|
 January 2008
Tough Times may be Ahead for Hospitals
 Although not-for-profit hospitals may not immediately feel the impact of a possible recession, Moody's is warning that they might fall on harder times in the relatively near future.
According to Lisa Goldstein, Senior Vice President of Moody's, by 2009 and 2010, not-for-profit hospitals may begin to feel the impacts of uncertainties regarding the outcome of the 2008 presidential election, the increased scrutiny of the not-for-profit hospital industry, and the rising number of uninsured and underinsured patients.
How will these factors, as well as changes to Medicare reimbursement and coding (see our article this month on MS-DRGs), increasing expenses, and managed care reimbursement issues ultimately affect hospitals' performance? Perhaps only time will tell.
Top CEO Concerns
According to an annual survey by the American College of Healthcare Executives (ACHE), financial challenges has once again ranked as the most significant concern among hospital CEOs. 70% of CEOs ranked it as one of their top three challenges.
Hospitals are already losing money when they treat Medicare and Medicaid patients, and with additional reimbursement cuts scheduled, this trend shows no sign of reversing. Hospitals are forced, therefore, to try to offset their loses by treating insured patients.
Unfortunately, the health plans are often not much more generous than the government. Higher reimbursement can be difficult, if not impossible, to negotiate and even when new contracts do increase payments, the plans do not always pay appropriately for services. In fact, studies have shown that between 3% and 14% of commercial revenue goes uncollected each year. For information on how Health Check can help recover these underpayments, please visit our website at www.hcaudit.com.
Other top concerns included: care for the uninsured (38%), physician-hospital relations (35%), quality (33%), and personnel shortages (31%).
MS-DRG Implementation
The date for the October 1, 2007 implementation of the new Medicare-Severity ("MS") DRGs has come and gone, but the effort to implement these new codes is ongoing for hospitals, physician practices, and other healthcare organizations nationwide. While the Centers for Medicare & Medicaid Services ("CMS") has assured these providers that the change in DRG classification will provide an increase in reimbursement as a result of higher coding, attempting to actually implement these new DRGs is proving to be costly.
Software and reimbursement vendors across the country have released products that tout the capability to do everything from educating a facility's staff on the new MS-DRGs, coding claims through the new classification system, providing reimbursement studies on the new MS-DRGs, and calculating possible losses and/or gains through the new system. No matter the software, hardware or publications purchased to assist in putting this new system into operation, facilities of all sizes face complex issues with the new MS-DRGs.
Originally, all payors were to convert to the MS-DRGs on October 1, 2007. Then, in its infinite wisdom, CMS allowed plans the option to delay implementation. Some insurers went exclusively to the MS-DRGs on the CMS implementation date, while others are lagging in their conversion efforts. How can a provider ensure they are submitting the appropriate DRG or MS-DRG to the correct payor? How do they know if 001 is a craniotomy (DRG) or heart transplant (MS-DRG)? A Health Check client in California has devised a simple solution that may prove insightful for your business as well.
Our client's patient accounting system, like many systems, can only maintain one DRG dictionary. Rather than implementing the new MS-DRGs on October 1, 2007 throughout their system, our client simply expanded their DRG database to include all of the new MS-DRGs, each with a prefix to indicate that it was a new DRG. This straightforward procedure allows anyone in the facility, from the billing office to the physician on the floor, to easily determine if the DRG assignment is one of the V24 DRGs or V25 MS-DRGs. Along with the simplicity of this method concerning facility staff, this uncomplicated system allows for the new DRGs to be used side-by-side with the 2007 classifications for the payors that are still requiring this older coding.
While the complexity of this MS-DRG conversion will be measured in both time and dollars for years to come, Health Check's client has certainly produced a simplistic, yet thoroughly effective, system for implementation.
Health Check's New Website
Thank you to everyone who has visited our newly redesigned website during the last month. Site traffic is up 100% from previous levels.
The new site, which was designed by Evolv Design, has a completely new layout, and we have also added a live RSS feed displaying healthcare financial news, links to industry articles and news, additional information about Health Check's services and staff, and even a secure section where clients can access their Health Check reports.
If you have not already visited the site, we welcome you to do so by clicking here.
Closing Open-Ended Contracts
Every day, Health Check identifies underpaid managed care accounts that cannot be recovered due to open-ended or vague contract language. The most common example of such language is regarding the plans and products that are covered by a contract.
A significant portion of the managed care contracts HCI works with are ambiguous when it comes to the definition of the plans and affiliates that are allowed to access the rates and discounts associated with the agreement. As a result, inappropriate products, and even payors, access unwarranted discounts.
For instance, Example Hospital has separate agreements with Sample Insurance Company for their HMO and PPO products that each contain language allowing Sample and "all of its entities and affiliates" to access the contract. If, as in most cases, the HMO contract offers lower reimbursement to the hospital than the PPO contract, the hospital may be at risk of Sample paying their PPO claims through the HMO contracted rates due to the open-ended language.
Another example of how vague contracting language can affect a hospital is when completely unrelated companies access the negotiated rates of another company. If the hospital signs a contract allowing any affiliates access to an agreement, the contracted insurance company is free to sign arrangements with other payors that allow them to gain access to their rates. These third parties may not be providing the hospital with any steerage of patients, but due to the vagueness of the contract there may not be anything that the facility can do to block the access.
Health Check recommends that all managed care contracts clearly define exactly which plans and products are allowed to access an agreement If an insurance company wants to offer a new product under their contract, or to provide access to a new plan, then it should be agreed to in writing by both parties.
While we are not attorneys, Health Check does understand managed care contracts and most importantly, how bad ones can affect a hospital's revenue. As part of our standard contingency fee auditing services, Health Check provides all clients with regular observations and recommendations regarding their contracts. Our goal is to not only recover lost money for hospitals, but also to help them avoid underpayments in the future.
|
