healthcare organizations of all sizes must transform their revenue cycle strategies to become more patient friendly.  The traditional focus on payers will no longer suffice as providers must address patient collections like never before.  In short, they need to find effective ways to collect more of the money owed by patients or risk their organizations good financial health.

Current revenue cycle processes are not traditionally set up to address consumer payment needs, which can have a significant effect on the patient experience and satisfaction levels.  Emphasis on the patient experience touches all areas of healthcare and the revenue cycle is no exception.  Patient dissatisfaction with financial processes can negatively impact satisfaction scores and bottom-line results.

Changes in the Payment Role for Providers

As the patient responsibility trend continues to grow, healthcare organizations must attempt to balance effective revenue cycle management processes with efforts to improve the patient experience.  Providers must change how patient payments are collected; however, some of these changes will not be easy to implement.  Highlighted below are some of the unique challenges in the payment process providers need to be preparing for:

  • Many payment processes are not engineered for simple and efficient patient payments.
  • The process of transacting directly with consumers presents a whole new set of challenges for providers who must now calculate patient responsibility as a first step towards rationalizing their payments systems.
  • Patient responsibility is a compound of two sub-components:  eligibility and estimation.

Often, providers are calculating a propensity to pay score, whether the patient is insured or not.  If an insured patient has a high deductible balance or if the patient is totally responsible for the bill, a combination of other transactions such as cost, mortgage balance inquiry and address verification can help determine a patient’s propensity to pay.  Given these insights into payment options, it will assist in determining if a patient is a candidate for a payment plan or charity care.

  • Patient responsibility determination must happen after a provider ascertains their eligibility status, plus the amount the patient owes for their co-pay, deductible balance and the information on their estimated fees.
  • The healthcare provider needs to provide the patient with all of this information as well as establish a payment method as soon as possible, ideally while the patient is still present.11

Strategies to Address Growing Patient Liabilities

There are emerging issues with collecting patient obligations that have necessitated changes in how providers accept patient payments.  Healthcare payment systems are transforming the methods consumers now make their payments for the care they receive. A provider’s financial strategies for collecting patient balances will begin to look more like how consumers purchase electronics or furniture at a large national chain or on-line retailer.  In his article, “Four Big Patient Payment Trends Shaping Healthcare Revenue Collection,” 12  Brian Watson outlined four new approaches providers can initiate to keep up with growing patient liabilities.  They are:

  1. Provider-Facilitated Patient Financing

With the rise in patient payment liability, many patients simply lack the financial ability to pay for their out-of-pocket healthcare debt.  Providers that offer patient-friendly financing options–such as structured, interest-free payment plans help consumers avoid unexpected expenses and smooth liabilities over an extended period.  A medical loan often enables patients to pay an outstanding balance in small increments over time.

  1. Consumers Payments Using Multiple Channels to Pay

Consumers increasingly are bill payment omnivores, flip-flopping between payment options based upon things like availability of funds, the size of the outstanding balance and proximity to the due date.  Recent research suggests the average U.S. household 13 uses three different bill payment methods each month.  And, their preferences for paying the same biller aren’t always consistent on a month-to-month basis.  For example, 42 percent of consumers will use a different payment channel than they did last month to pay the same bill.14

To meet consumer preferences about bill payment, providers must consider balancing traditional options such as mail-in remittance, payment by phone and—with developing channels like online and mobile.  Offering multi-channel payment options will increase patient satisfaction and accelerate revenue collection by giving patients the ability to pay bills how they want, using a channel where they are most comfortable.

  1. Consumers Embracing Online and Mobile Payment Tools

Given consumers’ bill payment patterns, a multi-channel approach makes a lot of sense for providers.  It ensures that no matter a patient’s preference, they’ll be able to make a payment quickly and easily.  Online and mobile billing tools are better suited to today’s increasingly retail oriented healthcare payment environment.  Patients can pay immediately anytime and from anywhere which allows providers to collect and post payments faster, more efficiently and without manual processing errors.

  1. Rise in Guest Pay Options for Provider Websites

Guest pay websites don’t require consumers to create a username or password to access payment tools—or even log-in to the site.  Patients can enter identifying account information from a statement and can make a payment in minutes.

Completing a guest payment is easy, fast and convenient.  So it’s not hard to see why adoption is skyrocketing.  In 2014, 28 percent of consumers used a guest pay option at a biller’s website, up from just seven percent in 2013.15

Guest pay websites are an ideal fit for patient payments.  For most consumers, healthcare is a service that is consumed irregularly:  patients go to see a doctor if they’re unwell or for periodic checkups or test.  Because encounters often fall into the bucket of sporadic billing rather than each month, like a mortgage or mobile phone bill, guest pay websites offer patients the simplicity and convenience of online payment, but without the hassles of registration or passwords.

Summary

Yogi Berra would often say “If you don’t know where you are going, you might wind up someplace else.”  Healthcare thought leaders know exactly where the industry is going.  Like never before, the path to financial viability for providers now lies squarely on the shoulders of the patient.

The healthcare industry will continue to evolve, and it’s more important than ever to put the needs of the patient first. As patient payment liability continues to grow through HDHP’s and state and federal insurance marketplaces, providers must develop new ways to collect for services rendered.  With the advent of healthcare consumerism and the growing trend towards clinical and financial transparency, patients have more control of how their care is administered and paid.

Emergent healthcare payment options help patients better anticipate manage and track the costs of their care. Similar to retail establishments, healthcare is moving towards offering new patient options and expanded payment channels that will meet consumer demands while enabling easy, fast, whenever/wherever financial transactions.

Hospitals and health systems must put into place new methods for serving patients in a friendlier manner with higher levels of patient satisfaction if they want to successfully compete in this rapidly changing healthcare environment.

  1. Physicians for a National Healthcare system program, A Brief History: Universal Health Care Efforts in the US, http://www.pnhp.org/facts/a-brief-history-universal-health-care-efforts-in-the-us
  2. Andrea M. Sisko et al., “National health expenditure projections, 2013–23: Faster growth expected with expanded coverage and improving economy,” Health Affairs, published online before print, September 2014, https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2014-Press-releases-items/2014-09-03.html
  3. Patricia Buckley, “The United States: Working toward a recovery that can stand on its own,” Global Economic Outlook Q3 2013, Deloitte University Press, 2013, http://dupress.com/articles/global-economic-outlook-q4-2015-united-states/
  4. Andrea M. Sisko et al., “National health expenditure projections, 2013–23.”, https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2014-Press-releases-items/2014-09-03.html
  5. McKinsey Quarterly, “The Next Wave of Change for US Healthcare Payments,” May 2010, http://www.mckinsey.com/insights/health_systems_and_services/the_next_wave_of_change_for_us_health_care_payments
  6. AHIP Center for Policy and Research, 2005-2011 HSA/HDHP Census Reports; June 2011 report, p. 2
  7. Innovators Wanted: Mounting Patient Financial Responsibility Driving Provider Demand for Positive Disruption and Change (Part 1 in a 3 Part Series), http://www.triple-tree.com/blog/2015/12/17/innovators-wanted-mounting-patient-financial-responsibility-driving-provider-demand-for-positive-disruption-and-change-part-1-in-a-3-part-series/
  8. McKinsey Quarterly, “The Next Wave of Change for US Healthcare Payments,” May 2010, pages 4 and 7, http://www.mckinsey.com/insights/health_systems_and_services/the_next_wave_of_change_for_us_health_care_payments
  9. McKinsey Quarterly, “The Next Wave of Change for US Healthcare Payments,” May 2010, pages 4 and 7, http://www.mckinsey.com/insights/health_systems_and_services/the_next_wave_of_change_for_us_health_care_payments
  10. Insurance Journal, Employees’ Share of Health Insurance Costs Rising, http://www.insurancejournal.com/news/national/2015/09/22/382429.htm
  11. P. Morgan white paper; “Key Trends in Healthcare Patient Payments”, https://www.jpmorgan.com/cm/BlobServer/JPM-KeyTrends-in-HealthcarePatientPayments.pdf?blobkey=id&blobwhere=1320610345938&blobheader=application/pdf&blobheadername1=Cache-Control&blobheadervalue1=private&blobcol=urldata&blobtable=MungoBlobs
  12. 4 Big Patient Payment Trends Shaping Healthcare Revenue Collection, Brian Watson, http://info.eliteps.com/elitepsblog/4-big-patient-payment-trends-shaping-healthcare-revenue-collection
  13. 2014 Billing Household Survey from Fiserv http://www.slideshare.net/FiservPR/fiserv-seventh-annual-bill
  14. 2014 Billing Household Survey from Fiserv http://www.slideshare.net/FiservPR/fiserv-seventh-annual-bill
  15. 2014 Billing Household Survey from Fiserv http://www.slideshare.net/FiservPR/fiserv-seventh-annual-bill

_______________________________

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 global 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

 

{ 0 comments }

CMS

Medicare’s Recovery Audit Contractor (RAC) program was implemented nationwide for Medicare Parts A and B in January 2010 

The Affordable Care Act calls for the program to be expanded to cover Medicare Advantage plans, and last month CMS released a draft Scope of Work to “solicit comment on, and interest in CMS entering into a contract with RACs to identify underpayments and overpayments, and recouping overpayments associated with diagnosis data submitted to the Centers for Medicare & Medicaid Services (CMS) by Medicare Advantage Organizations.”  Up to now, CMS has conducted limited audits of MA Plans covering only about five percent of Medicare Advantage Organization Contracts.  The Scope of Work document outlines plans to significantly expand those audits by contracting with RACs, who currently audit only Medicare Part A & B payments.

RACs are paid based on amounts recovered and currently earn anywhere from nine to 12.5 percent of recouped overpayments on average.  Many providers view RACs as administrative burdens and argue that independence and fairness cannot be achieved in a system in which auditors have a financial incentive to find errors.  On the other hand, CMS contends that RACs help to ensure taxpayer money is being spent appropriately.

Medicare Advantage plans (sometimes referred to as Medicare Part C) are Medicare-approved private health insurance plans offering seniors an alternative to traditional Medicare.  In recent years they have signed up more than 17 million members, about one-third of those eligible for Medicare.  Medicare Advantage plans provide all Medicare Part A (hospital insurance) and Medicare Part B (medical insurance) coverage and generally offer additional benefits, such as vision, dental and hearing, and many include prescription drug coverage.

Pricing to enrollees varies by plan provider, based on the services and type of plan chosen.  Since 2004, the government has paid the health plans using a risk score it calculates for each patient based on diseases reported by the health plans. Medicare expects to pay higher rates for sicker people and less for those in good health.  But overspending tied to fast-rising risk scores has cost taxpayers billions of dollars in recent years, as the Center for Public Integrity reported in a series of articles published last year, leading to widespread suspicions that some risk scores are being purposefully inflated.  CMS relies on diagnosis information reported by Medicare Advantage organizations to determine the health conditions for each beneficiary.  CMS then uses the Hierarchical Condition Category risk adjustment model to calculate risk scores.

All diagnosis codes submitted to CMS for Medicare Advantage risk adjustment must meet a number of requirements.  They must:

  • Be documented in the medical record
  • Be documented as a result of a face-to-face visit
  • Come from acceptable data sources (www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/mc86c07.pdf)
  • Be submitted at least once during the risk adjustment data reporting period
  • Be coded according to the ICD Clinical Modification Guidelines for Coding and Reporting

CMS currently conducts “comprehensive” Risk Adjustment Data Validation (RADV) audits to determine if diagnoses for risk scores submitted by Medicare Advantage plans are legitimate.  CMS reports that errors and omissions in the diagnosis data submitted by Medicare Advantage organizations account for the overall 9.5 percent rate of improper payments in Medicare Part C.  Up to now, CMS audits have not been “condition specific”; however, under the current proposal, in addition to the comprehensive audits, RACs would also conduct “condition-specific” RADV audits focusing on specific medical codes or health conditions, such as diabetes, that have high rates of payment errors.  The ultimate goal is to have all Medicare Advantage contracts subject to either a comprehensive or condition-specific audit for each payment year.

Comments on the Medicare Advantage RAC program must be received by 10:00 a.m. EST on February 1, 2016.  CMS said it will determine the next steps for procurement of a Part C RAC after reviewing all comments received by that date.

Read more posts at MiraMed

_______________

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 global 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

 

{ 0 comments }

CMS to Administer Penalties for Excess Readmissions 

Revenue Cycle News

Once patients are discharged from the hospital, they have no desire to return.  Hospitals also would prefer patients not be readmitted due to medical issues associated with their hospital stay.

Patient readmissions are a major problem plaguing the U.S. healthcare system and policymakers are taking steps to reduce them.  The efforts to reduce re-hospitalizations begin at the hospital and end with the transition of patients to their home and their community.  But while improving a patient’s transition from hospital to home is important, it is just one factor in preventing readmissions.

The typical cause of a readmission is often the swift deterioration in the patient’s condition, related to the patient’s primary diagnosis and/or comorbidities.  Readmissions can also be attributed to the disintegration and fragmentation of our healthcare system that begins when a patient meets their primary care-provider and continues after discharge.  Readmissions may result from inadequate treatment or sub-par care of the primary issue or may be caused by poor coordination of services at the time of discharge and afterward.

The hospital can affect treatments provided in-house; however, they have no control over the patient and how diligent they are following their treatment plan post-discharge.

Hospital readmissions have become a watershed issue for health providers because of the increasingly important impact they have on a hospital’s financial position.  Providers must be prepared to make the adjustments required to ascertain the root causes for readmissions and develop plans to reduce them.  With a concentrated and proactive effort it is clear that readmissions can be significantly reduced.1

New tools are becoming available to hospitals to manage their readmissions.  The Agency for Healthcare Research and Quality (AHRQ) has introduced a national database for hospital readmissions which will assist hospitals in measuring and benchmarking their results against similar hospitals or healthcare systems.

Readmission Measurements and Standards

Section 3025 of the Affordable Care Act added section 1886(q) to the Social Security Act2 which established the Hospital Readmissions Reduction Program.  This requires Centers for Medicare and Medicaid Services (CMS) to reduce payments to Inpatient Prospective Payment Systems (IPPS) hospitals with excess readmissions, effective for discharges beginning October 1, 2012.  The regulations that implement this provision are in subpart I of 42 Code of Federal Regulations (CFR) part 412 (§412.150 through §412.154).

CMS recently released the Fiscal Year 2016 IPPS for Acute Care Hospitals and the Long Term Care Hospital (LTCH) Prospective Payment System Policy Changes for 2016.  CMS outlined the following policies with regard to the readmission measures under the Hospital Readmissions Reduction Program:

  • Readmission is defined as an admission to a subsection (d)3 hospital within 30 days of a discharge from the same or another subsection (d) hospital;
  • Adopted readmission measures for the applicable conditions of acute myocardial infarction (AMI), heart failure (HF) and pneumonia (PN).
  • Established a methodology to calculate the excess readmission ratio for each applicable condition, which is used, in part, to calculate the readmission payment adjustment.  A hospital’s excess readmission ratio is a measure of a hospital’s readmission performance compared to the national average for the hospital’s set of patients with that applicable condition.
  • Established a policy of using the risk adjustment methodology endorsed by the National Quality Forum (NQF) for the readmissions measures to calculate the excess readmission ratios, which includes adjustment for factors that are clinically relevant including certain patient demographic characteristics, comorbidities and patient frailty.
  • Established an applicable period of three years of discharge data and the use of a minimum of 25 cases to calculate a hospital’s excess readmission ratio for each applicable condition.

Readmission Trends for 2009-2013

Developing national data benchmarks for hospital readmissions helps to identify those patient segments with comparatively high readmission rates for targeted improvement efforts.  Monitoring variations in these benchmarks over time allows officials to track and report on advancements made toward reducing readmissions.

As of October 1, 2012 and under the Hospital Readmissions Reduction Program, CMS is required to reduce payments to IPPS hospitals with excess readmissions.  Monitoring readmission trending is more important today than ever.  While there are severe financial repercussions for increased readmissions, they are becoming a key factor in assessing the overarching performance of the entire healthcare system.

Hospitals have taken various measures to reduce hospital readmissions.  For example, Partnership for Patients, a national initiative sponsored by the Department of Health and Human Services, is tracking changes in all-cause 30-day hospital readmissions.4  Reduction efforts range from re-engineering discharge practices and improving care transition to building community-wide partnerships for addressing health and social service needs.5

The most recently tracked readmission trends include:

  • Readmissions among all patients covered by Medicare declined from 18.1 per 100 admissions in 2011 to 17.3 per 100 in 2013.
  • Readmission rates among patients who were covered by private insurance or Medicaid did not change appreciably from 2011 to 2013.
  • The 30-day all-cause readmission rate was consistently highest among patients covered by Medicare.
  • Among uninsured individuals, both the number and rate of readmissions increased between 2009 and 2013 (10.6 percent increase in readmission count and 8.9 percent increase in readmission rate).
  • The readmission rate among nonmaternal patients aged 1 – 20 years increased substantially between 2009 and 2013: 22 percent increase for uninsured patients, 15 percent increase for those with private insurance and eight percent increase for Medicaid patients.
  • The overall readmission rate for all expected payers combined did not change appreciably.  From 2009 to 2013, the readmission rate for all payers combined stayed at about 14.0 per 100 admissions.
  • The average cost of a readmission was higher than the average cost of an index admission for all types of payers:
    • Five percent higher for patients covered by Medicare;
    • 11 percent higher for uninsured patients; and
    • 30 percent higher for patients covered by Medicaid or private insurance.

The readmission trends outlined above provide a macro overview of the segments of the population that are affected by readmissions.  However, without actionable data hospitals cannot improve readmissions if they don’t know the underlying cause of the problem.

Until now, hospitals did not have a database in which to evaluate their readmission statistics against similar hospitals.  In 2016, AHRQ introduced a national database tracking hospital readmissions.  The data is available through 2013 and it comprises information on 97 percent of all U.S. hospital discharges.

The AHRQ National Readmission Database

The AHRQ Nationwide Readmissions Database (NRD) is the first all-payer database for monitoring hospital readmissions.  Hospital administrators, policymakers and clinicians are able to use the new database in their analyses and decision-making.

The NRD is part of the AHRQ-sponsored Healthcare Cost and Utilization Project (HCUP) and includes various administrative billing data drawn from the HCUP State Inpatient Databases.

The new database will be used to create estimates of national readmission rates for all payers and the uninsured.  The NRD was constructed from 21 states’ data with reliable and verified patient numbers.

The key features of the NRD include:

  • A large sample size, which provides sufficient data for analysis across hospital types and the study of readmissions for relatively uncommon disorders and procedures;
  • Discharge data from 21 geographically dispersed states, accounting for 49.3 percent of the total U.S. resident population and 49.1 percent of all U.S. hospitalizations;
  • Designed to be flexible to various types of analyses of readmissions in the U.S. for all types of payers and the uninsured;
  • Criteria to determine the relationship between multiple hospital admissions for an individual patient in a calendar year is left to the analyst using the NRD;
  • Outcomes of interest include national readmission rates, reasons for returning to the hospital for care and the hospital costs for discharges with and without readmissions; and
  • The NRD is designed to support national readmission analyses and cannot be used for regional, state or hospital-specific analyses.

Are Hospitals Prepared to Reduce Readmissions?

Hospitals now have the required data to evaluate readmissions, but are they prepared to act upon it?  According to an anonymous survey of 320 C-suite, senior-level and quality professionals from hospitals conducted by Q-Centrix,6 the percentage of hospitals penalized for readmissions has increased each year since CMS began imposing them, reaching a high of 78 percent in 2015.  The most recent survey results indicate that only 55 percent of those surveyed expected to be penalized in 2016.

Since 2009, great strides have been made to reduce 30-day all-cause hospital readmission rates for heart failure, pneumonia and myocardial infarction.  This year, CMS penalties will extend to acute COPD and elective hip and knee replacements.  Given the historical trend and the three additional diagnoses recently added, the percentage of hospitals penalized will likely be much higher than 55 percent.

The senior-level executives that responded to the survey indicated that:

  • Nearly three-quarters of hospitals describe themselves as “somewhat” or “extremely” confident in their ability to reduce readmissions;
  • 15 percent of quality and compliance professionals are extremely confident they will reduce readmissions; and
  • 23 percent of C-suite executives are extremely confident they will reduce readmissions.

On average, the respondents are employing:

  • 4.5 different reduction strategies;
  • 92 percent are initiating a medication reconciliation process;
  • 87 percent are educating patients and patient caregivers with better pre-discharge instructions; and
  • 84 percent are conducting phone calls or other communication to patients post-discharge.

Unfortunately, three percent of the survey respondents have no formal strategy at all.

Readmissions Reduction Strategies

Readmissions are typically characterized as planned or unplanned events and related or unrelated to the initial admission within a 30-day period.  In order to assist with readmission reduction efforts, the American Hospital Association (AHA) developed a framework to help policymakers and providers consider the different types of readmissions.7  They are:

  • A planned readmission related to the initial admission;
  • A planned readmission unrelated to the initial admission;
  • An unplanned readmission unrelated to the initial admission; and
  • An unplanned readmission related to the initial admission.

The most viable scenario for reducing readmissions is the unplanned readmission related to the initial admission.  That said, the AHA suggests that public policy efforts should be focused on this category of care to reduce readmissions.

Regardless of the care provided, re-hospitalizations for some patients are unavoidable.  Hospitals cannot influence the occurrence of unplanned, unrelated readmissions because they cannot be anticipated or prevented.  However, some readmissions may be prevented through proactive hospital practices, such as:

  • Readmissions clinically related to a prior admission are possibly preventable if one or more actions are taken;
  • Delivery of quality care in the initial hospitalization;
  • Adequate discharge planning;
  • Comprehensive post-discharge follow-up; and
  • Focused coordination from inpatient and outpatient providers.

What Can Patients Do to Avoid Readmissions?

No patient wants to be admitted into a hospital.  And they certainly want to recover from their illness as quickly as possible.  While the bulk of responsibility for care lies with the hospital or provider, patients can positively influence their own recovery and reduce the chances of being readmitted.  In April 2014, a Consumer Reports investigation titled How to Avoid Hospital Re-admissions outlined six steps patients can take to reduce the chance of being readmitted.  They are:

  1. See a discharge planner.  The patient and/or their primary care giver should discuss the steps that should be taken when they are released from the hospital.
  2. Determine if you’re really ready to go home.  Hospitals and insurance companies have strong financial incentives to discharge patients as soon as possible.  A patient should discuss an extension of their stay with their doctor if they don’t feel ready to go home.  If the doctor isn’t able to extend the stay, patients must appeal to the discharge planner or a hospital patient advocate.
  3. Get a discharge summary.  The patient should ask for a clear written statement of what they should do when they get home—for example, how to care for surgical wounds or a broken bone covered by a cast, how active they should be, and when they can shower, drive a car, return to work and resume a normal diet.
  4. Get a discharge list of medication.  Patients should ask about medications that they should continue after returning home, including their purpose and side effects, and if they should resume or eliminate drugs taken before admission.
  5. Get late test results.  Make sure the doctor releases test results to the patient while they are hospitalized, especially those administered 24-hours before leaving the hospital.
  6. Schedule a doctor’s appointment.  Patients should proactively seek to make a follow-up appointment with their doctor to review their progress.

There are additional efforts patients can take to improve their chances of a rapid recovery and lessen the possibility of readmission.  The most important post-discharge action a patient can take is to ensure that they have open, clear and timely communication with their doctor.  By doing so, it will greatly reduce the chance of a re-hospitalization or a trip to the emergency room.

Summary

Given the increasing governmental and public scrutiny to control healthcare costs, improve the quality of clinical outcomes and receive the largest financial incentives available, hospitals are acutely focused on readmission reduction strategies.  The effectiveness of reducing readmissions will depend on the integrity of the benchmarking data available, the validity of the methods used for analyzing the data and the steps taken by the hospital and the patient to lower readmission incidences.

Developing national benchmarks for hospital readmissions will help identify those patient populations with relatively high readmission rates for targeted improvement efforts.  Tracking the changes from benchmarking data over time will allow stakeholders to make the adjustments needed to reduce readmissions.

1Medicare Payment Advisory Commission (2007) Report to the Congress: promoting greater efficiency,http://arxiv.org/ftp/arxiv/papers/1402/1402.5991.pdf
2Section 3025 of the Affordable Care Act establishes the Readmission Reduction Program and adds paragraph (q) to Section 1886 of the Social Security Act https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM8067.pdf
3Hospitals are eligible to participate in the Medicare EHR Incentive Programs: “Subsection (d) hospitals” in the 50 states or DC that are paid under the Inpatient Prospective Payment System (IPPS) Critical Access Hospitals (CAHs),https://www.cms.gov/regulations-and-guidance/legislation/ehrincentiveprograms/eligible_hospital_information.html
4U.S. Department of Health and Human Services, National Quality Strategy. 2013 Annual Progress Report to Congress: National Strategy for Quality Improvement in Health Care. July 2013, Updated July 2014.http://www.ahrq.gov/workingforquality/reports/annualreports/nqs2013annlrpt.htm#tab1.  Accessed November 13, 2015.
5Agency for Healthcare Research and Quality. Hospital Guide to Reducing Medicaid Readmissions. August 2014. Rockville, MD: Agency for Healthcare Research and Quality.http://www.ahrq.gov/professionals/systems/hospital/medicaidreadmitguide/index.html.  Accessed November 13, 2015.
6Higher Stakes, Troubling Trends and New Ways to Take Control – Readmission Reduction, http://www.q-centrix.com/readmission-reduction
7Examining the Drivers of Readmissions and Reducing Unnecessary Readmissions for Better Patient Care, TrendWatch, September 2011, http://www.aha.org/research/policy/2011.shtml

_______________________

Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog.  He serves as the Vice President of Global Services for MiraMed, a global healthcare Business Processing 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 for the company’s business process outsourcing and revenue cycle service lines.

Phil has over 25 years of experience consulting on a broad range of healthcare initiatives for clinical and revenue cycle performance improvement.  He has worked with many of the industry’s largest health systems developing executable strategies for revenue enhancement, expense reduction, and clinical transformation.  He is industry thought leader, strategist, author and featured speaker.  Phil can be reached at philcsolomon@gmail.com

{ 0 comments }

TCPA Healthcare Hits Hard and Dukes it Out With the FCC over TCPA

The Federal Communications Commission (FCC) issued a Declaratory Ruling and Order (Declaratory Ruling)1 on July 10, 2015, in response to 21 separate requests2 seeking clarifications to the Telephone Consumer Protection Act (TCPA).3 The Declaratory Ruling has grave implications for any organization that uses an autodialer or prerecorded messages to make non-emergency calls to wireless phones without obtaining the consumer’s prior express consent.

The healthcare industry got into the ring with the FCC and won significant concessions to the TCPA further clarifying its governance with healthcare. After a hard-fought boxing match, the July 10th ruling will allow healthcare entities greater flexibility in communicating with their patients.

Overview
The TCPA, ratified in 1991, was created to protect consumers from unsolicited telemarketing calls, faxes, and text messages. TCPA identifies the requirements by which a business may promote its products and services to consumers. Unambiguously, the TCPA prohibits the use of automated dialing systems that use live operators and pre-recorded voice messages without obtaining the recipient’s prior consent.

The types of communications restricted by the TCPA are:

1. Auto-dialed calls: An auto-dialed call is a phone call, involving a live person or pre-recorded message, that is placed using an “auto-dialer,” or automatic-telephone-dialing-system, that can produce, store and call telephone numbers using a random or sequential number generator;
2. Robocalls calls: A robocall is a phone call that uses an “auto-dialer” system to deliver a pre-recorded telemarketing message; and
3. Text messages: A text message is sent via a short message service (SMS) and messages containing image, video and sound content that are called multimedia messaging service (MMS). The TCPA considered these types of communications “calls” and they have the same requirements as other calling formats.
On October 16, 2013, the FCC revised its TCPA guidelines; further restricting telemarketing calls.4 Adjustment of the TCPA requires the prior written consent for most automated telemarketing communications, particularly those made to cellphones.

Since the healthcare industry is dissimilar to any other business or organization, the FCC’s July 10, 2015, Order outlines an assortment of healthcare-specific exemptions to the TCPA for some important healthcare calls.5 These exemptions are restricted to some requirements and conditions and do not provide an overarching exemption to TCPA liability.

A critical clarification was addressed from a petition filed by the American Association of Healthcare Administrative Management (AAHAM) in October 2014 regarding “free, pro-consumer healthcare-related messages” and under what circumstances such messages are exempt from the TCPA’s requirement for prior expressed consent.6 This petition sought clarification on exemptions that are currently found in the TCPA for calls subject to the Health Information Portability and Accountability Act (HIPAA).7

The HIPAA exemption in the TCPA regulations now extends to advertising and marketing calls to cell phones and residential landline phone numbers. The exemption provides for calls that deliver a healthcare message made by or on behalf of a “covered entity” or its “business associate,” as those terms are defined in HIPAA and do not require the prior express written consent of the called party. What has been confusing is whether non-telemarketing calls (i.e., informational or transactional calls) that deliver healthcare messages require any consent at all. The FCC’s response to the AAHAM petition8 helps to answer that question.

AAHAM requested that the FCC clarify how calls can be made subject to the HIPAA exemption, an individual’s voluntary provision of his or her cellular telephone number to a healthcare provider constitutes prior express consent to be called on that number. The FCC has previously declared in other contexts that an individual’s provision of his or her cell phone number is effectively an invitation to be called on that number, as long as the calls or texts are limited in scope to the purpose the number was provided in the first place. In its July 10, 2015, Ruling, the FCC extended that reasoning to calls and texts in the healthcare context and agreed that healthcare providers can rely on the voluntary provision of a cell phone number as constituting prior express consent under the TCPA. This exemption is tied specifically to HIPAA and its defined terms. Thus, only HIPAA-covered entities and their business associates, as those terms are defined in HIPAA, can make healthcare calls subject to this exemption. As with other types of calls, this HIPAA healthcare exemption is also limited in scope: the calls must be within the scope of the consent given and not regarding some unrelated topic.

The National Association of Healthcare Access Management (NAHAM),9 a national organization, supporting healthcare providers through education programs and the availability of subject matter expertise, prepared and distributed a checklist of five best practices and standards that offer their members guidelines to follow so they will be in compliance with TCPA. The checklist includes:

1. An individual’s provision of his or her cell phone number is effectively an invitation to be contacted at that number, as long as the calls or texts are limited in scope to the purpose the number was provided in the first place. Healthcare providers can rely on the voluntary provision of a cell phone number as constituting prior express consent under the TCPA.
2. In situations where a patient is incapacitated and unable to provide a telephone number directly to a healthcare provider, a third party HIPAA-covered intermediary is allowed to provide a number. Consent by a third party on behalf of an incapacitated individual will end when the individual is no longer incapacitated, at which time the provider must get prior express consent from the individual being called.
3. Non-telemarketing healthcare calls, for which the called party is not charged, are exempt from the prior express consent requirement. The FCC provided these examples:
– Appointment and exam confirmations and reminders;
– Wellness check-ups;
– Hospital pre-registration instructions;
– Pre-operative instructions;
– Lab results;
-Post-discharge follow-up intended to prevent readmission and prescription notifications; and
– Home healthcare instructions.

4. Healthcare calls related to accounting, billing and debt-collection or containing other financial content are not part of this exemption.

5. The content of the exempt calls continues to be subject to HIPAA privacy rules. The FCC reiterates that for purposes of these TCPA exemptions:
– Calls must be free to the end user;
– Calls must be made by or on behalf of a healthcare provider;
– Calls can only be made or sent to the cell phone number provided by the patient;
– Calls or texts must state the name and contact information of the healthcare provider;
– Calls or texts must be “concise” (one minute or less for voice calls and 160 characters or less for text messages);
– Healthcare providers may only make one exempt call or send one exempt text per day (per recipient), with a weekly limit of three total calls or texts (per recipient);
– Healthcare providers must offer recipients an opportunity to opt-out of receiving these types of calls or texts, and honor those opt-outs immediately; and
– The exclusive method for opting out of text messages is for the recipient to reply with the word “STOP.” Recipients must be given this instruction.

Risks
Litigation risk under the TCPA can be substantial. Because the TCPA provides for strict liability and statutory damages of $500 per violation (and up to $1,500 if the violation is deemed willful or knowing) with no maximum cap on recovery, potential exposure in a TCPA class action can quickly escalate. For example, the top four TCPA settlements in 2014 totaled more than $175 million.10

Latest Update: The Fight Continues
On November 25th, joint petitioners ACA International, Sirius XM, PACE, salesforce.com, ExactTarget, Consumer Bankers Association, U.S. Chamber of Commerce, Vibes Media and Portfolio Recovery Associates came out swinging as they filed their opening brief11 in the consolidated appeal12 of the FCC’s July 10, 2015, Declaratory Ruling and Order in the United States Court of Appeals for the District of Columbia Circuit. The joint petitioners argue that FCC’s recent Order “rewrote the TCPA,” “jeopardizes desirable communications that Congress never intended to ban,” and “encourage(s) massive TCPA class actions seeking crippling statutory damages.”
While the litigation in the United States Court of Appeals goes on, what can healthcare do to protect itself from receiving a TCPA knock-out punch?

Given the limitations and constraints set out by the FCC in its Declaratory Ruling, healthcare entities should:
– Review their policies regarding the collection and use of phone numbers provided by consumers;
– Ensure that the processes for collecting phone numbers distinguish between wireless and residential numbers, when necessary, and that any subsequent use of a wireless number meets the requirements of the Declaratory Ruling;
– Review potential methods to make sure that their list of wireless numbers is current and up-to-date; and
– Check the messaging that is taking place in those wireless calls to ensure that the calls are meeting the requirements above.

Summary
This clarification from the FCC helps to identify better which healthcare-related calls do not require consent, and which still might require the prior expressed consent of the patient. All healthcare organizations intending to follow newly created exemptions through automated calling or text messaging should pay specific attention to the details of these new requirements and be on the lookout for potential litigation risk.

References:
1. In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Declaratory Ruling and Order, FCC 15-72, CG Docket No. 02-278, WC Docket No. 07-135, (rel. July 10, 2015), https://www.fcc.gov/document/tcpa-omnibus-declaratory-ruling-and-order
2. Various organizations filed a total of 21 petitions with the FCC.
3. https://en.wikipedia.org/wiki/Telephone_Consumer_Protection_Act_of_1991
4. See In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, FCC Report and Order, CG Docket No. 02-278 (Feb. 15, 2012) (“2012 Report and Order”), https://apps.fcc.gov/edocs_public/attachmatch/FCC-12-21A1.pdf
5. TCPA Omnibus Declaratory Ruling and Order, https://www.fcc.gov/document/tcpa-omnibus-declaratory-ruling-and-order
6. Clarification addressed a petition filed by the American Association of Healthcare Administrative Management, http://www.naham.org/?page=FCCTCPAExemptions
7. HIPAA definition, https://en.wikipedia.org/wiki/Health_Insurance_Portability_and_Accountability_Act
8. AHAM petition to FCC, https://apps.fcc.gov/edocs_public/attachmatch/DA-14-1847A1.pdf
9. National Association of Healthcare Access Management, http://www.naham.org/
10. Sutherland Legal Alerts, http://www.sutherland.com/NewsCommentary/Legal-Alerts/166023/Legal-Alert-Multi-Million-Dollar-Settlements-Prompt-Record-Filing-of-TCPA-Lawsuits
11. Opening brief for consolidated appeal, http://tcpablog.com/wp-content/uploads/2015/11/Consolidated-Appeal-Joint-Petitioner-Brief2.pdf
12. Joint Petitioners File Initial Brief in Consolidated Appeal of FCC’s TCPA Order, http://tcpablog.com/category/consolidated-appeal/

_______________________

Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog.  He serves as the Vice President of Global Services for MiraMed, a global healthcare Business Processing 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 for the company’s business process outsourcing and revenue cycle service lines. Phil has over 25 years of experience consulting on a broad range of healthcare revenue cycle initiatives for revenue enhancement, expense reduction, and clinical transformation.  He is industry thought leader, strategist, author and featured speaker.  Phil can be reached at philcsolomon@gmail.com

{ 0 comments }

Education webinar

Have you implemented new processes designed to minimize insurance denials and backlogs caused by the effects of the ICD-10 transition? Discover how to implement proactive strategies that will help your organization thrive.

Industry pundits expect insurance denials will grow from the typical 2 percent to 3 percent to over 30 percent after the transition of ICD-10.

Do you have a plan in place to mitigate your financial risk against increased expenses, DRO and DNFB, increased AR and decreased cash?

Make sure your organization’s Post ICD-10 denial strategy will return the results you’ve projected.

Free Webinar Tomorrow: Top 5 Financial Repercussions from Post ICD-10 Denials and How to Avoid Them
Join us for a webinar on Nov 17, 2015 at 2:00 PM EST.
https://attendee.gotowebinar.com/register/2661198939481400833

Register Now!

Join us and you will learn how to apply actionable tactics to:

• Identify top services and procedures that are expected to have the greatest risks for variations
• Reduce pending claims and denials
• Minimize processing backlogs
• Maximize the use of strategic denial outsourcing partnerships
• Develop leading practice approaches with CMS and Commercial Payers

Space is Limited-Register Now!

*****************Note*****************
To deliver the best webinar experience, please submit any questions you may have before the webinar begins. We will promptly return the answers to you. Send your questions to phil.solomon@miramedgs.com

Presenter:
For six years, Lyman Sornberger was the Executive Director of Revenue Cycle Management (RCM) for the Cleveland Clinic Health System (CCHS) organization. Prior to his affiliation with CCHS, he was with the University of Pittsburgh Medical Center (UPMC) for 22 years as a leader in revenue cycle management.

During Mr. Sornberger’s career, he has experience working for healthcare organizations with revenues that exceed $12 billion. In the past twenty-nine years, he is proud to have served as a consultant and advisor with various healthcare organizations across the country. He has authored over 2,200 articles for HFMA, AAHAM, and other leading publications in the revenue cycle arena.
After registering, you will receive a confirmation email containing information about joining the webinar.

_______________

Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog. He serves as the Vice President of Global Services for MiraMed, a global healthcare Business Processing Outsourcing services company. Phil has 25 years of experience in healthcare as an industry thought leader, strategist, solution provider, author and featured speaker. In this blog, you will read about important industry updates, strategies for
improving financial performance, and commentary that challenges the status quo. 

{ 0 comments }

PF03_miniSelf-pay responsibility for health care is rising and is now the third largest payer behind Medicare and Medicaid.

The Centers for Medicare and Medicaid Services (CMS) released 2016 premium data for the “benchmark” plans in the states using federal exchanges. The data clearly indicates that the self-pay patient’s financial responsibility is increasing.

The report showed premiums rising an average of 7.5 percent. The truth is that most people don’t shop for health insurance every year; well under half of people who bought a policy in 2014 returned to the exchange to look for a new one in 2015. If their insurance policy’s price increased more than the benchmark rate (established by CMS), then they will be paying the difference out-of-pocket.

The Bronze plan went up by more than the cost of the cheapest Silver plan with an average increase of 13 percent. In 2016, the risk adjustment programs end, which will tend to push prices up.

A recent Commonwealth Fund survey found that four in 10 working-age adults skipped some kind of care because of the cost, and other surveys have found much the same. The portion of workers with annual deductibles— what consumers must pay before insurance kicks in—rose from 55% eight years ago to 80% today, according to research by the Kaiser Family Foundation.

The moral of the story; federal insurance exchanges are much more expensive than expected and aren’t offering the value that Obamacare promised. The lions share of the cost sits squarely on the shoulders of the patient.

It’s not a surprise to me (or many other industry insiders) that out-of-pocket expense for the patient is increasing. Instead of seeing a reduction of charity care and self-pay due to the expansion of Medicaid and the insurance exchanges, not-for-profit providers are experiencing increased write-offs from self-pay patients, or shall we call them no-pay-patients.

__________________________

Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog. He serves as the Vice President of Global Services for MiraMed, a global healthcare Business Processing Outsourcing services company. Phil has 25 years of experience in healthcare as an industry thought leader, strategist, solution provider, author and featured speaker. In this blog, you will read about important industry updates, strategies for
improving financial performance, and commentary that challenges the status quo. 

References:

Cost of Cheapest Obamacare Plans Is Soaring – Bloomberg View

Middle-class-workers-struggle-to-pay-for-care-despite-insurance – USA Today

{ 0 comments }

The Fed is talking about raising interest rates and now Congress so far has failed to find a way to stave off an unprecedented premium increase for millions of recipients in 2016.

Is our economy ready to take this one two punch? What say you?

http://www.wsj.com/articles/medicare-rates-set-to-soar-1444865843

________________

Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog. He serves as the Vice President of Global Services for MiraMed, a global healthcare Business Processing Outsourcing services company. Phil has 25 years of experience in healthcare as an industry thought leader, strategist, solution provider, author and featured speaker. In this blog, you will read about important industry updates, strategies for
improving financial performance, and commentary that challenges the status quo. 

 

{ 0 comments }

MiraMed webinarTo help providers with the knowledge necessary to reduce the risk of the Post ICD-10 transition, I invite you to join an educational webinar titled: Top at Risk DRG’s in the Post ICD-10 Era & How to Proactively Address Coding Challenges.  Date: October 13, 2015 at 2:00 EDT. Register now, space is limited: https://attendee.gotowebinar.com/register/2795847332489274113

The host: Lyman Sornberger. Mr. Sornberger is a 29-year healthcare veteran who led revenue cycle activities for The Cleveland Clinic and UPMC and consults with the largest health systems in the country.

In this webinar, you will learn how to address Post ICD-10 coding challenges by:

  • Identifying the top DRG’s and understanding the cost and how to decrease poor reimbursement results
  • Identifying specific documentation issues and associated risk areas
  • Understanding the costs to rework claims, how to reduce coding errors and cut expenses
  • Tracking performance through executive & operational dashboards
  • Identifying total costs and financial risks for ICD-10 coding
  • Understanding specific DRG’s at-risk and mitigation strategies
  • How to pick the right onshore/offshore coding outsourcing partner
  • What to expect from Post ICD-10 coding in 2015, 2016 & 2017

Register now, space is limited! https://attendee.gotowebinar.com/register/2795847332489274113

For more information, contact: Phil Solomon – Vice President of Global Services | phil.solomon@miramedgs.com | 404-849-8065

__________________

Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog. He serves as the Vice President of Global Services for MiraMed, a global healthcare Business Processing Outsourcing services company. Phil has 25 years of experience in healthcare as an industry thought leader, strategist, solution provider, author and featured speaker. In this blog, you will read about important industry updates, strategies for
improving financial performance, and commentary that challenges the status quo. 

 

{ 0 comments }

Has The IRS Used Salami Tactics to Update IRS 501(r)? 

Under the Patient Protection and Affordable Care Act (PPACA), that was enacted March 23, 2010 and amended by the Health Care and Education Reconciliation Act of 2010, the Internal Revenue Service (IRS) has added new requirements for hospital and healthcare organizations to justify their tax-exempt status under the new rules enacted under (IRS) statute §501(c)(3).

The new requirements affect the actions and policies of tax-exempt hospitals mandating that they follow new guidelines concerning serving patients unable to pay for the costs of their medical care.  Hospitals and healthcare systems are required to create an internal audit and compliance plan to provide oversight of these new policies.

New Requirements for Charitable 501(c)(3) Hospitals

Section 501(r), imposes new requirements on 501(c)(3) organizations that operate one or more hospital facilities.  Each 501(c)(3) hospital organization is required to meet four general requirements on a facility-by-facility basis:

  • Establish written financial assistance and emergency medical care policies;
  • Limit the amounts charged for emergency or other medically necessary care to individuals eligible for assistance under the hospital’s financial assistance policy;
  • Make reasonable efforts to determine whether an individual is eligible for assistance under the hospital’s financial assistance policy before engaging in extraordinary collection actions (ECA) against the individual; and
  • Conduct a community health needs assessment (CHNA) and adopt an implementation strategy at least once every three years (these CHNA requirements are effective for tax years beginning after March 23, 2012).

The PPACA also added a new section 4959, which imposes an excise tax for failure to meet the CHNA requirements, and added reporting requirements to sections 501(r) and 4959.  If a hospital organization to which section 501 (r) applies fails to meet the requirement of section 4959 for any taxable year, a tax equal to $50,000 is levied.

The regulations allow hospitals flexibility in determining how to implement the 501(r) rules to best meet the needs of the communities they serve, but provide a detailed outline how its hospitals must operate.  The regulations will apply for tax years beginning after December 29, 2015.

These policies must be established and applied throughout the hospital organization with close collaboration among regulatory compliance, operations, and billing to ensure proper action is taken to address this tax-exempt status requirement.  The following is a summary of the four general requirements:

  1. Written Financial Assistance and Emergency Care Policies
  • The financial assistance policy (FAP) must identify all providers, other than the hospital, delivering emergency or other medically necessary care and whether they are covered under the financial assistance policy;
  • The hospital may grant financial assistance based on information from sources other than the individual. Also, the hospital can obtain information from patients either orally or in writing;
  • The FAP is only required to disclose discounts under the FAP and not additional discounts the hospital may provide;
  • Billing statements must include a noticeable communication of the availability of financial assistance from the healthcare organization; and
  • Emergency care administered under Section 501(r) prohibits debt collection activities that interfere with the provision of emergency medical care under the Emergency Medical Treatment & Labor Act (EMTALA).
  1. Limitations on Charges
  • A facility can change the amounts billed (AGB) method it uses at any time; it just needs to update its FAP to reflect the method and percentage discount applied;
  • The regulations clarify that the AGB limitation applies only to the amount the patient is personally responsible for paying after deductions, discounts and insurance have been applied;
  • Medicaid can be included in the calculation by itself or in conjunction with the other payers;
  • The AGB can be calculated based on all services provided by the hospital versus just emergency and medically necessary services; and
  • A reasonable allocation of capitated or other lump-sum payments made by an insurer can be incorporated.
  1. Billing and Collections
  • At least one bill post-discharge must contain a plain language summary of the FAP;
  • An oral notification of the FAP and how to obtain financial assistance is required once, at least 30 days before initiation of an ECA;
  • A summary of the ECAs the hospital intends to follow must be provided to the patient before initiation;
  • Liens placed on a portion of potential settlement proceeds when the patient has sued a third party due to an auto accident or other type of accident is not considered a collection action and thus is not an ECA;
  • The rule requires hospitals to have a written agreement with third parties (collection agencies) to abide by the 501(r) requirements;
  • Hospitals can place accounts with a collection agency within 120-day notification period if they meet the requirements;
  • The sale of debt to a third party is not considered to be an ECA. Accounts cannot be sold until after the notification period; and
  • The hospital must accept financial assistance policy applications for 240 days after the date of the first billing statement.
  1. CHNA
  • A description of the process and methods used to conduct the CHNA need to be made available;
  • A description of how the hospital facility solicited and took into account input from the public;
  • An outline that shows a prioritized description of the significant health needs and an explanation of the process and criteria used to identify the health need; and
  • A description of the resources potentially available to address the health need.

The IRS has used a Salami tactic to increase the scrutiny of tax-exempt healthcare organizations. This has put extra pressure on healthcare organization’s internal auditors and compliance officers to assess risk and appropriately create, implement and monitor their compliance standards.

The Salami tactic employed has allowed “slice by slice” changes to 501(r) to take place over the past five years without much opposition. When stepping back and viewing the broader change over time, it shows clear evidence of its significance. The small slice changes that have been made by the IRS are all connected to an enormous change in the way charitable hospitals must operate to keep their tax-exempt status intact. Section 501(r) is the most significant change to tax exemption standards for hospitals in more than 40 years.

Despite this Salamic approach, hospitals and other applicable healthcare organizations must take note and prepare themselves for compliance with the new rules.  These policies must be established and applied throughout the hospital organization with close collaboration among regulatory compliance, operations, and billing to ensure proper action is taken to address this tax-exempt status requirement.

__________________

Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog. He serves as the Vice President of Global Services for MiraMed, a global healthcare Business Processing Outsourcing services company. Phil has 25 years of experience in healthcare as an industry thought leader, strategist, solution provider, author and featured speaker. In this blog, you will read about important industry updates, strategies for
improving financial performance, and commentary that challenges the status quo. 

{ 0 comments }

The U.S. healthcare system needs an overhaul. I don’t know of anyone who would disagree with me. Healthcare providers have transitioned to the new clinical documentation system called ICD-10 (International Classification of Diseases) in order to document a patient encounter. The previous system, ICD-9 lacked the level of specificity needed to adequately describe a patient’s medical issue. Leave it to the government to make things more complicated. ICD-10 has 68,000 procedure codes, as opposed to the 13,000 in ICD-9.

Below you’ll find 80 of the craziest codes created for ICD-10. Look closely at them to make sure you absorb the level detail with their description. Case in point, consider this code: “V97.33XD Sucked into jet engine, subsequent encounter”. This means someone that has been sucked into a jet engine has a follow-up visit with their provider! Will wonders ever cease? Enjoy reading the list.

R14.3 Flatulence causing injury

G4482 Or a headache associated with sexual activity

V97.33XD Sucked into jet engine, subsequent encounter

V91.07XA Burn due to water-skis on fire, initial encounter

W61.62XD Struck by duck, subsequent encounterduck

W22.02XD Walked into lamppost, subsequent encounter

V0490XA Hit by a Mack Truck

Z631 Problems in relationship with in-laws

V00.15 Heelys accident roller shoes

W22.01XA Walked into wall, initial encounter

R46.1 Bizarre personal appearance

Z621 Parental overprotection

V95.41XA Spacecraft crash injuring occupant, initial encounter

W56.22xA Struck by orca, initial encounter

V96.00XS Unspecified balloon accident injuring occupant, sequelawater-splash-23798__180

T63.442S Toxic effect of venom of bees, intentional self-harm, sequela

X52 Prolonged stay in weightless environment

Z73.1 Type A behavior pattern

W49.01XA Hair causing external constriction, initial encounter

Z62.891 Sibling Rivalry

Y93.E4 Activity, ironing

S30.867A Insect bite (nonvenomous) of anus, initial encounter

W27.4XXD Contact with kitchen utensil, subsequent encounter

W50.2 Accidental twist by another person

T505x6A Under-dosing of appetite depressants, initial encounter

W60.XXXS Contact with Sharp Leaves

R46.0 Very low level of personal hygiene

Y92.146 Swimming-pool of prison as the place of occurrence of the external cause

S10.87XA Other superficial bite of other specified part of neck, initial encounter

W55.41XA Bitten by pig, initial encounter

Y34 Unspecified event, undetermined intent

Y93.D Activities involved arts and handcrafts

V00.01XD Pedestrian on foot injured in collision with roller-skater, subsequent encounter

W61.12XA Struck by macaw, initial encounter2689844157_d13751baa9_m

W.56.52 Struck by other fish

W59.21 Bitten by turtle

W58.11 Bitten by crocodile

Y93.D1 Knitting and crocheting

Y92.146 Swimming-pool of prison as the place of occurrence of the external cause

Y92.250 Art gallery as the place of occurrence of the external cause

V80.2 Occupant of animal-drawn vehicle injured in collision with pedestrian or animal

Y92.253 Opera house as the place of occurrence of the external cause

V61.6XXD Passenger in heavy transport vehicle injured in collision with pedal cycle in traffic

Z73.4 Inadequate social skills, not elsewhere classified

V61.6xxD Passenger in heavy transport vehicle injured in collision with pedal cycle in traffic

W5611XD Bitten by sea lion

Z89.419 Acquired absence of unspecified great toe

V9135XA Hit or struck by falling object due to accident to canoe or kayak

Y92241 Hurt at the library

Y92146 Hurt at swimming pool of prison as the place of occurrence

W55.21XA Bitten by a cow, initial encounter

Y92.024 Injured in the driveway of a mobile home

Y92.72 Injured in a chicken coop

W5609XA Other contact with dolphin, initial encounter

W51.XXXA Accidental striking against or bumped into by another person, initial encounter

V0001XD Pedestrian on foot injured in collision with roller-skater, subsequent encounter

V94810 Civilian watercraft involved in water transport accident with military watercraft

W56.09XA Struck by sea lion

W2202XA Hurt walking into a lamppost

W6133XA Being pecked by chickenchicken peck

R46.1 Bizarre personal appearance initial encounter

V91.34 Hit or struck by falling object due to accident to sailboat

W04 Fall while being carried or supported by other persons

Y92.142 Bathroom in prison as place

W55.52 Struck by raccoon

Y92.022 Bathroom in mobile home as place

Z65.2 Problems related to release from prison

W5803XA Crushed by alligator, initial encounter

W54.1XXS Struck by dog, sequela

S1087XA Other superficial bite of other specified part of neck, initial encounter.

Y92.010 Kitchen of single-family (private) house as place

V95.44XA Spacecraft fire injuring occupant, initial encounter

95.42 Forced landing of spacecraft injuring occupant

W21.11XA Struck by baseball bat, initial encounter

A281 Or cat scratch disease

W16.222D Fall in (into) bucket of water causing other injury, subsequent encounter

Y92.131 Mess hall on military base as the place of occurrence of the external cause

Y92.834 Zoological garden (Zoo) as the place of occurrence of the external cause

Y92.311 Squash court as the place of occurrence of the external cause

W61.02 Struck by parrot

__________________

Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog. He serves as the Vice President of Global Services for MiraMed, a global healthcare Business Processing Outsourcing services company. Phil has 25 years of experience in healthcare as an industry thought leader, strategist, solution provider, author and featured speaker. In this blog, you will read about important industry updates, strategies for
improving financial performance, and commentary that challenges the status quo. 

Media Credit: Various photo’s via photopin (license)

 

{ 0 comments }