Reporting SDOH is a primary approach to achieving health equity, but a new study says it may be costing you.
As revenue cycle leaders place a heavier focus on social determinates of health (SDOH) code capture, a new study says hospitals with these more medically complex patients are more likely to receive a penalty under CMS’ value-based payment programs.
The study published in Health Affairs suggests that value-based payment programs do not adequately account for health equity factors when determining incentive payments.
The study analyzed value-based program penalty results for various groups of hospitals across three programs and assessed the impact of patient and community health equity risk factors on hospital penalties.
According to the study, there was a significant positive relationship between hospital penalties and several factors that affect hospital performance but that hospitals cannot control including medical complexity, uncompensated care, and the portion of patient populations who live alone.
As hospitals leaders know, addressing SDOH is a primary approach to achieving health equity, but the study found that patients that “live alone” had a strong association with hospital value-based penalties across all three of CMS’ programs. Other SDOH like poverty and unemployment “might or might not” be predictive of penalties though, the study says.
The study also found that hospitals with less complex patients were generally less likely to receive a penalty compared to hospitals with patients with the highest complexity. Hospitals with the highest relative portion of uncompensated care cost were somewhat more likely to receive penalties in two of the three CMS programs.
Hospitals have placed a larger focus on capturing circumstances in patients’ lives that can influence the quality of their life and overall wellbeing as SDOH will sometimes need to be reported on a claim form to support the medical necessity for specific services. The reporting of these codes is also tracked by government agencies, such as CMS for its value-based payment programs.
HHS is trying to establish a No Surprises Act data baseline.
The Department of Health and Human Services' (HHS) Office of the Assistant Secretary for Planning and Evaluation recently released the first annual report on the impact of the No Surprises Act.
Since it’s the first annual report, it merely identifies the factors the agency intends to evaluate for future reports, and gives an analysis of the state of these factors prior to implementation of the law for the purpose of creating a baseline for future reports.
According to the report, there was a downward trend in out-of-network claims prior to the No Surprises Act implementation. The prevalence of claims that were out-of-network decreased from 6.0 percent to 4.7 percent from 2012 to 2020. In addition, the share of total payments that were out-of-network declined over this period from 9.2 percent in 2012 to 6.8 percent in 2020, the report said.
The report also says that during that time, out-of-network billing was highly concentrated among a small percentage of physicians from certain specialties.
Numerous gaps remain in the understanding of the effects of state surprise billing laws, the report says. “Evaluations of state surprise billing laws have yielded varying results. Some of this variation likely stems from variation in how states determine out-of-network prices in surprise billing scenarios as well as other differences in state regulation, state health care markets, and other state level variation,” the report says.
In future reports, the agency intends to analyze various factors including:
The impact of market consolidation and concentration on prices, quality, and spending
The implementation and impacts of state surprise billing laws already in effect
Trends in market consolidation and concentration
Trends in out-of-network billing
HHS notes that the data necessary to evaluate the impact of the act on these market factors should become available in 2023 and will be used for the next report in January 2024.
On top of investment portfolio losses, incessant inflation, and staffing shortages, children’s hospitals have had to contend with a decline in patient acuity and a temporary increase in contract labor utilization, the report said.
How does this compare to previous years? Well, according to the report, 2023 children's hospital medians show operational deterioration and liquidity dilution with median cash flow metrics falling to the lowest level in a decade.
But, there is good news.
The report shows that children’s hospitals still have favorable reimbursement, unique market positions, and generally maintain a lower debt load, which allows for a more consistent performance, Fitch said.
The median days cash on hand for children's hospitals is 323, and while this is a significant drop to prior years, these numbers are still higher than overall acute care facilities and are still in line with pre-pandemic levels, the report said.
Despite these formidable challenges, the stand-alone children’s hospitals’ median rating remains strong at ‘AA-’ Fitch says.
“Children's hospitals continue to be able to drive positive operating results as a result of favorable reimbursement for higher acuity services and distinct market positions that provide for more consistent volumes compared to the overall acute care sector,” said Fitch Ratings director Richard Park in a news release.
Working through deteriorating margins isn’t new for Bridgett Feagin, CFO for Connecticut Children's—a level 1 pediatric trauma center with roughly $600 million in net patient revenue. She has been working tirelessly since joining the organization in June 2020 to balance the hospital's financial needs with its mission to help sick children.
“One thing I always tell my team is, no margin, no mission. You need a margin to continue with the mission. So, it's about balancing the needs of the community and being able to cover your costs,” she previously told HealthLeaders.
Connecticut Children’s doesn’t have high margins, she says, but it obviously needs a decent margin to be able to continue with patient care to cover inflation.
So, what’s the workaround?
“We work with our payers to cover our costs and a little bit more than our costs because we need to purchase capital and facilities. So, it's a fine line. We have to be good partners with our payers in order to get paid for the services that we render,” she said.
Payer scrutiny won't be letting up anytime soon, in fact, expect it to intensify.
The COVID-19 public health emergency has come to an end, which means more audits will be coming your way.
To prepare for a potential increase in payer audit activity, especially from CMS, it’s essential for revenue cycle leaders to examine upcoming trends so they can best protect an organizations’ bottom line.
In fact, organizations should expect heavier scrutiny from Medicare risk adjustment data validation (RADV) auditors in the near future, Rose Dunn, chief operating officer of First Class Solutions Inc. in Maryland Heights, Missouri, told NAHRI. “We are definitely going to see an uptick in activity because the RADV auditors have a few years to catch up on,” she said.
Telehealth will be looked at more intensely moving forward, Sandy Giangreco Brown, director of coding and revenue integrity at CliftonLarsonAllen LLP in Minneapolis, Minnesota, said in the same article. “I’ve done a fair number of audits for telehealth over the last three years and identified some things,” she says. Now that the public health emergency is over, leaders need to determine what will and won’t be allowed by different payers, she said.
To help with telehealth policy compliance and avoid potential payer audits, Brown suggests conducting internal audits as soon as possible. “I think we’re going to have to do our due diligence and make sure we are following who is allowing what,” she says.
Telehealth audits will likely focus on whether provider organizations were billing appropriately based on what rule was in place at that point in time, Dunn says. Auditors will look for documentation issues, as well as whether it was appropriate to treat a patient via telehealth. “I think this area is ripe for audits,” she says.
Going forward, Dunn emphasized to NAHRI that the need for national rules that preempt state requirements, especially for providers who are located near state borders.
Providers should also expect heavier scrutiny on reimbursement for COVID-19 claims, according to Brown. “We’ve seen some really sick patients who had COVID-19 on top of comorbidities,” she says. “And those are some long lengths of stay with very complex patients.”
Responding to COVID-19 audit requests shouldn’t be different than responding to any other audit requests based on diagnosis, such as sepsis or malnutrition, Brown noted to NAHRI. As long as the documentation is thorough and the audit response is complete and timely, there shouldn’t be any surprises.
Over the last few months CMS has been releasing procedure codes for your revenue cycle teams, both for inpatients and outpatients.
For your inpatient procedures, the updated ICD-10-PCS codes will available for discharges starting October 1. When it comes to outpatient reporting, most of the HCPCS code changes were just implemented July 1.
CMS recently announced the addition of 395 new diagnosis codes, 25 deletions to the diagnosis code set, and 13 revisions. An ample amount of these changes pertains to reporting certain diseases, accidents and injuries, and social determinants of health. These code updates will take effect on October 1.
MedPAC estimated that Medicare Advantage (MA) plans would be overpaid by $27 billion in 2023, mostly due to coding intensity of enrollee health conditions combined with bonus payments related to quality. That estimation did not factor in favorable selection of MA plans.
Detroit-based Henry Ford Health recently expanded its collaboration with CodaMetrix to include patient bedside visits, where abstraction takes an average of 40 minutes per patient and accounts for 20% of the health system's overall coding costs.
Medicare overpaid $22.5 million in 2019 and 2020 for physician services while enrollees were hospital inpatients or in skilled nursing facilities, according to an audit by OIG.
Researchers conducted analysis of the 2.1 million physician service claim lines identified at risk of overpayment because of non-compliance with the place-of-service policy.
Medicare pays for physician services separately from the payments it makes to inpatient facilities like skilled nursing facilities and hospitals. However, practitioners may not always correctly report the place-of-service code on a claim line, causing Medicare to pay more at higher nonfacility rates than at lower facility rates while beneficiaries were inpatients of facilities, OIG stated.
Multiple senators recently sent a letter to stakeholders to seek input on improving the 340B drug pricing program.
The senators, who are all members of a 340B bipartisan working group, released a request for information to look for policy solutions that would “ensure the program has stability and oversight to continue to achieve its original intention of serving eligible patients,” according to the letter.
The Health Resources and Services Administration administers the 340B program, and it previously issued guidance that allowed covered entities to dispense drugs through contracted pharmacies in the program. However, the senators noted that the current 340B statute does not clearly address this issue.
“The 340B drug pricing program is not working as effectively as it should,” said Senator Moran said in a press release. “The confusion around its contract pharmacy provision and lack of transparency and congressional oversight is failing the patients the program exists to help.”
In addition, a number of drug manufacturers haven’t offered 340B discounts on their covered outpatient drugs dispensed at contract pharmacies in recent years, according to the letter. The senators said that providers in their states have alerted them to the negative impact this has had on providers who serve their constituents, according to the letter.
The senators also acknowledged that stakeholders have been concerned by the need to strengthen the program’s integrity measures. To address these concerns, the senators are requesting information on ways to improve covered entities’ accountability and ensure transparency according to the letter.
As finance and revenue cycle leaders know, the 340B program requires drug manufacturers to provide outpatient drugs to eligible healthcare organizations and other covered entities at significantly reduced prices, and these payments are a lifeline for some orginizations.
"Henry Ford Health system and a lot of folks rely on 340B discounts and other mechanisms like disproportionate share payments. We're a big teaching institution, so a lot of these special payments that we do in order to teach the healthcare leaders of the future or make sure that we can take care of vulnerable patients are extremely important," Damschroder said.
"So that is an area that we and others are actively—in our advocacy—ensuring that these programs stay intact or evolve to a place that enhances the programs for the people that were trying to care for," said Damschroder.
Cheryl Sadro, the CFO for UC Davis Health, and Tammy Trovatten, the director of government reimbursement for UC Davis Health, also connected with HealthLeaders to discuss the financial issues hospitals and health systems have been dealing with over the course of the pandemic, one key area being 340B payments.
“One of the things we've been watching and will continue to watch through this process is where we go from here with 340B. We're the only level one trauma center in a multicounty area, and between 340B trauma and transplant, we've garnered a large portion of our bottom line,” Sadro said.
The senators’ goal is to ensure that the program has improved stability and integrity and that it continues to enable providers to use federal resources to provide better healthcare, the group says. Stakeholders should submit written responses no later than July 28, 2023.
Molloy will oversee the organization's accounting, financial planning and analysis, reimbursement, and revenue cycle functions, as well as managed care contracting and treasury starting in July.
While his current role is still as the managing director and head of municipal banking at Citi, Molloy is not new to the innerworkings of Ochsner Health’s finances. He has been a key financial advisor to Ochsner for several years and has spent more than a decade overseeing banking for all municipal-related activity, including public finance, healthcare, higher education, and public-private partnerships.
When Molloy officially joins Ochsner in July, he will work side-by-side with Ochsner’s current CFO, Scott Posecai, who will retire as CFO in December.
Molloy recently chatted with HealthLeaders about his new role and how he plans to ensure the financial success of the organization once Posecai departs.
HealthLeaders: Ochsner says you will play a pivotal role in the continued development and execution of strategy as the health system builds on its clinical excellence and innovation in healthcare delivery. How does your background in banking make you a good fit for this new role and Ochsner in particular?
Jim Molloy: I’ve worked on all types of financings and have led numerous strategic projects over the years. This background has afforded me a strong understanding of healthcare and the financial markets while allowing me to create strong relationships with investors and other stakeholders. It has also exposed me to the strategic aspects of the business.
I have been fortunate to work with Ochsner on projects that fueled the organization’s strategic growth, including the original merger of the clinic and the foundation. I have developed a strong connection to the organization, and I understand how important Ochsner is to the overall health and well-being of the communities it serves. I have also been fortunate enough to get to know much of the executive and board leadership.
I have a deep respect for the culture and depth of talent at Ochsner, and I’m committed to the organization’s values and mission to serve, heal, lead, educate and innovate.
Photo courtesy of Ochsner Health.
HealthLeaders: CFOs need to help their organizations grow while keeping expenses low. What sort of processes do you plan to put in place to make sure this happens?
Molloy: My engineering background and my consulting work helped influence the process-oriented thinking I adopt and live by today. It is important to develop a culture in which leaders seek continuous improvement, while also measuring the appropriate things and benchmarking yourself in key areas against best-in-class organizations. While it is important to always keep a mindset toward reducing expenses, the true key to success for any organization is disciplined growth.
HealthLeaders: With your history in banking, how will you use your expertise to think outside of the box when it comes to Ochsner’s investment portfolio?
Molloy: When considering investments, it’s critical to have strong discipline and balance appropriate risk-taking.
The organization has done a great job of this over the years, but over time I will utilize my industry connections to identify new ideas and opportunities to improve.
HealthLeaders: How will you help ensure financial stability for Ochsner in 2024 and beyond?
Molloy: I will look to develop strong relationships across Ochsner’s management, clinical leadership, and finance teams to ensure we can support our operational and clinical priorities, which in turn will support our strategic growth priorities.
I plan to examine our portfolio of businesses and assets to ensure we are investing in the best areas to fulfill our mission. Resources are limited, so it is important to determine what competencies are core to the organization and then find good partners for important non-core competencies, so we properly allocate resources.
Most critically, we must keep our focus on better serving our patients and improving the lives and the health of our communities. We need to find new ways to make healthcare more accessible to the communities we serve, and work to ease the pressures on our workforce. Improving in those arenas each year will be critical to our success.
HFMA announced the winners of its 2023 MAP Award for high performance in revenue cycle, and 10 hospitals were awarded.
According to the Healthcare Financial Management Association (HFMA), there are five physician practices, four hospital systems, three individual hospitals, two critical access hospitals, and one an integrated delivery system, with high performing revenue cycles.
The awards were presented at the HFMA annual conference on June 25 in Nashville and recognized providers that have excelled in meeting industry standard revenue cycle benchmarks, implemented the patient-centered recommendations, achieved outstanding patient satisfaction, and more.
Some of the winners of HFMA’s 2023 MAP Award for high performance in revenue cycle include the following organizations:
Winning integrated delivery system:
Saint Francis Health System
Winning hospital systems:
Ballad Health
Covenant Health
OhioHealth
ThedaCare
Winning individual hospitals:
CHRISTUS St. Michael Health System
Liberty Hospital
The University of Texas MD Anderson Cancer Center
Winning critical access hospitals:
Henry County Health Center, Inc.
Van Diest Medical Center
Winning physician practices:
Alo/Avance Care
ENT and Allergy Associates
Graves-Gilbert Clinic
Heart and Vascular Care
State of Franklin Healthcare Associates
“We are truly honored to be recognized with this high-performance award,” Steven Sinclair, CFO of Graves-Gilbert Clinic, told HFMA. “While our tradition of clinical excellence dates back more than 85 years, our approach to revenue cycle could not be more contemporary. Our entire revenue cycle team is dedicated to making the financial experience a seamless one for our patients.”
The new codes cover a range of procedures, including:
Bypass femoral artery using conduit
Insertion of conduit to short-term external heart assist system
Insertion of intraluminal device, bioprosthetic valve
Introduction of drugs into peripheral veins
Repositioning of larynx
The revisions and deletions mainly featured vertebral fusion procedures and introduction of certain drugs.
When it comes to outpatient reporting, most of the HCPCS code changes will be implemented July 1, but some codes were made available as early as March 14.
New administration code 0174A is for patients six months through four years of age and is to be used in conjunction with CPT product code 91317 (SARS-CoV-2 vaccine, mRNA-LNP, bivalent spike protein, preservative free, 3 mcg/0.2 mL dosage, diluent reconstituted, tris-sucrose formulation, for intramuscular use). In March, the Food and Drug Administration amended the bivalent Pfizer-BioNTech COVID-19 vaccine’s emergency use authorization to allow clinicians to administer a booster to certain young patients. Shortly after, the AMA released administration code 0174A, which became effective March 14.
The transmittal also mentioned the 20 Category III CPT codes that were originally introduced in January. These 20 Category III CPT codes will be available for use beginning July 1.
All of these new procedure codes come in conjunction with the 2024 ICD-10-CM diagnosis codes that were announced in June.
Robust data is critical to hospitals’ efforts to improve reimbursement. One way to better capture data on your patient populations is through proper documentation and keeping revenue cycle staff up to date on code changes.
June's National Hospital Flash Report from Kaufman Hall says hospital finances showed signs of stabilizing in a few key areas in May.
Healthcare leaders have been battling incessantly against poor operating margins and increases in expenses. But luckily for health systems such as Ascension Healthcare—who recently announced "significant improvement plans" focused on operational efficiencies and controlling expense growth amid a loss of almost $1.8 billion—stabilization may be on the horizon.
According to the June 2023 report, hospital finances saw slightly improved operating margins, declining labor expenses, and increases in outpatient visits, i.e., more reimbursement.
Here are three ways hospitals saw financial improvement in May:
Operating margins regain positive territory.
The median year-to-date (YTD) operating margin index for hospitals was 0.3% in May, up slightly compared to 0.1% in April and March, the report says.
Although operating margins are slowly regaining positive territory, they are well below levels during the latter half of 2021 and prior to the pandemic.
Labor expenses saw a decrease.
While labor costs remain significant, expenses were down 9% in May 2023 compared to May 2022. FTEs per AOB saw a decrease of 6% between May 2022 and 2023, and a decrease of 21% compared to May 2020.
Interestingly, April’s report showed that high expenses continued to put pressure on hospitals, with labor expense per adjusted discharge increasing 3% from March to April, that report revealed.
More hospital revenue is being driven by outpatient services.
Net operating revenue per calendar day was 9% higher in May 2023 compared to May 2022, while outpatient revenue per calendar day rose 14% over the same time frame.
“Now that hospital finances are showing signs of stabilization, it’s an opportune time for executives to reevaluate their longer-term business strategy,” Erik Swanson, senior vice president of Data and Analytics with Kaufman Hall, said in a statement.
“The continuing shift in patient demand from inpatient to outpatient services is particularly important and will inform business decisions for years to come,” he said.
The June 2023 National Hospital Flash Report draws on data from more than 1,300 hospitals from Syntellis Performance Solutions.
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