Every year, as the winter holiday season rolls around, the greatest debate of our time resurfaces – is Die Hard a Christmas movie?
We at Cleverley + Associates believe that the answer to this question may be beside the point. What’s important are the traditions we create for ourselves, especially around the holidays. What really matters is what brings us together and make us feel happy and fulfilled.
But also, yes. It’s a Christmas movie.
Plus, it’s a totally awesome action movie, which means injuries…a lot of injuries. That got us thinking – we assume that John McClane went to a hospital eventually, and considering what he’d gone through, what would his treatment cost him and the hospital?
Last year, we speculated wildly on Mr. McClane’s bill. Let’s see what would change this year! As we pointed out last year, we’re not doctors, we’re data nerds, so our diagnosis and treatments are only tangentially related to real life medical advice.
Our hero sustains his first injury (or probably injuries) as he falls down the stairs while fist fighting. There are a lot of injuries that can occur from both a fall and a fight, but since Mr. McClane goes on to punch several other people, we can rule out fractures, spinal injuries, and basically anything that would put in him in traction.
But we can’t rule out a concussion, or a subdural hematoma.
He’d probably get an MRI and CT scan (Let’s go ahead and do both, since he’s a hero.)
We’d also want to do an ImPACT test.
This year the hospital saved a whopping $11, while Mr. McClane will owe $917 more than last year.
Next up, the most famous injury, deep cuts to our hero’s feet, because he walked across broken glass.
Ow.
So, we’re talking lacerations to the feet.
We’re going to need a lot of antiseptic, bandages, and probably stiches. Also foreign body removal from the wounds.
Again, ow.
It looks like Mr. McClane saved $466 on his terrible and iconic podiatric injury! It cost our fantasy hospital $104 more.
Next up, poor McClane is shot in the shoulder! The following scenes, where he still manages to win in hand-to-hand combat with the villain, show that the bullet likely grazed him. Of course, we can’t rule out that the bullet is still there, or a shard of it. So, we’re going to have to explore the wound to make sure it’s clean, and probably take an x-ray to make sure we got all the bullet bits out.
This year that procedure looks cheaper for both John and the hospital! Mr. McClane will save a total of $1,553 while the procedure will be $402 cheaper for the hospital!
Lastly, in the grand finale, John McClane wraps a fire hose around himself and bungee jumps off the building. This is, generally speaking, a terrible idea. He then breaks through a window using his already battered body. Again, not a great idea.
This could, of course, cause a variety of injuries, but let’s go ahead and just assume the worst – a fracture of the vertebrae and ribs. There would probably also be internal damage as well, but considering he’s still walking around being witty, let’s assume he’s miraculously okay-ish.
These procedures will cost McClane $112 more than last year, and cost the hospital $28 more.
The end of the movie seems to suggest that McClane rides off into the sunrise with his wife, triumphant and filled with the Christmas spirit. I assume they didn’t go straight home with the hope that he would survive until morning. More likely they stopped at the ER to at least make sure he wasn’t bleeding internally.
So here’s everything all together! Overall, both John and the hospital saved money this year. John spent $970 less and the hospital saved a total of $281!
Insurance audits can be an intimidating prospect, but they’re necessary and, unfortunately, inevitable. Even if an insurer didn’t single your facility out for an audit, you may be part of a random selection. Whether you’re preparing for a pre-payment review or a post-payment review, the general purpose of an audit, from the insurer’s perspective, is to check for fraud abuse, and waste. There’s no such thing as a routine audit. They’re all a little bit different, but there are some things you can do to prepare ahead of time.
1. Words!
Read the language of the audit notification very, very carefully. Obviously, you’ll need to know timeline information and deadlines, but every audit is a little different and giving special attention to what they’re asking for can save you time. Why do they want the audit? What are they looking for? What documentation are they asking for? Make a list so you can tackle each part systematically.
2. Scope!
Focusing on the language leads us to the second step – scope. What does the audit include? What isn’t included? Your list of necessary items will help you get a handle on not only what is necessary, but how much of your facility will be impacted. You can determine who needs to be involved. How much help do you need? Do you need to loop in an attorney or compliance officer? Of course, your facility may consider every audit worthy of all-hands-on-deck, but if not, it’s good to be prepared.
3. Stuff!
Get all your stuff – medical records, invoices, and whatever else they’ve requested – all together in one place. If you need to have your physicians sign off on the medical records, prepare that too. If you’re missing something, it’s easier to determine that if you haven’t been sending information piecemeal. You may need to ask for a deadline extension, but once you have everything, you can conclude the audit.
4. Help!
A good option, when preparing for audits, is to get more people in your corner! We have several approaches that could clarify and improve the process. We can help you understand how CDM changes impact payers and how potential changes might disproportionately impact some payers, which might raise red flags. We can analyze how your decision-making will impact your payment from individual payers. We’ll look at your contracts closely and show you how a change in prices might affect your payment. If this change is too dramatic, it may trigger an audit. We also offer services to benchmark terms and help hospitals evaluate how payment changed through contract alterations from year to year.
Audits can be frustrating, and they’re often a huge amount of work, but, besides being necessary, they can provide a wonderful look at the health of your organization, as well as your data collection and storage systems. Being honest and comprehensive is the best way to give yourself, as well as the insurer, the best look at your facilities.
To learn more about how we can help give us a call at 888.779.5663 or contact us here!
Another Way to Gauge Your Hospital’s Financial Health
Beckers recently published an article on how to gauge your hospital’s financial health, and they make excellent points. You can read the full article here. They cover many of the basics, including Aggregate Volume, Operating Ratios, Labor Costs Relative to Patient Volume, and Liquidity Ratios, but we believe there is another measurement that can shed light on your facility’s health and financial stability – Equivalent Discharges.
Equivalent Discharges is an alternative to Adjusted Patient Discharges as a measurement of patient load and resulting revenue.
Virtually every hospital finance executive knows that relative pricing methodology can influence Adjusted Discharges or Adjusted Patient Days. Increases in Relative Outpatient Prices will artificially increase Adjusted Discharges, while decreases in Relative Outpatient Prices will artificially decrease Adjusted Discharges.
In addition, modifying an Adjusted Discharge value by the inpatient case mix makes little sense because the complexity of an organization’s outpatient case mix does not always correlate with that of its inpatient case mix.
Equivalent Discharges is expressed as follows: Equivalent Discharges = Case Mix Adjusted Discharges + Conversion Factor X Case Mix Adjusted Visits
Hospital financial health can’t be measured by one metric alone, and ideally, we use many metrics and frequent checkups and reassessments. One of these can be Equivalent Discharge.
To learn more about Equivalent Discharges, and how we can use them to measure your hospital’s financial health, you can read our white paper here. Or give us a call at 888.779.5663 or contact us here.
Update: FY21 IPPS Final Rule Requirement to Post Median Payment for Medicare Advantage Plans
The FY21 IPPS Final Rule solidified a new requirement for hospitals to post the median payment (called the median “payer specific negotiated charge”) by MSDRG for Medicare Advantage (MA) plans. The plan is to use this information to establish weights for MSDRGs using hospital payments, as opposed to hospital costs via the current cost-to-charge ratio methodology. Per the rule, this transition to payment-based weights would likely begin in FY24. There are several key points to consider in this new requirement:
Hospitals are required to disclose this information through the Medicare cost report for periods on or ending after January 1, 2021.
The requirement is ONLY for Medicare Advantage plans and will represent a median across all of those plans – NOT disclosing the payment for individual MA plans separately. So, if the hospital has three MA plans, the median payment by MSDRG across those three plans will need to be calculated and disclosed through the Medicare cost report. This does not represent the median reimbursement amount but rather the median payment across patient claims for MA payers. Through the proposed rule, CMS had considered requiring hospitals to disclose this information separately for all third-party plans but finalized action for a calculated median across MA plans only.
While this new requirement comes on the heels of the Final Rule on Hospital Price Transparency released in November 2019, this new requirement does not alter those previous requirements. To be clear, CMS still expects hospitals to report all payer specific negotiated charges for all negotiated payers – including MA plans assuming those have been negotiated – and to post those on the hospital website through the single machine readable file and the consumer friendly shoppable services display.
For more information, you can find the federal register here.
We will continue to monitor changes to the Final Rule. If you would like to be part of our mailing list, to make sure you don’t miss anything, let us know.
Content included a description of the price transparency guidelines effective 1/1/21, a list of important action items hospitals must implement, and a discussion of the two different ways prices must be published.
Thanks to great attendance and participation in this event, we put together the following list of frequently asked questions!
Q: At what detail level do we have to post payer negotiated charges? We have multiple contracts for one payer i.e. Aetna, Anthem? A:We interpret the rule to mean that payer negotiated rates should be at the product level. A contract with Aetna may have multiple products (i.e. PPO, HMO, etc.) with different negotiated rates and even different payment methods.
Q: Can payer specific information be limited to top contracts…i.e. 80/20 rule? A:The CMS has not established any thresholds, so we believe that a hospital would need to provide all negotiated contracts. However, we do believe it is reasonable that a hospital would not need to show negotiated rates for older contracts for which there are currently no volumes.
Q: It sounds like payer specific charges need to be included in 2 places for each facility – 1) the list of standard charges and 2) the list of shoppable services – is this correct? A:This is correct. Facilities are required to provide a machine-readable file with five standard charges (1. gross charge, 2. discounted cash price, 3. payer-specific negotiated charge, 4. de-identified minimum negotiated charge, and 5. de-identified maximum negotiated charge) and a consumer friendly shoppable services file with all standard charges except gross charge. As an alternative to the consumer friendly shoppable services file, the CMS will deem compliant facilities that maintain a patient estimation tool that provides information on at least 300 shoppable services (including the CMS required 70).
Q: Is there any talk of consumers using this to shop for insurance plans? A:Since most consumers obtain health insurance through their employers, it is not as likely that consumers would use this information to shop for insurance plans, but it is conceivable that employers might do so.
Q: Is there anything in the rule that would deter us from locking the cells of our csv files to prevent tampering or changing items within the files loaded to our website. A:The CMS final rule includes a link to Web Standards and Usability Guidelines (https://webstandards.hhs.gov/). The link will take you to Policies and Standards, including a Checklist of Requirements for Federal Websites and Digital Services. Under the heading “Security”, this checklist states that you should “Provide adequate security controls to ensure information is resistant to tampering . . . .”
Q: My contract does not include a payer’s community fee schedule (Lab, PT/OT, Professional Fee), we just accept these rates. Would we need to post these rates? A:Below is an excerpt from the CMS final rule: “hospitals would not include payment rates that are not negotiated, such as rates set by certain healthcare programs that are directly government-financed, for example, those set by CMS for FFS Medicare. We indicated,however, that we believed the display of a non-negotiated rate (for example, display of a Medicare and Medicaid FFS rate for an item or service) in conjunction with the gross charge and the payer-specific negotiated charges for the same item or service could be informative for the public and that the proposals would not preclude hospitals from displaying them.”
Q: On the Pro fees is that really charges, or is it also reimbursement? A: Pro fees are subject to the same five definitions of charges as required of hospitals – gross charge, cash discounted price, payer-specific negotiated charge, de-identified minimum negotiated charge, and de-identified maximum negotiated charge. The disclosure of pro fees is required only for employed physicians and non-physician practitioners.
Q: Our surgical codes are not hard coded in the charge master. How should they be shown in this format? A:We interpret this to relate to surgical charges that are based on time in the operating room where HCPCS are assigned by HIM upon billing. We propose multiple worksheets to meet the requirements of the rule. Worksheet One would show the gross charge as built in your charge master and would show your time-based surgery charges by item code. Other worksheets would show discounted cash price or payer-specific negotiated rates by service packages where surgical charges may be rolled up at the HCPCS level or through other assigned case rates.
Q: We have maybe 100 supply codes for surgery supplies that cover our 8000 surgery items and the price is based on cost markup for each one when added so all the prices are different. How would we do that? A:We recommend that you use average charge for the supply code based on usage and actual charges.
Q: We have over 2000 payer contracts and they are 99% in pdf any suggestions on tackling the payer negotiated rates? A: While hospitals may have many payer plans associated with various combinations of contracts and employers, the number of contracts with different payment rates is typically much smaller.
Q: Are MA plans included in the reporting requirements or are those grouped together with Medicare Fee for Service? A:Medicare Advantage rates, if negotiated, should be reported under the rule’s requirements.
Q: Are the “Service Packages” for the Chargemaster file, or the Shoppable Services component? A:Service packages would apply to shoppable services, as well.
Q: For a multi hospital organization, do you have to provide and list the 5 standard charges for each hospital, even if each hospital has the exact same rate structure/charge structure? A:Per the Final Rule on Transparency, “each hospital location operating under a single hospital license (or approval) that has a different set of standard charges than the other location(s) operating under the same hospital license (or approval) must separately make public the standard charges applicable to that location, as stated in 45 CFR 180.50. All hospital location(s) operating under the same hospital license (or approval), such as a hospital’s outpatient department located at an off-campus location (from the main hospital location) operating under the hospital’s license, are subject to the requirements in this rule.” We interpret this to mean if the reporting of the different definitions of standard charges and items and services would yield the same results for system facilities, then one file could be produced to represent those facilities and could be indicated as such on the file’s naming structure.
Q: If you have an organization that has multiple hospitals, is the penalty applied to each of the hospitals? A:Per the explanation above, we interpret that the penalty would be applied to each facility that has a different set of standard charges. You should contact legal counsel for your specific circumstances.
Q: Has anyone discussed how to best layout bundled pricing in regard to Transplant services? (something that has different rates, structures across care phases) A:Since the continuum for care related to transplant reimbursement typically includes pre- and post-transplant services in addition to the transplant procedures, the presentation of the payer-specific rates may be complex. We would welcome a conversation with you to discuss the specific concern and how you might best address it.
Q: Has CMS released the naming convention of these files/the preferred location to be housed on our websites? A:The CMS final rule requires that the information be “displayed prominently” meaning “. . . that the value and purpose of the webpage and its content is clearly communicated, there is no reliance on breadcrumbs to help with navigation, and the link to the standard charge file is visually distinguished on the webpage.” Below is a header suggestion that CMS provided as an example in the final rule:
Q: If my hospital does not schedule labs, could labs be part of the 300 shoppable, including the labs listed in the 70 required? A:The CMS final rule provides the following definition: “Shoppable services are typically those that are routinely provided in non-urgent situations that do not require immediate action or attention to the patient, thus allowing patients to price shop and schedule a service at a time that is convenient for them.” Based on the above definition, if the lab allows the patient to receive the test at a time that is convenient for them even if not scheduled, it could still be considered shoppable.
Q: Many charges don’t drive the reimbursement rate, or the reimbursement varies based upon the context under which they are provided. How are the payer specific charges presented for these services? A:Claim payment will be variable for similar types of services based on patient experience and utilization. By disclosing the different negotiated elements (carve out, outlier, lesser-than terms, as examples) the CMS hopes to inform patients on the types of components that could impact final payment.
Q: Does this new requirement essentially incorporate the previous current requirements for DRG/Charges… We’re not expected to post the FY2019 requirement and now the FY2021 requirement? A:That is correct.
If you have any other questions, please contact us at sales@cleverleyassociates.comor here!
