Member Spotlight

Q and A with David Hammer, David Hammer, FHFMA, MBA, MHA, Member of the Financial Systems Steering Committee and Financial Systems Revenue Cycle Task Force

Mr. Hammer is a Vice President in McKesson’s Business Performance Solutions group. He focuses on revenue cycle, consumer-directed healthcare, and pay for performance issues for hospitals, health systems, and related entities. In his more than 23 years of industry experience, Mr. Hammer has held a variety of positions with leading health systems, Big-4 consulting firms, IT vendors, and revenue cycle outsourcing companies. He is certified by HFMA as a Fellow (FHFMA) and as a Certified Healthcare Finance Professional (CHFP). He has been named an HFMA Distinguished Speaker for six consecutive years, and is a 2007 recipient of HFMA’s Medal of Honor service award. Mr. Hammer has written several articles, the most recent being “Don't Panic: How CFOs Are Facing the New Economic Reality,” which appeared in the March 2009 issue of HFMA’s healthcare financial management journal (hfm). Mr. Hammer serves on the HIMSS Financial Systems Steering Committee and has been an active participant in HIMSS Revenue Cycle Work Groups. 

1. How has the revenue cycle in healthcare evolved in recent years? What main factors have influenced these changes?  

This decade has seen the emergence of the “chief revenue office” form of revenue cycle management organization. Healthcare providers have recognized the strategic importance of the revenue cycle to overall financial success and so have settled on the "singly-accountable leader" to coordinate this vital function. In addition to the traditional patient access and patient financial services responsibilities, chief revenue officers typically are responsible for:

• Health Information Management
• Case Management
• Charge Description Master Management
• Managed Care Contracting

The predominant force driving this emergence has been the impact of denials and the increase in bad debt and charity. Both of these issues have put serious pressure on financial margins, and healthcare providers have reacted accordingly. Further, the array of challenges facing revenue cycle professionals today is as challenging as any we have ever seen, including:

• Severe recession, leading to limited access to capital, impacting both providers and payers
• ARRA / stimulus bill
• Medicare recovery audit contractors (RACs)
• ICD-10-CM coding system
• HIPAA’s claim-attachment regulations
• Medicare’s severity-adjusted diagnosis-related groups (MS-DRGs)
• Privacy mandates
• Pay-for-performance, “never events,” and bundled reimbursement
• New government-sponsored health-insurance plan
• Consumer-driven healthcare cost-shift from insurers to patients, and the consequently-increased self-pay collection risk
• Emerging consolidation of EMR systems and practice management systems
• Shifting market dynamics, away from first-dollar insurance toward first-dollar self-pay
• Uninsured patients, who account for +$100 billion in uncompensated emergency care, resulting in +$40 billion in waived fees
• Regulatory pressures, including some “unusual suspects,” such as the Sarbanes-Oxley and Patriot acts

2. From the ambulatory perspective, what are the biggest advantages—and challenges—of moving to automated revenue cycle management (RCM)? 

Two of the shaping forces mentioned above, ARRA / stimulus bill and the emerging consolidation of EMR systems and practice management systems, are going to rapidly accelerate the adoption of automated RCM systems by physicians. It is worth noting, however, that "physicians" is not a term that describes a monolithic group. In fact, there are three distinct groups of physicians. Each will have different approaches and timelines for the adoption of new-generation RCM systems:

• Employed physicians (typically in medium-to-large group practices). These can be further sub-divided into two groups: office-based practices and hospital-based practices (ED physicians, radiologists, hospitalists, etc.). Either group can take advantage of "hospital-based physician" Medicare reimbursement
• Group-practice physicians (again, typically in medium-to-large group practices)
• Solo-practitioner and small-group physicians

Notwithstanding the differences in these groups, each stands to benefit in similar ways from the adoption of new-generation RCM systems:

• Lower total cost of ownership (TCO), due to the incorporation of formerly bolt-on capabilities within the RCM systems. This will obviate the need to pay annual maintenance costs associated with the former bolt-on systems.
• Further TCO reductions due to reduced labor costs. Physicians will need fewer FTEs to accomplish the same work because new-generation RCM systems will have powerful automation and worklisting capabilities.
• Reduced bad debt due to improved financial clearance activities that will result from the combination of built-in bolt-ons and worklisting automation.
• Increased net revenue, due to more timely and accurate insurance billing. This will result in fewer denials, thus helping to optimize net revenue. 

3. What is the anticipated impact of HIPAA 5010 and ICD-10 compliance on RCM?  How about the potential impact on RCM from the American Recovery and Reinvestment Act of 2009?

HIPAA 5010 and ICD-10
Although costly and difficult to implement in the near-term, both HIPAA 5010 and ICD-10-CM should benefit physicians both clinically and operationally. According to HHS,¹ ICD-10 will:

• Support value-based purchasing and Medicare’s anti-fraud and abuse activities by accurately defining services and providing specific diagnosis and treatment information;
• Support comprehensive reporting of quality data;
• Ensure more accurate payments for new procedures, fewer rejected claims, improved disease management and harmonization of disease monitoring and reporting worldwide; and
• Allow the United States to compare its data with international data to track the incidence and spread of disease and treatment outcomes...

HHS also contends² that "ICD-10 will also improve claims processing and payment, and, through the use of healthcare technology that utilizes ICD-10, assist healthcare practitioners in making treatment decisions by more precisely matching diagnoses and procedures to the appropriate code.”

1. “HHS Modifies HIPAA Code Sets (ICD-10) and Electronic Transactions Standards”, Department of Health and Human Services, Centers for Medicare & Medicaid Services, Fact Sheet. January 15, 2009.
2. “HHS Issues Final ICD-10 Code Sets and Updated Electronic Transaction Standards Rules”, CMS Office of Public Affairs. January 15, 2009.
 

Stakeholder revenue cycle collaboration is necessary for a true consumer-based model. Payers and employers need to provide timely, accurate information to providers and consumers in a pre-service model. The model will allow consumers and providers to identify the financial responsibility and establish payment plans prior to service.

This can only be achieved by payers (include public sector, too) making real time, electronic information on coverage, co-payments, non-covered services and out-of-pocket limits. The critical component is that all this information needs to be transparent and in real time for this level of RCM.

The benefits to the stakeholders are:

• Payers—increase in real time, first pass rate claims payment, which creates consumer and provider loyalty.
• Providers—decreased in denials, increased cash flow, decreased bad debt
• Consumers—access to pricing, quality and benefit coverage in real-time to allow for pre-service financial planning.

  
5. How can healthcare systems engage their patients in taking a greater role in their health and the health services they receive?

As discussed above, stakeholders in the consumer-based model can only achieve this through technology wherein:

• Consumers and providers access and exchange information via online portals that contain up to the minute real time information
• Consumer education begins at the time of enrollment into a plan and/or at the establishment of a physician/patient relationship and is dynamic and continuous.  Too many health plans only do an account set-up orientation and provide some newsletter type information occasionally.
• Consumers receive continuous, real-time communication from both their physician(s) and their health plan, both of which are key to success.
• Consumers’ providers work with payers to provide accurate, real-time information on cost and quality to keep consumer portals current.
• Consumers have access to pricing-transparency information at the pre-service stage.

6. Switching gears, what keeps you busy in your free time away from work?

As the father of an active nine-year-old daughter, I keep busy with her school activities.  We also enjoy many of the outdoor activities that South Florida has to offer: swimming, bicycling, tennis, camping, etc.