How to thrive in the environment of changing reimbursements

As hospitals and health systems transition to alternative payment models, many are seeking answers on how to best navigate changing reimbursement levels.

In January 2015, HHS said it wanted 30 percent of all Medicare provider payments to fall under an alternative model, which includes accountable care organizations, patient-centered medical homes or bundled payments, by the end of 2016. Last March, HHS said it has already achieved this goal. By 2018, the benchmark is to have half of all Medicare provider payments fall under an alternative model.

At Becker's Hospital Review 5th Annual CEO + CFO Roundtable on Nov. 8, experts seasoned in healthcare finance discussed how their entities are working to stay ahead of the curve. During a panel titled, "Observations and thoughts on changing reimbursement levels: How to thrive," the panel emphasized why the revenue cycle management process and financial planning are critical for reimbursement success.

"For our hospital, about 70 percent of the funding is activity based, so it's based on the patients we serve and the clinical diagnosis and the case mix index. So it's really important for us to capture the right documentation right upfront on admission — the postal code, zip code, where the patient is from — because that's how funding comes back to us, and it floats through a system of clinical documentation, physician documentation, medical record," said John Kurvink, vice president of corporate services and CFO of Georgian Bay General Hospital in Ontario, Canada.

But capturing the right documentation upfront is not always an easy task, according to Edward Gaines, chief compliance officer for Zotec Partners, which provides billing services as well as management services to physician practices.

"On the front end, providers don't always get demographics and insurance right [for patients], and that creates problems on the back end in terms of resolving that and avoiding friction in the revenue cycle," he said.

That front-end misstep can be even more likely when a mix of clinicians, including mid-level providers and residents, are accessing the EMR. But new and emerging technology platforms and solutions can help facilitate more accurate documentation, added Mr. Gaines.

Another important step in achieving reimbursement success is preparing for the Medicare Access and CHIP Reauthorization Act final rule. The final rule is a landmark payment system for Medicare physician fees that replaces the sustainable growth rate formula.

Physicians, physician assistants, nurse practitioners, clinical nurse specialists and certified registered nurse anesthetists who bill more than $30,000 a year or provide care for at least 100 patients under traditional, fee-for-service Medicare will be subject to MACRA's Merit-Based Incentive Payment System beginning Jan. 1.

While the New Year is approaching, there is time to adjust to the final rule. That's because under the final rule, providers may opt out and not send CMS any data in 2017. Those who opt out will receive an automatic 4 percent negative Medicare payment adjustment in 2019. However, Mr. Kurvink noted that the bar is low for hospitals to avoid this penalty — by submitting data for just one quality measure or improvement activity.

Still, Joe Barnes, CFO of Summersville (W. Va.) Regional Medical Center, who has been at his job since last April, said medical staff at his facility have been resistant to the changes in payment models.

"They're very resistant so we have to play catch up quickly so that's what we'll do," he said.

Panelists also addressed how financial planning amid reimbursement changes are impacting services at their entities.

Greg Klugherz, senior vice president and CFO of CentraCare Health in St. Cloud, Minn., said for his facility in St. Cloud, it's an opportunity to change their portfolio by re-evaluating low-volume services and enhancing services in greater demand by the community.

"We pay attention to people leaving our area for services we're capable of providing ...We're paying attention and trying to build patient loyalty," he said.

But community demand and reimbursement pressures are often not the only factors administrators have to balance when making service decisions. At Georgian Bay General Hospital, officials at one time thought the hospital should close the obstetrics unit. However, the organization decided not to close the unit after seeing strong support from the community.  

Local residents made it clear they "wanted their babies born in their community. So now we're going to collaborate with a larger facility for those services," Mr. Kurvink said.

All of the panelists agreed clinical affiliations and strategic partnerships will continue to be key as hospitals navigate a changing reimbursement environment.

Panelists also agreed patient experience — which hasn't historically been a significant focus for the finance department — is an increasing relevant discussion topic for CFOs in a value-based reimbursement model.

Mr. Klugherz said patient experience is a particularly important consideration in managing the revenue cycle, because it impacts the public image of a hospital.

Overall, Mr. Gaines said, hospitals and health systems have an opportunity and a responsibility to better engage and educate patients on the revenue cycle, which will ultimately lead to reimbursement success.


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This week's 5 must-reads for hospital CFOs

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