Browse by Topic
More than 40,000 members value HFMA's thought leadership and practical strategies. HFMA is where you need to be.
Get acquainted with the
healthcare finance industry's leading professional association. Find out why our
members rely on HFMA as their go-to source for insight and
Members have many
options for helping them advance their careers. Conferences, seminars,
eLearning, certification, and more -- our education and events will keep you
Connect the dots on today's big issues, explore collaborations, get career-boosting tips, and network with colleagues nationwide at the leading finance conference. Save $100 off the full conference rate when you register by May 8.
Real-time presentations with nationally recognized experts, networking opportunities, and industry solutions—no travel required!
Get the latest, practical education in key areas of healthcare finance over 1, 2, or 3 days. Choose Essentials Programs or Master Sessions in DC or Seattle. Register early and save $100.
If you're a subscriber to any of our three newsletters, you have access to online education. Learn more or subscribe.
Get the perspectives of leading healthcare finance professionals on today's hottest issues.
Information about leading vendors helps your buying decisions.
Forum members can network during live webinars or access a library of past webinars on topics such as bundled payment, charity care, and ICD-10.
An ever-expanding collection of spreadsheets, policies, job
descriptions, checklists, and more that you can adopt and adapt.
Forum members can submit vexing questions to a panel of experts
using our Ask the Expert service.
Your source for employment solutions.
Find new employment opportunities or
reach out to qualified candidates.
Distinguish yourself as a
leader among your peers and advance your career by earning certification in our
healthcare finance programs.
Get an objective third-party evaluation of products and services used in the healthcare finance workplace.
MAP App is a web-based application that helps organizations improve revenue cycle performance based on industry-standard metrics called MAP Keys.
Find suppliers and products in this comprehensive vendor directory for healthcare finance professionals.
Guidance for understanding and communicating about the price of health care.
Transformation toward value-based healthcare is reshaping the delivery of care, patient expectations, and payment structures.
Improve your revenue cycle performance through standard metrics, peer comparison, and successful practices.
By Richard Bajner and Eric Logue
Hospitals are increasingly finding payers unwilling to increase reimbursement without sound reasoning. Hospital systems that are able to clearly articulate their "value" story have had greater success negotiating contracts that maintain current unit rate trends. Conversely, hospitals that haven't been able to back up their rate increase positions with detailed analytics have a much greater likelihood of leaving substantial revenue on the table.
What tactics work when you are trying to justify a rate increase request?
This is a sample article from HFMA's Payment & Reimbursement Forum, a subscription-based discussion community that encourages networking and sharing among reimbursement, managed care, and finance leaders.
Learn more and join the Payment & Reimbursement Forum
Payers are investing more resources into their analytic foundation to better benchmark hospital value profiles, including detailed cost comparisons across hospitals. We have observed the following four steps will help you define your "value" story.
Step 1: Benchmark your quality versus the market. As payment systems evolve from volume-based to outcomes-based, providers will need the necessary IT systems and analytic infrastructure to measure and monitor quality trends. It is important to view your data from a payer's standpoint so as to define the quality conversation before your payers define it for you. Risk-based payment models based on quality performance will require integrating managed care and clinical strategies in order to price your performance risk appropriately.
Some key metrics that payers currently use to shape a quality conversation include the following. All of these are based on publicly available data.
Providers that can provide trended quality data to illustrate consistent high performance have had success maintaining or raising current annual rate increases.
The following exhibit illustrates one way to present comparative quality data.
Access exhibit:Trended Quality Scores
Key take-away: If hospitals cannot quantify their quality positions to payers, they will likely not be able to quantify their positions to patients or employers, which would be critical if a contract negotiation went to term.
Step 2: Quantify your cost position. Achieving high quality is important to your value story; however, a national focus is forcing executives to better understand their cost positions. Health plans are investing in the capability to understand the value of the healthcare services that they are purchasing. As such, they are mining data for key cost and quality trends to create "value" positions for providers within their networks. These analytics become the foundation for their network strategy as they attempt to shift volume to high-quality, low-cost facilities.
A health system was recently able to demonstrate its high-quality, low-cost position using the following graphic, which defined the system's importance to the payer early in negotiations.
Access exhibit:Defining Your Cost and Quality Position
Key take-away: If a hospital has low costs, high quality, and low margins, an increase to rates is justifiable.
Step 3: Identify your rate position versus the market. The most difficult and complex step relates to quantifying your rate position versus the market. While payers have rate information for their networks, providers are often left to benchmarking their rates by comparing their discounts versus the market. Such analysis assumes similar charge positions, yet our research indicates tremendous charge variances within markets.
A more detailed and accurate benchmarking can help you quantify your rate position for inpatient and outpatient services-down to DRG and CPT detail levels.
Triangulating your market position can be achieved by benchmarking your rates to different data sets, including:
Identifying specific areas where rates fall below the market has helped providers negotiate better terms that can be implemented immediately or through a phased-in approach over time.
Knowing where you need to defend a premium price versus where you should achieve mar-ket parity is a negotiating advantage, especially if you can integrate your quality and cost story into your rate benchmarks. Recently, we helped one community hospital benchmark its rates versus market and Medicare by service line, using a single graphic to illustrate markups versus both market and Medicare by service line (see the exhibit below). This visual representation helped communicate rate opportunities and vulnerabilities to executives in order to integrate unit reimbursement rates into a larger strategic margin plan.
Access exhibit:Service Line Rate Benchmark
Key take-away: Hospitals need to understand their market positions. Justification for increased rates is related but separate from determining if the market will bare a rate increase. Hospitals can start by benchmarking their own payer rates against each other.
Step 4: Define how your services are differentiated. Through your first three steps, you've already benchmarked your cost, quality, and rates versus the market. So you're on your way to showing how you are differentiated. But asking yourself these additional questions will round out your story:
Summarizing your analysis into a single graphic quickly tells your story. For example, in the following exhibit, cardiac services have a rate, cost, and quality advantage. However, the service has seen volumes decline over recent years. Pushing rate increases to a service with volume losses may not maximize future revenue. In contrast, orthopedics has both a quality and cost advantage as well as volume growth with rates below market averages. Negotiating rate increases for orthopedics will maximize future reimbursement given the strong volume growth in this service line.
Hospitals can use this service line differentiation tool to identify and analyze how service lines compare to the market. In this example, the hospital's cardiac services have a rate, cost, and quality advantage. However, the service has seen volumes decline over recent years. Pushing rate increases to a service with volume losses may not maximize future revenue. In contrast, orthopedics has both a quality and cost advantage as well as volume growth with rates below market averages. Negotiating rate increases for orthopedics will maximize future reimbursement given the strong volume growth in this service line.
Access exhibit:Summary Service Line Differentiation
Providers with an organized approach to quantifying their value propositions and being able to effectively communicate that value to key stakeholders, including payers, physicians, patients, and employers, are in a much stronger negotiating position. Failing to do this prior to the negotiation creates risk of reduced hospitalwide margins and reduced credibility of the negotiators.
Richard Bajner is managing consultant, Navigant Consulting, Inc., Chicago, and a member of HFMA's Florida chapter (rbajner@NavigantConsulting.com).
Eric Logue is director, Navigant Consulting, Inc., Chicago, and a member of HFMA's Georgia chapter (elogue@NavigantConsulting.com).
Eric and Rich look forward to hearing from you. Feel free to contact them with any questions.
Forum members: Please share your comments, questions, and insights about this article on the Payment & Reimbursement Forum's Linked In discussion site:
Or perhaps you have another discussion starter?
Publication Date: Thursday, February 24, 2011
Brian Kueppers, founder and CEO, Apex, discusses the importance of a robust patient payment strategy in boosting organization revenue and enhancing patient satisfaction.
Brian Grazzini, CFO, HealthPort, describes the importance of efficient and compliant information exchange and audit management in helping HIM staff spend less time on paperwork and more on mission-critical projects.
Cindy Matthews, executive vice president, Community Hospital Corporation, discusses how rural and community hospitals can use collaborative partnering to position for success through tough market conditions.
Rick Heise, senior vice president, revenue cycle, at Cerner Corporation, discusses the importance of integrating clinical and financial data to excel in health care’s changing payment environment.
Dale Hockel, senior vice president of operations, and Jim Fanelli, CFO, TriMedx, share strategies for elevating clinical engineering through innovative management programs.
Russ Graney, founder and CEO for Aidin, and John Laursen, head of business development for Aidin, share insights on how to improve care transitions between acute and post-acute care settings and incentivize high-quality patient outcomes.
Scott Elston, strategic accounts manager, GE Healthcare Services, describes how substantial cost reduction in health care requires rethinking business strategy and asset use.
Robert Williams, MD, director, Deloitte Consulting LLP, and Arielle Freiberger, product strategist, ConvergeHEALTH by Deloitte, explain how sophisticated retrospective, real-time, and predictive data analytics can inform decision making to reduce costs and improve care.
Stuart Hanson, director of business development (healthcare solutions) at Citi Retail Services, discusses how improving the payment experience can benefit consumers and healthcare providers.
Scott Schmidt, vice president, Cerner RevWorks, LLC, shares insights on best practices for maximizing a revenue cycle management partnership.
HFMA's print, email, online, and mobile opportunities provide you maximum reach and impact. We will work with you to build a plan that meets your needs. Contact a sales rep.
HFMA offers online, email, and print opportunities to help you recruit the most talented healthcare finance professionals. Place your classified ads today.
Drive down costs while improving quality in a reform environment.
Stay informed about new directions in healthcare finance. Share tools and strategies for improving performance. Be an active participant in your profession. Together, we’ll reshape the business and practice of healthcare. Join us.
©2015 Copyright Healthcare Financial Management Association
HFMA.org is best viewed using IE9 or the latest versions of Chrome, Firefox, and Safari.
Join HFMA today and enjoy: