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The concept seemed simple enough, even if the outcome was unexpected. According to Kristin Reiter, Rebecca Slifkin, and Mark Holmes, writing under a cooperative agreement with the Health and Human Services' Office of Rural Health Policy, Health Resources and Services Administration, the hospital prospective payment system (IPPS) is designed to standardize payments for inpatient care. Under this system, hospitals receive a base operating payment and a capital payment for each Medicare case. The base operating rate is split into two components-a labor-related amount and a non-labor related amount.
The Benefits Improvement and Protection Act of 2000 (BIPA) required the Centers for Medicare and Medicaid Services (CMS) to collect data on the occupational mix of hospital employees for the purpose of constructing an occupational mix adjustment to the Medicare Hospital wage index in order to capture the local cost of labor. The intent was to improve the accuracy of hospital payments by ensuring that the wage index better reflects the differences among areas in the cost of the average mix of workers employed.
Theoretically, according to Reiter, Slifkin, and Holmes, "variation across hospitals in the cost of care that is due to efficiencies differences (such as decisions about the mix of professionals used to provide care to similar patients) should not result in payment difference, as these factors are assumed to be under management's control and provide the financial incentive to maximize efficiency."
It's what Dale Baker CPA; FHFMA, President of Baker Healthcare Consulting, Inc. (BHC), an Indianapolis-based consulting firm specializing in Medicare Payment strategies, especially wage index and Medicare geographic reclassification matters, calls the Robin Hood factor. The Congress, amended the Social Security Act to instruct the Centers for Medicare and Medicaid Services (CMS) to collect data every three years on the occupational mix of employees for each short-term, acute care hospital participating in the Medicare program, in order to construct an occupational mix to the wage index, beginning with 19 occupations in 2003. The law also required the application of the occupational mix adjustment to the wage index beginning October 2004.
According to Baker, however, that first survey did not go according to plan. Prior to the data collection, it was assumed that urban hospitals used workers with a higher/more advance skills mix (like registered nurses) while rural hospitals used a workers with a lower skills mix (LPNs, orderlies, etc.). "The survey and data collection was intended to level the playing field with respect to Medicare payments by using the data to arrive at an average national hourly wage," he says. It was assumed that this adjustment would benefit small, generally rural hospitals. After crunching the numbers, the agency found out that the information collected just didn't work, so they eliminated the skills mix altogether and collapsed the 19 occupations into 7 departmental subtotals." Baker adds that because the data collected didn't work, the agency was only able to apply it to 10 percent of the wage index in the first years of the program, FY2005 and FY2006.
The result was that, contrary to the intent, hospitals in New York City for example ended up with higher Medicare payments and approximately a third of the rural hospitals experienced decreases in payment.
The shortchanged hospitals sued CMS, and on April 3, 2006, the Court of Appeals for the Second Circuit ordered the agency to apply the occupational mix adjustment to 100 percent of the wage index effective for Federal fiscal year (FY) 2007. The Court required CMS to "immediately…collect data that are sufficiently robust to permit full application of the occupational mix adjustment." The Court also required that all "data Collection and measurement and any other preparations necessary for full application should be completed by September 30, 2006, at which time the agency was instructed to immediately apply the adjustment in full."
In order to carry out the Court's order, CMS was obligated to collect new occupational mix data from hospitals and determine the mix adjustment by that Court-mandated September date. However, given the constraints of the data collection process, hospitals were instructed to collect occupational mix data for the first three months of the six-month time frame previously announced for the 2006 survey.
The data from the second three months of the time frame would be used for FY 2008 and FY 2009 payments and for 2010 and 2011, CMS will use July 2007-June 2008-a full year-for the first time.
Baker notes that to encourage 100% compliance by hospitals, CMS uses a "soft hammer," that is hospitals are warned that if they don't submit the occupational mix data, the agency may use a negative adjustment to determine payment.
However, to date, the agency hasn't actually levied that penalty and hospitals typically are diligent about submitting the required information.
This 2007-2008 data will only include four nursing categories-registered nurses (RNs), licensed practical nurses (LPNs), medical assistants, aides/orderlies/attendants and an "all other" category.
"The biggest mistake hospitals can make is relying on job descriptions to complete the survey instead of actually talking with the nursing executives about what they do. It's essential to have the Finance executives talking with the nursing executives prior to completing the survey--to review the actual duties of RNs, LPNs, nurses aides, orderlies, and medical assistants, rather than simply rely on job descriptions."
He adds that the process used to interpret the occupational mix data is counter-intuitive. Although hospitals may feel that employing more RNs to patient cases is a way of improving patient care, the higher hourly wage that results in not rewarded by the occupational mix adjustment. He notes that it is better for a hospital to include as many lower-paid workers as possible, while completing the survey according to the instructions.
"Don't include nursing executives that do not provide patient care" he says. "Exclude advance practice nurses. Use the lowest skills worker applicable, while following survey instructions. For example, transporters (employees that move patients to, for example, the radiology department) are includable in the nursing aides category even if the salary is charged to radiology.More on Occupational Mix...
Publication Date: Thursday, August 07, 2008
In this Business Profile, Shawn Yates, director of healthcare product management at Ontario Systems, discusses the growing challenge of managing self-pay accounts and provides insight on how providers can successfully collect patient payments.
In this business profile, Cathy Smith, leader of the revenue transformation consulting practice at The Claro Group discusses how the organization helps hospitals and medical groups reimagine their revenue cycle.
In this business profile, Deloitte & Touche LLP executives Anne Phelps, principal and U.S. healthcare regulatory leader, and Daniel Esquibel, senior manager, explain ways health systems, health plans, and physician practices can prepare for MACRA.
In this Business Profile, Bruce Haupt, president and CEO of ClearBalance, discusses how a patient loan program can increase patient collections, reduce bad debt, and speed cash flow.
In this Business Profile, Jerry Bruno, principal with Deloitte Consulting LLP, discusses the importance of choosing revenue cycle solutions that help an organization meet the challenges of a quickly evolving healthcare environment.
In this business profile, Lane Jackson, a partner in the Grant Thornton LLP Health Care Advisory Services practice, with extensive experience in overseeing system implementations and revenue cycle reorganizations, discusses best practices for elevating revenue cycle performance during an EMR implementation. Grant Thornton LLP is a sponsor of the Large System Controllers Council Affinity Group.
Patient financial engagement is more challenging than ever – and more critical. With patient responsibility as a percentage of revenue on the rise, providers have seen their billing-related costs and accounts receivable levels increase. If increasing collection yield and reducing costs are a priority for your organization, the metrics outlined in this presentation will provide the framework you need to understand what’s working and what’s not, in order to guide your overall patient financial engagement initiatives and optimize results.
No two patients are the same. Each has a very personal healthcare experience, and each has distinct financial needs and preferences that have an impact on how, when and if they chose to pay their healthcare bill. It’s no longer effective to apply static billing techniques to solve the complex challenge of collecting balances from patients. The need to tailor financial conversations and payment options to individual needs and preferences is critical. This presentation provides 10 recommendations that will not only help you improve payment performance through a more tailored approach, but take control of rising collection costs.
This white paper, written by Apex Vice President of Solutions and Services, Carrie Romandine, discusses the importance of patient segmentation and messaging specifically related to the patient revenue cycle. Applying strategic messaging that is tailored to each patient type will not only better educate consumers on payment options specific to their billing needs, but it will maximize the amount collected before sending to collections. Further, targeted messaging should be applied across all points of patient interaction (i.e. point of service, customer service, patient statements) and analyzed regularly for maximized results.
This white paper, written by Apex President Patrick Maurer, discusses methods to increase patient adoption of online payments. Providers are now seeking ways to incrementally collect more payments due from patients as well as speeding up the rate of collections. This white paper shows why patient-centric approaches to online payment portals are important complements to traditional provider-centric approaches.
Increased electronic engagement between healthcare providers and patients provides significant opportunities for improving revenue cycle metrics and encouraging patients to access EHRs. This article, written by Apex Founder and CEO Brian Kueppers, explores a number of strategies to create synergy between patient billing, online payment portals and electronic health record (EHR) software to realize a high ROI in speed to payment, patient satisfaction and portal adoption for meaningful use.
Faced with a rising tide of bad debt, a large Southeastern healthcare system was seeing a sharp decline in net patient revenues. The need to improve collections was dire. By integrating critical tools and processes, the health system was able to increase online payments and improve its financial position. Taking a holistic approach increased overall collection yield by 10% while costs came down because the number of statements sent to patients fell by 10%, which equated to a $1.3M annualized improvement in patient cash over a six-month period. This case study explains how.
With the ICD10 deadline quickly approaching and daily responsibilities not slowing down, final preparations for October 1 require strategic prioritization and laser focus.
Read how Gwinnett Medical Center provides clear connections to financial information, offers multiple payment options for patients, and gives onsite staff the ability to collect payments at multiple points throughout the care process.
Read how Orlando Health was able to perform deeper dives into claims data to help the health system see claim rejections more quickly–even on the front end–and reduce A/R days.
To maintain fiscal fitness and boost patient satisfaction and loyalty, healthcare providers need visibility into when and how much they will be paid–by whom–and the ability to better navigate obstacles to payment. They need payment clarity. This whitepaper illuminates this concept that is winning fans at forward-thinking hospitals.
Financial services staff are always looking for ways to improve the verification, billing and collections processes, and Munson Healthcare is no different. Read about how they streamlined the billing process to produce cleaner bills on the front end and helped financial services staff collect more than $1 million in additional upfront annual revenue in one year.
Effective revenue cycle management can be a challenge for any hospital, but for smaller providers it is even tougher. Read how Wallace Thomson identified unreimbursed procedures, streamlined claims management, and improved its ability to determine charity eligibility.
Before launching an energy-efficiency initiative, it’s important to build a solid business case and understand the funding options and potential incentives that are available. Healthcare leaders should consider taking the steps outlined in the whitepaper to ease the process of gaining approval, piloting, implementing, and supporting sustainability projects. You will find that investing in sustainability and energy efficiency helps hospitals add cash to their bottom line. Discover how hospitals and health systems have various options for funding energy-efficient and renewable-energy initiatives, depending on their current financial structure and strategy.
Health care is a dynamic mergers and acquisitions market with numerous hospitals and health systems contemplating or pursuing formal arrangements with other entities. These relationships often pose a strategic benefit, such as enhancing competencies across the continuum, facilitating economies of scale, or giving the participants a competitive advantage in a crowded market. Underpinning any profitable acquisition is a robust capital planning strategy that ensures an organization reserves sufficient funds and efficiently onboards partners that advance the enterprise mission and values.
The success of healthcare mergers, acquisitions, and other affiliations is predicated in part on available capital, and the need for and sources of funding are considerations present throughout the partnering process, from choosing a partner to evaluating an arrangement’s capital needs to selecting an integration model to finding the right money source to finance the deal. This whitepaper offers several strategies that health system leaders have used to assess and manage capital needs for their growing networks.
Announcements from several commercial payers and the Centers for Medicare and Medicaid Services (CMS) early in 2015 around increased efforts to form value-based contracts with providers seemed to point to an impending rise in risk-based contracting. Rather than wait for disruption from the outside in, health care providers are now making inroads on collaborating with payers on various risk-based contracting models to increase the value of health care from within.
Yuma Regional Medical Center (YRMC) is a not-for-profit hospital serving a population of roughly 200,000 in Yuma and the surrounding communities.
Before becoming a ZirMed client, Yuma was attempting to manually monitor hundreds of thousands of charges which led to significant charge capture leakage. Learn how Yuma & ZirMed worked together to address underlying collections issues at the front end, thus increasing Yuma’s overall bottom line.
Kindred Hospital Rehabilitation Services works with partners to audit the market and the facility’s role in that market to identify opportunities for improvement. This approach leads to successes; Kindred’s clinical rehab and management expertise complements our partners’ strengths. Every facility and challenge is unique, and requires a full objective analysis.
As the critical link between patient care and reimbursement, health information enables more complete and accurate revenue capture. This 5-Minute White Paper Briefing shares how to achieve cost-effective revenue integrity by your optimizing HIM systems.
Speedier cash flow starts with better CDI and coding. This 5-Minute White Paper Briefing explains how providers can improve vital measures of technical and business performance to accelerate cash flow.
Qualified coders are getting harder to come by, and even the most seasoned professional can struggle with the complexity of ICD-10. This 5-Minute White Paper Briefing explains how partnerships can help improve coding and other key RCM operations potentially at a cost savings.
The point of managing your revenue cycle isn’t just to improve revenue and cash flow. It’s to do those things effectively by consistently following best practices— while spending as little time, money, and energy on them as possible.
How Lucile Packard Children’s Hospital Stanford increased payments received within 45 days by 20% and reduced paper submission claims by 70% by using ZirMed solutions.
The reasons claims are denied are so varied that managing denials can feel like chasing a thousand different tails. This situation is not surprising given that a hypothetical denial rate of just 5 percent translates to tens of thousands of denied claims per year for large hospitals—where real‐world denial rates often range from 12 to 22 percent. Read about how predictive modeling can detect meaningful correlations across claims denials data.
Emergency Mobile Health Care (EMHC) was founded to be and remains an exclusively locally owned and operated emergency medical service organization; today EMHC serves a population of more than a million people in and around Memphis, answering 75,000 calls each year.
Since the Physician Quality Reporting Initiative (PQRI) introduction, CMS has paid more than $100 million in bonus payments to participants. However, these bonuses ended in 2015; providers who successfully meet the reporting requirements in 2016 will avoid the 2% negative payment adjustment in 2018, so now is the time to act! Included in this whitepaper are implications of increasing patient responsibility, collections best practices, and collections and internal control solutions.
Getting paid what your physician deserves—that’s the goal of every biller. Yet even for the best billers, achieving that success can be elusive when denials stand in the way of success, presenting challenges at every turn. Denials aren’t going away, but you can learn techniques to manage and even prevent them.Join practice management expert Elizabeth W. Woodcock, MBA, FACMPE, CPC, to: Discover methods to translate denial data into business intelligence to improve your bottom line, determine staff productivity benchmarks for billers, and recognize common mistakes in denial management.
Physician practices must improve organizational efficiency to compete in this era of reduced reimbursement and escalating administrative costs.
Many healthcare organizations are pursuing next-generation health information systems solutions. Learn more about Navigant's work with University of Michigan Health System.
The proper implementation of healthcare information technology systems is crucial to an organization’s financial health.
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.
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