Staying Ahead of the Curve
Revenue Cycle Change
Joseph J. Fifer, FHFMA, CPA
President and CEO, HFMA
2014 MAHAP-MPAA-HFMA
Michigan Revenue Cycle Conference
September 18, 2014
1
Key Trends Affecting Revenue Cycle
Leaders
1. Intensifying regulatory scrutiny (RACs, etc).
2. Preparing for ICD-10
3. Adapting to emerging payment models
4. Integrating with physicians and affiliated
providers
5. Reducing costs
6. Impact of the Affordable Care Act
7. Adopting a patient-centered approach
2
RAC Denials and Medical Record
Requests Continue to Increase
3
CMS RAC Settlement Offer
•
Situation: CMS backlog of up to 800,000 cases has resulted in
hospitals waiting up to 18 months to resolve a case.
•
CMS is offering 68% of the net payable sum that most hospitals had
appealed or planned to appeal of patient status claim denials.
•
CMS’s stated goal is to “quickly reduce the volume of patient status
claim denials pending in the appeals process.”
•
HFMA Analysis: Each qualifying organization should evaluate the
offer in the context of its case mix & historical success rate with
appeals.
•
Solving the backlog without addressing the root problem is only a
Band-Aid solution. This offer does not address higher costs
beneficiaries face when a RAC denies stay that would have otherwise
qualified a patient for medically necessary skilled nursing care.
4
ICD-10 Readiness Still Low
Only 11 percent of respondents to a survey conducted in summer 2014
reported that they are ready for ICD-10.
Source: Reader/CHIME survey reveals 12 ICD-10 delay surprises.
SearchHealthIT. http://searchhealthit.techtarget.com/news/2240228031/
Reader-CHIME-survey-reveals-12-ICD-10-delay-surprises
5
Claims Processing Must Adapt to
Reflect Changing Payment Models
Changing Claims
Processing
Changing
Payment
Fee for Service
Per Diem
Episode
of Care
(Individual
Provider)
Episode
of Care
(Multiple
Providers)
Capitation:
ConditionSpecific
Capitation:
Full
Insurance exchanges – plans
Narrow networks
High deductibles
501(r) requirements
6
Fee-For Service Still Dominant. . .
What Is the Tipping Point?
• Catalyst for Payment Reform
found that only about 11 percent
of all hospital payments were
“value-oriented” in 2013.
• But even that may be high,
because for 43 percent of these,
providers were not at risk for
their financial performance.
• We haven’t reached the tipping
point yet, and it’s not clear what it
will be.
• When that tipping point comes,
revenue cycle must be ready.
7
Realignment Is Erasing Traditional
Healthcare Boundaries
Driven by demands for care transformation, the healthcare industry is
realigning at an an unprecedented pace.
SHARED GOAL
The Triple Aim framework was developed by
the Institute for Healthcare Improvement in
Cambridge, Mass. (www.ihi.org).
8
Revenue Cycle Integration: Can It
Keep Pace with Realignment?
Benefits
• Improves efficiency by
reducing costs and
eliminating duplication
and waste
• Prepares organization for
integrated care delivery
models
• Boosts patient
satisfaction and retention
Challenges
• Cultural barriers between
hospitals and other care
settings
• IT systems that are
difficult or impossible to
integrate
• Lack of leadership
support
• Limited opportunities for
collaboration between
hospitals and payers
9
"
A Perspective on the Long-Term
Revenue Cycle Cost Imperative
“Health care is the only industry that has a revenue cycle with a
designated subsector of companies that manage it. It costs 20 to
30 cents on the dollar to cross a trade in health care – to take the
money from the buyer of health care, the self-insured employer,
and put it into the pockets of the providers. If any other industry
had a revenue cycle like that, we'd all be living like the Amish. Wall
Street crosses a trade for fractions of a penny. There's an
enormous opportunity to take costs out of the process by
actually fixing the revenue cycle. And by fixing I don't mean
by incremental process improvements. I mean blowing it up.
And really rethinking the process of how we go about getting
doctors and hospitals paid.“
-Sean Wieland, Managing Director and Senior Research Analyst, Piper Jaffray
“Revenue Cycle Ripe for Radical Change,” Healthcare IT News, Dec. 9, 2013
http://www.healthcareitnews.com/news/revenue-cycle-ripe-radical-change
10
Why a Patient-Centered Approach
Matters Now
• Patients are paying more of their health care out-ofpocket, due to increase in HDHPs and cost-sharing
• As a result, receivables are shifting from third-party payers
to patients
• This shift
– Puts more pressure on revenue cycle processes
– Raises concerns for patients –and patients’
expectations of providers
• Big picture: we see a shift toward a more patient-centric
industry
11
ACA Enrollees Choose Lower Premiums
Now & Higher Patient Share Later
ACA Enrollees Are Opting for High-Deductible Plans
Avg. Silver Plan
Deductibles:
$2,907 Individual;
$6,078 Family
% Covered: 70%
Source: American Action Forum. May 15, 2014.
Late ACA Enrollment Dominated by Bronze and Silver Plans.
12
http://americanactionforum.org/uploads/files/serialized_products/Weekly_Checkup_20140515.pdf
ACA Discourages Out-of-Network Care—
But Patients May Not Understand That
• ACA regulations cap a patient’s annual out-ofpocket expense for in-network care.
• But the patient’s responsibility—and the hospital’s
exposure—is unlimited for care delivered out-ofnetwork.
• And nearly 4 in 10 non-group insurance enrollees
(37%) in a recent study didn’t know the amount of
their deductible.
•
Source: Kaiser Family Foundation. Survey of Non-Group Health Insurance Enrollees. June 19, 2014.
http://kff.org/health-reform/report/survey-of-non-group-health-insurance-enrollees/
13
Many Newly Insured Don’t
Understand Basic Insurance Terms
Source: Public Understanding of Basic Health Insurance Concepts on the Eve of Reform. Urban Institute. Dec. 2013.
http://hrms.urban.org/briefs/hrms_literacy.html
14
What Is OUR Responsibility,
Given the Patient-Centric Trend?
15
Hospitals Have a Role in Educating
Newly Insured Patients
16
Employees Are Also Sharing More
Costs; Not Necessarily by Choice
Percentage of covered workers enrolled in a plan with a general annual deductible of $1,000 or
more for single coverage, by firm size, 2006-2013
•
•
•
•
* Estimate is statistically different from estimate for the previous year shown (p<.05).
NOTE: These estimates include workers enrolled in HDHP/SO and other plan types. Average general annual health plan deductibles for PPOs, POS
plans, and HDHP/SOs are for in-network services.
SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2006-2013.
17
Providers’ Collection Yields Fall as
Balance After Insurance Increases
Even at higher income levels, collection yields on balances
after insurance drop precipitously as balances increase
Balance: $0 - $250
FPL <
200% 200- 400% > 400%
Balance: $250 - $500
FPL <
200% 200- 400% > 400%
Balance: > $500
FPL <
200%
200- 400% > 400%
60 Day
120 Day
180 Day
29.1%
37.2%
39.8%
38.0%
46.7%
49.2%
44.7%
54.1%
56.6%
22.9%
30.4%
33.9%
31.7%
40.4%
43.8%
38.9%
49.0%
52.6%
5.6%
7.5%
8.6%
9.6%
12.5%
14.0%
15.6%
19.9%
21.9%
360 Day
41.9%
51.4%
58.5%
37.5%
47.3%
56.2%
10.2%
16.0%
24.5%
75% Decline
Source: David Franklin; Connance; Patient Pay Collectability Data Study Review; March 14, 2014
18
Dissatisfied Patients Are Less Likely
to Pay
19
Source: Steve Levin, “What to Expect in Round Two of the Health Insurance Exchanges.”
HFMA Revenue Cycle Strategist, Sept. 2014. http://www.hfma.org/Content.aspx?id=24697
How to Adopt a Patient-Centered
Approach to Revenue Cycle
• Before (or at) the time of service
– Help patients understand what they will be
expected to pay
• After the time of service
– Ensure that patients with unresolved accounts are
treated fairly
• Throughout the time that patients are interacting
with you
– Treat patients with empathy and respect
20
Patients Want Better
Price Information
“Participants repeatedly said they wanted to
see a resource, or ask their doctor, to
better understand what a particular test or
procedure would cost before they agreed to
it, and wanted to comparison shop among
providers when possible. They said that
they also wanted the ability to know what a
treatment should cost before they agreed
to it, and needed more transparent
information on price in order to do
this….They were very interested in efforts
to share information on price and quality.”
•
Source: Robert Wood Johnson Foundation. Consumer Attitudes on Healthcare Costs: Insights from
Focus Groups in Four U.S. Cities. January 2013. http://www.rwjf.org/en/research-publications/find-rwjfresearch/2013/01/consumer-attitudes-on-health-care-costs--insights-from-focus-gro.html
21
Our Payment System Was Not Designed
for Price Transparency
• Historically, prices have served a wholesale
function
• Only recently have prices been viewed as retail
• Without transparency, neither consumers nor
hospitals could compare hospital prices
• With thousands of items, the chargemaster is not
“transparency-friendly”—and not reflective of
“price”
22
Would this be a
reasonable pricing
system for buying a
truck? Yet , that is
the system hospitals
and doctors are
REQUIRED to use
23
The Time Is Right for Price
Transparency
In a system where. . .
– Charges are primarily used as a factor in a payment calculation
– Actual prices are essentially invisible to the consumer, and…
– Charges have little relationship to the service being acquired
. . . change is inevitable!
We all contributed to this situation—hospitals, physicians,
payers, the business community, and even patients.
We all need to work together to fix it!
HFMA Resources to Help You Improve the
Billing and Payment Experience for Patients
hfma.org/dollars
25
HFMA Price Transparency Task Force
26
HFMA Price Transparency Task Force
Report
• Clarifies basic definitions
that are often misused
• Sets forth guiding
principles
• Establishes roles for
payers, providers, others
• Reflects consensus of
key stakeholders
hfma.org/dollars
27
Definitions of Key Terms
Cost, charge, and price should not be used as
interchangeable terms.
• Cost varies by the party incurring the expense.
• Charge is the dollar amount a provider sets for
services rendered before negotiating any
discounts.
• Price is the total amount a provider expects to
be paid by payers and patients for healthcare
services.
28
Definitions of Parties
to a Transaction
Care Purchaser
• Individual or entity that contributes to the purchase of
healthcare services.
Payer
• An organization that negotiates or sets rates for provider
services, collects revenue through premium payments or tax
dollars, processes provider claims for service, and pays
provider claims using collected premium or tax revenues.
Provider
• An entity, organization, or individual that furnishes a
healthcare service.
29
An Actionable Definition of
Price Transparency
Readily available information on the price of
healthcare services, that, together with other
information, helps define the value of those services
and enables patients and other care purchasers to
identify, compare, and choose providers that offer
the desired level of value.
30
Guiding Principles
Price transparency information should:
• Empower patients and other care purchasers to
make meaningful price comparisons
• Be easy to use and easy to communicate
• Be paired with other information that defines the
value of services for the care purchaser
• Enable patients to understand the total price of
their care and what is included in that price
And price transparency will require the
commitment and active participation of all
stakeholders.
31
Roles for Key Stakeholders
• Health plans should serve as the principal source
of price information for their members
• Providers should be the principal source of
information for uninsured patients and out-ofnetwork care
• Referring clinicians should use price information
to benefit patients
• All stakeholders can offer a price information
resource to consumers
32
Health Plan Role
• Health plans should serve as the principal source of
price information for their members.
• Tools for insured patients should include:
– The total estimated price of the service
– A clear indication of whether a particular
provider is in the health plan’s network
– A clear statement of the patient’s estimated out-of-pocket payment
responsibility
– Other relevant information on the provider or service sought
33
Provider Role
For uninsured patients and out-of-network care,
providers should:
• Offer an estimated price for a standard procedure and make
clear how complications may increase the price.
• Clearly communicate pre-service estimates of prices.
• Clearly state what services are included in an estimate.
• Give patients other relevant information, where available.
34
Referring Clinician Role
Physicians and other referring clinicians should
• Help patients make informed decisions about
treatment plans
• Recognize the needs of price-sensitive patients
• Help patients identify providers that offer the best
value
35
Employer Role
• Employers should continue to use and expand
transparency tools that help their employees
identify higher-value providers
• Self-funded employers should identify data that will
help them
– Shape benefit design
– Understand their healthcare spending
– Provide transparency tools to employees
36
Pricing Resource for Consumers
• Describes how to request price
estimates, step by step
• Clarifies what estimates may or
may not include
• Explains in-network and
out-of-network care
• Defines key terms
• Available for posting on your
website at no charge
hfma.org/transparency
ahaonlinestore.org
• Hardcopies available for purchase
in bulk at a nominal price through
AHA’s online store
37
Example:
Ensure Easy Access to Information
38
Example: Allow Patients to Search for
Providers in Their Area
39
Example: Identify Key Service Components
& View Range of Prices in the Area
40
Example: See List of Area Providers
Ranked, Based on Relative Price
41
Example: Provide Simple, Clear Estimates for
Self-Pay Patients
42
Transparency Issues Yet to Be
Addressed
• Determining effect of transparency on prices
– For consumers, more transparency is better.
– But in the B2B marketplace, the jury is still out.
• Surfacing issues with out-of-network balance billing
– Inadvertent out-of-network use
(e.g., anesthesiologists, pathologists)
– Emergency care
• Reassessing hospital chargemasters
– It is time for change!
43
Checklist for Preparing for
Price Transparency
 Identify a reasonable starting point
 Assess whether your pricing structure is
transparency-ready
 Consider how care purchasers will access the
information you provide
 Identify other information sources that will help
patients assess the value of the services you provide.
 Work on a collaborative basis with the payers in your
market
 Be prepared to explain healthcare pricing
44
Price Transparency Is Just One Element of
a Patient-Centered Approach
hfma.org/dollars
45
Communication Is Critical
Throughout the Process
Every day, healthcare professionals conduct
sensitive financial discussions with patients.
But there have been no accepted, consistent
best practices to guide them in these
discussions—until now
hfma.org/dollars
46
What the Best Practices
Cover
Provision of
Care
Registration
and Insurance
Verification
Financial
Counseling
Patient Share
Prior
Balances
(if applicable)
Balance
Resolution
47
Designed for the Most
Needed Settings & Purposes
Emergency
Department
Measurement
Criteria
Framework
Practices for All
Settings
Time of Service
(Outside the
ED)
Advance of
Service
48
Benefit Patients and Providers
• Encourage patients to talk with a financial
counselor about any financial concerns
• Identify opportunities to locate additional or
alternative insurance coverage
• Determine how accounts will be resolved through
conversation
• Identify patients who fall under the 501(r)
regulations
• Benefit from the public relations value of a
satisfied consumer vs. an unhappy consumer
49
Achieve Recognition
as an Adopter
• Recognition demonstrates
commitment to best practices
• Based on HFMA review of an
application and supporting
documentation
• All provider organizations may
apply
• Recognition valid for two years
• Adopters may use the phrase
“Supporter of the Patient Financial
Communications Best Practices”
in their marketing materials
50
Best Practices for Medical Debt
By following the HFMA Best Practices for Medical Account
Resolution, your organization is affirming that. . .
•
We want to find solutions that are balanced, fair, and
reasonable.
•
We keep patients informed about payment expectations
and time frames.
•
The business practices that we—and our business
affiliates use—have been approved at the Board level.
51
Selected Best Practices
• Educate patients and follow best practices for
communication
• Make all bills and other communications clear, concise,
correct, and patient-friendly
• Establish policies and make sure they are followed
internally and by business affiliates
• Be consistent in key aspects of account resolution—from
billing disputes to payment application
• Coordinate with business affiliates to avoid duplicative
patient contacts
52
Selected Best Practices
(cont.)
• Exercise good judgment about the best ways to
communicate with patients about bills
• Start the account resolution clock when the first statement
is sent to the patient
• Report back to credit bureaus when an account is resolved
(in the event that an account is reported to a credit bureau)
• Track all consumer complaints.
• Draw on best practices, principles, and guidelines to
inform your organization’s approach
53
hfma.org/dollars
54
The Revenue Cycle Model Must Change
Historical Model
Gather basic info before & at
the time of service.
Most billing processes are
post-service, amounts due
based on data gathered
after service, calculated
retrospectively.
Patients notified of
financial obligations
after insurance is
billed & paid.
PreService
At
Service
Post-service:
Retrospective Data
Gathering and
Processing
The Near Future
Pre-Service:
Prospective Data
Gathering and
Processing
At Service
PostService
Gather info before & at
time of service.
Prospectively
calculate expected outof-pocket costs.
Providers bill at or right after
time of service. Many times,
patients know in advance
what they owe & agree on
terms.
Insurance bill verifies what the
patient already expects.
55
What we have before us are some
breathtaking opportunities disguised
as insoluble problems.
John Gardner
Secretary, U.S. Department of Health, Education, and Welfare, 1965
• Logic will get you
from A to B.
Imagination will
take you
everywhere.
• Albert Einstein