Scott Johnson, FHFMA
Vice President, Finance, Legacy Health System, Portland, Ore.
I was just reading Joseph Fifer's column in hfm magazine on courage in leadership and wanted to offer an idea that I believe truly embodies this concept.
One of the most costly things we do in healthcare is bill and collect. There are entire industries built around helping insurance companies and providers deal with the myriad payment structures we have allowed to develop over the years. In my opinion, most of this is waste. Computer systems have advanced to the point where we could probably automate countless manual processes and eliminate countless "bolt on" programs designed to deal with exceptions. Payers believe they need their unique payment structures to provide contract cost control or "predictability." Hospitals accept these required structures more often than not and then just deal with the problems they create. Certainly there is no coordinated effort to standardize these payment structures, even by the hospitals that pride themselves the most on good contracting and insistence on reasonable payment structures. And in the end, most hospitals and health plans are evaluating the performance of a contract in total anyway, and less concerned about the details of how one piece or another of it performs. As a result, there appears to be little value added relative to the vast expense created to maintain these systems.
I believe HFMA could and should take a leadership role in standardizing the payment structures used to pay hospitals. I don't necessarily like Medicare's payment methodology, and I really don't like the complexities in the APC formulas. But I would advocate for making Medicare payment methodology the standard, or something similar to it that is more simple, then advocate for CMS to simplify the Medicare methodology to match. Countless billions of dollars could probably be saved with such a change to a common payment structure. Payers and providers would still negotiate rates within the common structure, to achieve the results they need by service and in total. The savings would come in being able to automate billing and collections. Everything could be done electronically. I also don't believe this is something individual state chapters can take on individually. The major payers that would need to be engaged are national and regional. This would need to be a national effort with buy-in from the majority of HFMA members, and discussion with all the major health plans. In the end, it may mean hospitals stand united to force a change that will not be welcomed by the insurance carriers.
One of the major benefits of this for the healthcare industry and consumers would be the ability to more quickly advance the cause of transparency in pricing. Under a common payment structure, the ability to compare prices by service becomes instantly available. Differences in outlier methodologies and other nuances may complicate things, but the advancement of common definitions and terms would be a major step forward.
The downside of this idea is that many of our HFMA members and supporters (custom program developers, claims recovery companies, etc.) might be negatively affected. But that is not a good reason for HFMA not to take the lead on this.
You want to talk about Courage in Leadership? Here's a good one for us to consider!
