Member Spotlight
Q and A with David Hammer, FHFMA, CHFP, 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.”
References
- “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.
- “HHS Issues Final ICD-10 Code Sets and Updated Electronic Transaction Standards Rules”, CMS Office of Public Affairs. January 15, 2009.
ARRA
The Congressional Budget Office (CBO) estimates that ~$20 billion will be spent on HI-TECH which will, among other things, accelerate adoption of EHRs. The acceleration will deliver US health system net savings of 0.3% between 2011 and 2019, or greater than $60 billion in savings. While this is a good return, 0.3% won't by itself substantially dampen the trajectory of healthcare spending (see Health Care Costs: A Principal Driver of Long-Term Deficits).
The CBO projects that without the stimulus package, "about 45% of hospitals and 65% of physicians will have adopted qualifying health IT in 2019. CBO estimates the incentive mechanism would boost these adoption rates to about 70% for hospitals and about 90% for physicians."
Read more >>
Tool/Resource of the Month: Red Flag Compliance Document
The newly released white paper, HIPAA Transaction Code Set 5010: Implications and Opportunities, now available on the members-only section of the HIMSS Web site, facilitates understanding of the challenges and advantages of 5010 implementation. Developed by the HIMSS Financial Systems Steering Committee, the paper provides a summary of this code set, outlines key implications and anticipated opportunities and provides practical guidelines for 5010 implementation.
Upcoming Events
National Health IT Week
Sept. 21-25
HIMSS Advocacy Day
Sept. 22-23
Call for Participation: Financial Edge
Share your feedback on Financial Edge. Let us know what you’d like to see in future issues and if you’d like to participate in planning and developing newsletter content. Contact Pam Matthews, CPHIMS, HIMSS senior director, healthcare information systems, or Nancy Vitucci, HIMSS manager, publications.
CMS' Payment Rate Updates Don't Sit Well with Hospitals
By Richard Pizzi
Hospital officials won’t be pleased with the Centers for Medicare & Medicaid Services’ proposed 2010 payment rate updates for acute care and long-term care hospitals.
Welcome to Financial Edge
Thank you for subscribing to Financial Edge, HIMSS’ financial systems eNewsletter—your source for the latest issues and emerging trends focused on financial systems and related technologies within healthcare delivery.
Share Financial Edge with colleagues, co-workers, friends and anyone involved in connecting clinical and financial systems. If you have received this issue as a courtesy and would like to receive future issues, click here to subscribe.
Story ideas and other comments can be emailed to Nancy Vitucci, Manager, Publications.
A Case for Automated Explanation of Benefits Processing
By Maureen Turo
Processing Explanation of Benefits (“EOB”) forms, and the huge amounts of associated data, has become one of the most labor-intensive and costly back-office functions for healthcare providers. This is largely due to its being paper based and manually processed. To get a handle on this massive volume of data, and to reduce the costs inherent in manual processing, it is critical to enable the electronic movement of EOBs.
Advances in optical and intelligent character recognition (OCR and ICR) technology have resulted in the ability to precisely recognize varying amounts and types of unstructured data among non-standard forms. These innovations apply to nonstandard patient data, making the automation of payment posting from EOBs a reality.
Once an EOB is scanned and made into an electronic image, today’s recognition technology locates the required data with highly accurate recognition capabilities. The data is captured (as defined by the healthcare provider), translated and fed back to the provider electronically in a HIPAA compliant 835 EDI file. The files can be downloaded to the provider’s patient accounting system to automatically post up to 90 percent (or more)1 of commercial insurance payments.
The prospect of revamping a manual EOB process may initially seem cost prohibitive. And contracting with a vendor to apply the technology, allocating resources to handle data overhauls, and retraining staff for handling new functions can seem especially daunting. But evaluating the costs of manual EOB processing operations and cash application delays reveals deep savings potential by automating payment processes within an organization’s entire funding stream: transitioning to electronic payments and remittance processing can produce cost savings estimated from $1MM to $10MM per hospital.1
By enabling the receipt of electronic EOB payment detail in the required format, a financial operation can reap the rewards of increased efficiencies across the board, including accelerated cash posting rates, streamlined revenue cycle processes, decreased labor costs, enhanced researching capabilities and greater customer satisfaction. And a smoother back office operation allows for greater focus on the true heart of your business: quality patient care.
References
1. Healthcare Financial Management Association (HFMA) Educational Report, “Looking to Rev Up Your Revenue Cycle.”
Maureen Turo is the healthcare market specialist within Bank of New York Mellon’s Treasury Services Department and is responsible for all aspects of product and market management within the healthcare industry. This includes ongoing market needs assessment; identifying, evaluating, and launching new products and services; and overseeing the development of appropriate marketing programs and materials to bring BNY Mellon’s healthcare solutions to the market. In addition, she has significant experience in project management and strategic planning. Ms. Turo also currently serves as president for the Medical Banking Institute's Council of The Medical Banking Project, an affiliate member of HIMSS.
Protecting Patient Identifiable Information
By Melissa Markey
Among the many consequences of the American Recovery and Reinvestment Act of 2009 (ARRA), provisions relating to healthcare—those which impact HIPAA compliance, are among the most far-reaching. HITECH is a subset of ARRA that has specific focus around information technology. Of special concern are the changes related to the relationship between covered entities and their business associates covered in ARRA. While the statute prescribes certain changes to business associate obligations, regulations are anticipated to further define requirements.
An important aspect of the HITECH changes to HIPAA is the increased burden imposed on business associates. By directly applying the regulatory framework to business associates, Congress has increased the risk, and the resistance, of vendors that are arguably business associates. Even as vendors may be more wary of acknowledging their role as business associates, the importance of careful identification of business associates has increased. Covered entities should review all vendor relationships to ensure that a business associate agreement is in place if required, and should begin planning how to update and modify business associate agreements to accommodate new legal requirements. Even if a vendor argues successfully that it is not a business associate of the covered entity, consider contractually requiring the vendor to implement similar protections for individually identifiable information, and to cooperate with the covered entity in the event of a breach of security or improper use or disclosure of information. In this way, the covered entity can continue to protect the information, itself, and its patients.
As providers and other covered entities await further direction from regulators, the reality is that business activity must continue. It is important to remember that HIPAA does not occupy the entire field of confidentiality for individual information. State laws, which are more stringent, as well as other federal laws, may prevent or limit use or disclosure of health information. Payment card industry standards impose requirements to protect credit card information. State and federal regulations also protect other individually identifiable information, often in an attempt to minimize the risk of identity theft. Although enforcement of the Red Flags Rule by the Federal Trade Commission has been suspended, state laws continue to apply and patients and clients still expect companies to protect their private information.
By developing an integrated approach to security and confidentiality, covered entities can honor the trust placed in them by patients, and comply with the varying regulatory requirements. Development of a single agreement for vendor use, which addresses the universe of confidentiality obligations, can effectively accomplish this facet of compliance. A Business Associate and Individually Identifiable Information Addendum can be used to address both the business associate requirements, as well as state law and Red Flag requirements applicable to vendors and service providers. The Addendum should also address response to a security breach or improper use or disclosure of information, and compliance with breach notification laws. By including a provision which permits the healthcare provider to amend the Addendum as necessary to comply with law, the burden of revising the Addendum is avoided; when new regulatory or legal requirements are imposed, a simple form letter sent to each vendor will suffice to advise the vendor of the changes.
Melissa Markey is a shareholder in Hall, Render, Killian, Heath & Lyman, one of the nation's top health law firms, in the Troy, Mich. office, and is licensed to practice as an attorney in Texas and Michigan. Ms. Markey leads the Life Sciences team at Hall Render, and she has a particular interest in human subject research and technology law, including electronic health records, health information exchange, software licensing, data rights management and e-commerce issues, as well as emergency legal preparedness, HIPAA, patient care issues, and compliance. She is a member of the State Bar of Texas and its Computer and Technology and Health Law Sections, the State Bar of Michigan and its Health Care Law, Computer Law, and Intellectual Property Sections, and the American Health Lawyers Association.
HHS Releases $30 Million to Help Medicare Beneficiaries Access Their Benefits
Earlier this month, HHS Secretary Kathleen Sebelius announced the release of $25 million in grants to help older people, individuals with disabilities and their caregivers apply for special assistance through Medicare, and an additional $5 million for a national resource center to support these important efforts. These grants, made possible by the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), will provide valuable support at the state and community levels for organizations involved in reaching and providing assistance to people likely to be eligible for the Low-Income Subsidy program (LIS), Medicare Savings Program (MSP), the Medicare Part D Prescription Drug Program and in helping beneficiaries to apply for benefits. This initiative also includes special targeting efforts to rural areas of the country and to Native American elders.
HIMSS Virtual Conference & Expo on June 9-10 Available On Demand
Although the live segment of the two-day HIMSS Virtual Conference & Expo concluded on June 10, the event’s educational sessions and virtual exhibit hall are available on demand for 30 days. July 10 is the last day to register and access the event.
Free to qualified registrants,* the HIMSS Virtual Conference 18-session educational program included opening and closing keynote sessions, and two educational tracks: Health Policy and the New Administration and Transforming Healthcare through Practice. Sessions focused on trends and changes in financial systems included:
- Maximizing Financial Incentives and Satisfying the New HIPAA Requirements Under the HITECH Act
- Outcomes and Lessons Learned from 5010 Testing Project Collaboration
- Getting Clinical Decision Support Right: Improving Quality to Satisfy ARRA and Payers
- Ensuring Compliance with FTC's Red Flags Rule on Identify Theft Prevention
But the education didn’t end there for attendees: Through industry solutions sessions, engaging video demonstrations and downloadable product brochures and documents, attendees explored today’s leading health IT solutions and gained product and industry knowledge in real time at the event’s virtual exhibit hall. June’s expo included 33 exhibitors.
Click here to register and learn more about HIMSS Virtual Conference & Expo
*Registration is complimentary to qualified registrants: Non-qualified individuals may attend for a nominal fee ($99 HIMSS Members/$119 non-members).
Viewpoint: Leveraging Health IT to Achieve Price and Quality Reporting
Although the healthcare industry’s interest in price and quality reporting is escalating, the ability to achieve price and quality reporting is very difficult—even with the leverage of technology and interoperability.
We posed the following questions to some stakeholders:
What’s driving the movement toward greater emphasis on price and quality reporting in healthcare? What benefits can the healthcare industry realize from price and quality reporting? How can health information technologies be leveraged to gain greater efficiencies in achieving price and quality reporting? How do you see The American Recovery and Reinvestment Act of 2009 moving quality reporting forward in the industry?
In last month’s Financial Edge, we ran several perspectives from vendor stakeholders. Here is one more perspective on the subject:
We have undoubtedly entered the quality-based reimbursement era. When coupled with the financial challenges facing healthcare and the market-driven responses of the last eight years, consumer engagement and increased financial participation are here to stay. To be able to make informed choices about healthcare, consumers (be they individuals or businesses purchasing group insurance for their employees) must have access to accurate, meaningful and actionable price and quality information.
Healthcare providers that embrace transparency and commit to quality will find themselves the winners in the quality-driven reimbursement era. Those that do not will find themselves on the outside looking in. For example, Medicare's newly-proposed rules suggest that hospitals in the bottom quality quartile will face severely-constrained Medicare reimbursement. This could eventually force the weeding out of these lowest-performing hospitals.
Especially regarding price transparency, there are many moving parts. To provide an accurate, up-to-date and defensible price quote, hospitals need information about payers' reimbursement methodologies / contracts; individual patients' eligibility, benefits and the status of their deductibles; CDM line-item prices; and "average" prices and ranges for complex outpatient procedures and inpatient DRGs. Although this information can be collected and communicated manually, today's consumer wants the information quickly (if not instantaneously) available on the Internet. To achieve this goal requires effective integration between disparate information systems.
Because ARRA will drive the widespread adoption of clinical information systems, it will hasten the arrival of the quality-driven reimbursement era. When quality information is easier to obtain, it will be easier to make it available to consumers.
—David Hammer, Vice President, Revenue Cycle Solutions, McKesson Provider Technologies
The inclusion of an organization name, product or service in Viewpoint should not be construed as a HIMSS endorsement of such organization, product or service, nor is the failure to include an organization name, product or service to be construed as disapproval. The views expressed in Viewpoint are those of the author and do not necessarily reflect the views of HIMSS.
Advocacy Update—Health IT Advocates to Converge on Capitol Hill for National Health IT Week and Advocacy Day
With the emphasis in Washington on the role of health IT in healthcare transformation and the American Recovery and Reinvestment Act of 2009, there has never been a better time to become involved and advocate for health IT in Washington, DC. In September, health IT advocates will head to the nation’s capital for two highly-anticipated events: National Health IT Week and the 8th Annual HIMSS Advocacy Day.
National Health IT Week
September 21-25
Events during National Health IT Week 2009—One Voice, One Vision: Transforming Health and Care, promote widespread adoption of health IT to improve patient safety and healthcare quality. Now in its fourth year, this collaborative forum assembles key healthcare constituents—vendors, provider organizations, payers, pharmaceutical/biotech companies, government agencies, industry/professional associations, research foundations and consumer protection groups, to raise national attention on the importance of health IT in healthcare reform.
8th Annual HIMSS Advocacy Day
September 22-23
Held in conjunction with National Health IT Week, the 8th Annual HIMSS Advocacy Day, to be held at the Renaissance Hotel in Washington, DC, joins health IT advocates in “spreading the word” about the value of health IT. Attendees will have an opportunity to meet with their members of Congress, learn advocacy techniques from Washington insiders, hear how the latest happenings on Capitol Hill are impacting the health IT industry, get the latest news about the American Recovery and Reinvestment Act of 2009 and mingle with key decision-makers at the Networking Reception and Federal Leadership Awards Ceremony.
Now Accepting Nominations for Board and Nominating Committee Positions
Nominations are now being accepted for positions on the HIMSS Board of Directors and the Nominating Committee. Nominees must be a Regular or Life Member or the senior executive representative of an Organizational Member who has achieved and maintained advanced membership status. Nominations must be received by Aug. 1.
H. Stephen Lieber, President and CEO
HIMSS
230 East Ohio Street, Suite 500
Chicago, IL 60611-3269
executive@himss.org
*To obtain further information on the advancement process and/or access the application, go to www.himss.org/advancement.