A typical healthcare organization receives and processes hundreds of thousands of paper invoices every year. There are many risks and costs associated with paper invoicing, such as loss in transit, or in the mailroom, or human error due to number of “touches.” According to the Gartner Group Report “Managing Credit, Receivables and Collections,” processing a paper invoice manually costs an average of $5 to $20 per invoice versus $2 per electronic invoice. The report also states that as many as 35 percent of all invoices are “lost in the mail.” Below is a list of pain points that healthcare organizations experience as a result of processing paper invoices and how they can be alleviated.
1. The significant amount of time and resources spent re-keying invoice data into an Enterprise Resource Planning (ERP) system.
Utilizing an invoice automation solution eliminates the time-consuming, inefficient and error prone nature of manual processing of invoices. This type of system automates the majority of invoices and reduces invoice exceptions materially to create significant operational efficiencies. In addition, supplier adoption is high since electronic invoices can be sent in the supplier’s preferred format, i.e., not limited to just one restrictive format, such as Electronic Data Interchange (EDI).
2. Backlog of invoice processing leads to loss of prompt pay discounts, exposure to late payment fees and untimely accruing of expenses.
An invoice automation solution reduces invoice approval cycle time by automating cost coding, routing and approval of PO-backed and non-PO-backed invoices. Ease of adoption and use are promoted if the system features intuitive workflows, plus it enables end users to configure rules without the need of IT support. Adopting user-defined business rules helps invoices move more rapidly through approvals relative to the traditional manual process. This capability further increases the utilization of prompt pay discounts and eliminates exposure to late payment penalties.
3. The significant amount of time spent researching invoice errors and discrepancies.
Receiving “dirty invoices” with incorrect or missing information such as wrong price, incorrect SKU, or no purchase order number can be time consuming to research, reconcile and process. A customizable rules engine can result in a 98 percent, “touchless” invoice process by pre-validating invoices for accuracy before they are ever received. As a result, providers spend less time reviewing and returning invoices to suppliers for resubmission and more time focusing on other value-added activities.
4. Paper invoices must be filed and archived.
Years and years of storing paper add up. Adopting an electronic invoicing solution can convert 100 percent of paper documents into electronic format and along the way reduce storage backlog and expense to create optimal efficiency. In addition, the solution enables increased visibility into spend data at the line-item level.
5. The ability to receive incremental prompt payment discount terms.
Electronic invoice processing places providers in a position to accelerate payment and thereby obtain incremental discounts—beyond the standard contracted discount terms. That capability, known as “dynamic discounting,” can save providers a significant amount of money. There’s also great benefit to control the acceleration of payment on approved net term invoices such as Net 60 in exchange for a discount, all within a secure online environment.
Click here to learn more about improving efficiency with smart invoicing.
Bejan Shamsy, vice president, Procure-to-Pay Solutions, Procurement Solutions, MedAssets
The healthcare industry is still 18 months away from the mandatory transition from the ICD-9 to ICD-10 code set. Even though the deadline seems far away, it doesn’t diminish the importance of the many changes that need to take place over the next year and a half. A major piece of the transition process is to take every step and precaution to validate that your claims are timely, current and accurate leading up to and following the transition. Below are five considerations when taking a comprehensive look at your claims management system readiness:
1. The existence of interpretive billing edits:
ICD-10 brings with it increased complexity in coding requirements for reimbursement. Often the published rules payors provide can be ambiguous and difficult to apply to specific billing instances. This lack of information leaves it up to billing staff members to properly build the logic behind the claims. A strong claims management system should be supported by a claims vendor partner with the expertise to decipher those rules and advocate for the provider if needed.
2. The complexity of the logic that drives your rules for claims:
The logic that drives your rules should be complex and having the ability to manage the complexity of rules is important. In fact, your complexity capabilities should be such that your own compliance experts may have a hard time comprehending the same amount of information and logic within a similar time frame. The more complex the logic, the more coding combinations that can be accounted for, and the more likely your claims will be paid the first time submitted.
3. The complete understanding of payors:
This is a two part consideration. Part one: It’s important that your facility and system understand how payors operate and what they are doing at all times. For example, it’s important to know exactly how a specific payor’s billing requirements have changed and when those changes take effect. Providers typically hire full-time staff just to keep up with the constant changes. If you have the right claims partner, you can avoid this staffing expense because the system is designed to stay current on all payor trends.
Part two: It is critical that your claims system and edits partner be scalable not only to the payors you deal with at your facility, but to all payors nationwide. The system should utilize data and editing experience from other providers from across the industry so that writing rules isn’t limited to just your facility or health system. Edits should span across hundreds of payors.
4. The scalability of rules:
Billing and coding rules have become very complex. If your claims rules do not scale into millions of combinations of claims and billing scenarios, it’s difficult to be confident in the validity of your claims. Each of these rules should check the different code tables to quickly and easily identify errors on the claim prior to submission. This capability will help increase your clean claim rate and protect your organization against payor audits.
5. The functionality of eligibility and benefit edits:
Since the majority of issues arise at the point of patient access, having the automated ability to check on the eligibility of the patient on the front end is a great benefit that improves denial rates.
Click here to learn more about other claims management system benefits that can help improve first pass acceptance rate, cash flow and accounts receivable (A/R) days.
Janett Checo, director, Edit Research, MedAssets
Every year, MedAssets holds its annual premier educational and networking event. This event can be daunting, even for the seasoned attendee who has come since its inception 13 years ago, so here are some tips to help you navigate effectively through this event. It can be a whirlwind of three days if you don’t know all of the ins and outs of this fabulous event. Join me as I walk through this event day-by-day offering tips along the way so that you can get the most out of your time spent at the MedAssets Healthcare Business Summit.
Tuesday, April 2
Tip #1: Be in the Know! Stay informed – on the go.
New this year, check-out the Daily Program. This informational daily guide helps navigate the events of the day. You can pick up each Daily Program in the various newsstands located throughout the event. Scan the QR code to assess the Event App. This year’s mobile app is enhanced and offers features such as your own personalized agenda based on the events and sessions you registered for during the registration process; ability to send messages and book meetings with other attendees; ability to complete session evaluations for accreditations since we are paper-free this year; event maps; exhibitor information and much more!
Tip #2: Connect at the Client Welcome Session and Welcome Reception.
New this year: Mike Nolte, chief operating officer of MedAssets will be delivering a Welcome Session for Clients highlighting the breadth of capabilities that MedAssets delivers every day in support of our clients’ success. Afterwards, network with your peers and join the fun as we kick of this event in style at the House of Blues.
Wednesday, April 3
Tip #3: Start your day with our keynote speakers.
Today is our premier day for education and it begins with three dynamic keynote presentations.
· If you want to learn more about how the modernization of medical treatment using the latest technologies is going to create new and more effective ways to treat patients, attend Dr. Eric Topol’s keynote session in Mandalay Bay Ballroom J. To see a sneak peak of what Dr. Topol will present during his session, you can watch this video from Rock Center with Brian Williams.
· If you’re interested in learning more about the continuing impacts of legislation and regulations as it occurs in Washington, D.C., attend Dr. Wendell Primus’s session in Mandalay Ballroom I. Dr. Primus is the Senior Policy Advisor on Budget and Health to Democratic Leader Nancy Pelosi. He will share current government activities and their related impacts across the care continuum.
· To learn more about where we’ve been, where we are currently and where we are going with healthcare reform, listen in on Dr. Benjamin Sasse’s keynote presentation in Mandalay Bay Ballroom K and L. Dr. Sasse has served in multiple senior roles within the government including U.S. assistant secretary of Health and Human Services. He will share his thoughts on current reform efforts and how the transition will stimulate entrepreneurial innovation from doctors, hospitals and adjacent industries.
Tip #4: Get your education on!
This jam-packed day has more than 70 sessions encompassing 14 tracks presented by nationally-recognized speakers and healthcare leaders. More than 50 of these sessions are available for continuing education credits and you can see these sessions on the Healthcare Business Summit Download site that hosts all of today’s presentations and handouts for your notes.
Tip #5: Get to the Client and Supplier Awards Ceremony early.
Don’t miss our annual recognition of you and your peers at the awards ceremony. Try to get there as soon as you can from your last education session of the day. Join us as we recognition our President’s Award winner, honoring the client that has achieved the most significant operational performance improvement in 2012.
Tip #6: Network at the Exhibit Fair and join in the Scavenger Hunt.
We have more than 500 exhibitors this year and this venue provides a unique opportunity to learn more about contracted supplier solutions available to optimize business operations and reduce costs. This year, we have introduced a scavenger hunt that will help drive meaningful conversations between you and our suppliers. Learn more about new product offerings and solutions that can help you and your organization today. The more meaningful conversations you have, the better your chances for winning prizes such a first class European vacation for two, wine country trip to Sonoma, a home theater system and much more! You must be present to win so don’t leave before 7:30 p.m.
Thursday, April 4
Tip #7: Arrive early for the General Session.
This year’s general session is going to be epic and you don’t want to miss out on this extraordinary presentation. With more than 4,300 attendees, it can get rather hectic so my advice is to arrive early, wait patiently to enter and quickly select your seat since you will see every ounce of action no matter where you are seated.
Tip #8: Time to Network at the Exhibit Fair.
Take time to visit our 2012 Humanitarian Award recipients located by MedAssets Booth #349, and stop by and see the latest offerings from MedAssets too. Spend time visiting exhibitors to learn about the latest innovative solutions to lower costs and improve quality. Join in the Scavenger Hunt. Final prizes are drawn at 2:45 p.m. and you must be present to win.
Tip #9: Check out our charity booths to learn more about their causes.
Today is not only about appreciation for our clients but also homage to the charitable organizations we support. As an organization, we fully support each cause, and we hope you receive that exposure in order to learn more about ways you and your organization can help these meaningful causes. Below is a list of their booths:
Global Medial Relief Fund – Booth #72
Heart For Africa – Booth #308
Hire Heroes USA – Booth #338
MedShare International – Booth #507
Tip #10: Join the conversation!
If you haven’t already, join the conversation on LinkedIn, Twitter and Facebook. MedAssets has a Facebook page specifically dedicated to this event every year. If you’re on Twitter, tweet with our event hashtag: #HBS2013. We would love to see your comments about the event so don’t hesitate to share your thoughts!
Click hereto learn more about the 2013 MedAssets Healthcare Business Summit
Ann Diamond, senior vice president, Marketing, MedAssets
According to the Healthcare Supply Chain Association, a growing portion of long-term care, ambulatory care, home care and physician practice markets are using group purchasing to help lower costs and improve efficiency. As the industry moves through healthcare reform, alternate care takes on a new importance with the Affordable Care Act (ACA) which changes how supply chain costs are managed. The majority of U.S. hospitals belong to a GPO, however, the financial cost savings and benefit from GPO membership also applies to alternate care providers, especially during a time where every dollar is scrutinized. When an alternate care provider evaluates its options for joining a GPO, I strongly encourage identifying one that has a dedicated team with comprehensive understanding of how best to serve the unique needs of the alternate care market. When considering a GPO for your alternate care facility, it is critical that the relationship is right for the technology and processes you use as part of your care delivery model. Needless to say, it’s also critical to ask the right questions when evaluating GPOs. Below are my suggested top five questions for alternate care facilities evaluating GPOs and the answers you will want to hear:
1. I’m concerned with adding additional costs to my bottom line due to the increased costs that I’m faced with, does the GPO charge a monthly fee?
Since suppliers pay GPOs a fee for every dollar spent with them, they shouldn’t be charging you a monthly fee. Paying a membership should suffice for a well-rounded GPO.
2. Because of the sensitivity between costs and physician preference items, can the GPO provide a list of contracted suppliers within its portfolio and how flexible are the contracts?
It’s important to know all of the contracted suppliers so that you can compare them to the suppliers within which you currently conduct business. If you find that your current suppliers do not represent a good percentage of the contracted suppliers, ask the GPO if they will negotiate to add specific suppliers that you feel is important to maintain. A client-driven GPO will work to make certain that your supply needs are met.
3. Looking from a cost reduction perspective due to increased costs from healthcare reform, what special programs does the GPO offer to help with my cost reduction initiative?
Special programs lead to pricing based on percentage commitment vs. volume which helps to create low pricing that’s attainable for alternate care providers. Another additional bonus is if group buying programs and other periodic sourcing events offer additional savings on products such as medical devices and capital equipment.
4. Because budgets are tight, will my non-acute facility experience pricing changes during the term of the agreement?
Ideally, prices should remain the same throughout the entire term of the agreement. It’s important to ask upfront what the prices are and having both sides agree to the determined prices in order to better forecast expenses and manage costs effectively. This point is important especially in light of health reform and anticipated growth in patient populations. The ability to predict costs of increased supply needs will help with the overall care delivery and budgeting appropriately.
5. Does the GPO have value-added services to help enhance my investment?
Value-added services such as electronic contract catalogs and business tools that provide visibility and reporting into volumes are essential tools in achieving success and efficiency. Electronic contract catalogues enable your staff to gain quick access to view terms and conditions, contract details and pricing, which in turns promotes purchasing compliance on a day-to-day basis. Business tools that provide greater visibility into spending also support the alternate care facility business leaders to verify that contracted items are being purchased, spending is at the pre-determined contracted rates and agreed-to price changes are tracked.
Click here to learn more about the MedAssets Alternate Care Program and how you can experience the cost and financial benefits that 122,000 non-acute healthcare providers are receiving currently.
Tonia Kraus, senior vice president, Spend Management and Alternate Care, MedAssets
We are facing times where every dollar is important. Figuring how to cut costs from every operational aspect of an organization is critical. I have found that one of the biggest opportunities for a financial impact is the efficiency of the operations within a hospital’s walls. Lean is the process improvement mentality for true cash dollars. It is more than a set of tools; it is a modification in behavior and culture. In an era where value-based reimbursements are now a reality, having a system in place to guarantee patient safety while optimizing staff efficiencies is critical for hospitals’ sustainability.
How do you move forward successfully with a Lean transformation?
Executive buy in. Commitment from upper management is step number one. This support will ensure that staff members understand the importance of Lean principles and feel empowered to make lasting changes to improve operations.
Education. A truthful and comprehensive understanding of what Lean can truly do for an organization is step number two in being successful with this transformation. A common belief is that Lean is only a set of tools such as a Kaizen event or a 5S event. Lean is more than a tool box; it is a management system and a behavior that drives all operations for maximum benefit and efficiency. It is not a one-time event, but rather an ongoing process that requires constant attention and analysis. Lean initiatives are not a quick fix to a current problem. These are principles that need to be imbedded into the culture of the organization so that they have wings that will affect not only the present, but future operations and processes. True returns happen when the staff members understand the system, can quickly recognize waste and possess the ability to solve problems at the root instead of trying to solve through committees.
Establish timeline expectations. An understanding that Lean principles take time to disperse throughout an organization also is critical to drive positive staff commitment and support in their critical role of incorporating these principles into everyday work.
Are there areas of the hospital that need more focus than others for Lean?
No one area requires more of a focus than the other. Lean can be applied in every department of the hospital and should be applied across the enterprise. For example, if the nursing department is practicing Lean, but the supply chain department isn’t implementing Lean practices, then disconnects occur, which in turn cause inefficiencies within concurrent operations. Another example is departments that rely on ancillary departments such as the Emergency department (ED). Most people assume that the long wait times in the ED are due to staffing issues and pace. It’s often the case that the delay is caused by waiting for deliverables from the Laboratory department or the Radiology department. Other times, it is a workflow issue related to slow patient admissions, or inefficient patient discharges.
The architectural design of the hospital also has an effect on its operations. While designing a new facility with the best equipment and technology may seem sufficient, it also is important to design with process in mind. The intent is to not just design a facility on current flows and operations, but also around what the desired future state and goals are for processes and operational improvements. Ultimately, Lean is about building a positive future and outlook for process management to eliminate permanently ineffective workflows and short-term workarounds.
What resources are available to help move this transformation forward?
I co-authored a book with Naida Grunden, “Lean-Led Hospital Design: Creating the Efficient Hospital of the Future.” This book was recently awarded the 2012 Shingo Research and Professional Publication Award from the Shingo Prize for Operational Excellence. Established in 1988 in honor of Shigeo Shingo, one of the world’s leading experts on manufacturing practices, the award is presented annually by the Jon M. Huntsman School of Business at Utah State University to recognize and promote research and writing that advances the understanding of Lean and operational excellence.
Another opportunity to learn more about Lean healthcare is attending the Lean Healthcare PowerDay conference. Now in its sixth year, this two-day educational event will be held April 1 - 2, 2013 at the Mandalay Bay Resort and Convention Center, prior to the 2013 MedAssets Healthcare Business Summit.
Charles Hagood, president and founder, Healthcare Performance Partners, a MedAssets Company
When the Centers for Medicare and Medicaid Innovation (CMMI) announced new definitions for the Bundled Payments for Care Improvement (BPCI) initiative, I provided an overview of The Changing Risk Landscape of the Bundled Payment for Care Initiative. MedAssets monitored the BPCI changes to the episode definitions, policies and payment calculations, and the most recent updates only serve to confirm our original assessment that the recent change of course poses a significantly higher financial risk to program participants than originally anticipated.
CMMI announced that the program will be split into two phases. Phase I is a six-month, “no risk” period that begins in January 2013. During this trial period, BPCI participants will continue to be reimbursed under fee-for-service terms as they engage in learning community activities and provide feedback to CMMI on episode-specific quality measures. Phase II—the BPCI performance period—starts in July 2013.
Updated Policies and Program Changes
CMMI continues to revise the BPCI components even as the Phase I starting date approaches. These recent changes are a strong indication that CMMI is taking into consideration candidates’ concerns and is re-evaluating policies, including how the 48 episodes initially were defined.
Below is an executive summary of program updates. You also can download more detailed information here.
· Episode Anchor MS-DRGs remain the same.
· All Oncology and Trauma Medical MS-DRGs are excluded from the Episode Definitions.
· MS-DRGs 469 and 470 are not included as readmissions for an episode.
· Discount Rate Policy Update: The discount rate for Model 4, including ACE MS-DRGs, is 3.25%.
· Health providers will receive multiple risk scenarios to support better decision making: CMMI will provide several different tracks of varying financial risk based on differential trimming.
· Target Prices for low volume MS-DRGs will no longer use the Empirical Bayes method.
· Final Price Setting Methodology will be provided before an agreement is signed: CMMI will discuss final methodologies, provide corresponding Medicare data and present final target prices at the time of candidate/awardee agreements. Candidates will be accorded 60 days to review this information.
· Narrowed Post-Episode Spending Calculation: In response to candidates’ concerns regarding the liability of high-cost cases during the post-episode period, CMMI’s preliminary policy is to trim payments during the 30-day post-episode period at the 5th and 95th percentile, and prorate claims that span the end of this period.
Important Next Steps for Candidates
· Participate in the Phase 1 ‘No Risk’ period. Take the opportunity to further evaluate the BPCI program and its potential impact on your organization.
· Re-analyze data. Model the financial impact of CMMI’s new inclusions, exclusions and policies to determine how they could affect the episodes your organization is considering. To help minimize financial risk exposure, verify that your organization has selected optimal episodes.
· Meet deadlines. Ensure that your organization meets critical due dates.
Critical Dates for CMMI Applicants
Dec. 5, 2012
· Supplemental Information Template A and B were due to CMMI. Candidates that submitted Template A will be considered participants in Phase 1, or the ‘No Risk’ period.
· CMMI BPCI Phase 1, the ‘No Risk’ period, begins.
January 10, 2013
· Candidate Profiles must be submitted to CMMI.
· CMMI BPCI First Performance Year, ‘Risk’ period, begins.
· Participants sign agreements with CMMI.
MedAssets is experienced in implementing bundled payment methodologies and in leveraging robust modeling capabilities to analyze organizational risk associated with the new CMMI episode definitions and policy changes. If your organization is participating in the BPCI program, please contact us to find out how we can assist in reviewing your implementation plans and re-analyzing your data.
For further information on additional risks resulting from the changes to the CMMI BCPI program, view my previous blog post. Click here to download an executive summary of the recent program updates from MedAssets.
Gilbert D’Andria, senior vice president, B2B Partnerships, MedAssets
Providers across the country are developing transition of care management programs as a proactive defense against the financial risks presented by the Hospital Readmissions Reduction Program, which on Oct.1 began imposing penalties for patients readmitted within 30 days for the following three conditions:
1. Acute Myocardial Infarction (more commonly known as a heart attack)
2. Heart failure
It’s estimated that nearly 20 percent of Medicare hospitalizations are followed by a readmission within 30 days. One in five Medicare patients is readmitted and more than 75 percent of these readmissions may be preventable. The data also indicate that approximately 64 percent of readmissions are attributed to non-compliance issues with prescriptions and nutrition as part of post-discharge care. All of these additional hospital stays add up to staggering costs, which is exactly what this new program is designed to mitigate. The potential savings for the government under this program is an estimated $26 billion. Knowing that hospitals cannot always control the reasons for readmissions, it is critical that they build strategies around three critical business issues to mitigate, wherever possible, the financial risk presented by this new reimbursement regulation:
1. Move to a value-driven accountable care model;
2. Identify patients at risk for re-hospitalization; and
3. Coordinate care at pre- and post-discharge.
One way to progress toward all three issues is implementing a best practice transition of care services program that coordinates all components across the continuum of care. Key components of this program include a clinically-aligned transition care plan for each patient; compliance through hospital pharmacy fulfillment; adherence through therapeutic product solutions; and delivery and support through community organizations.
Four Steps for an Effective Transition of Care Services Program
Step One: Identify the patient needs.
Proper coordination of patient data is necessary to appropriately identify the patient’s discharge needs. Using LACE (Length of stay, Acuity of admission, Comorbidity, and ED use) and Johns Hopkins Adjusted Clinical Groups (ACG) methodologies to score patients and identify risk levels is a key step in further identifying post-discharge needs and services.
Step Two: Engage in discharge planning and identifying care transitions.
Development of a discharge care plan that identifies accurately the patient’s actions and responsibilities for proper post-discharge care is critical. These include mapping medications, nutrition, self-care products, follow-up appointments and other social and community services to interventional and post-discharge activities and responsibilities. This step also will equip the hospital’s discharge team with best practice discharge processes.
Step Three: Develop complete care coordination.
Accurate alignment of flexible after care programs is necessary for complete medication monitoring, disease specific care management, nutritional therapy and care monitoring. For example, enabling proper utilization of the hospital pharmacy to ensure that patients fill their prescriptions, enabling the nurse call center to assist patients in the proper consumption of appropriate medications, and coordinating the delivery of nutritional meals to help patients follow prescribed diets.
Step Four: Measure and monitor readmissions.
Through care coordination with your community providers and the patient, it is important for providers to monitor the patient once in the population. One strategy that is critical for monitoring is developing and implementing a care management plan for patient outreach, such as the nurse call center. In order to effectively monitor and measure patients, a system must have access to the relevant data that is typically housed within hospital information systems. The implementation of a Business Intelligence platform can help bridge the gap and provides near real-time access to this relevant information.
Solutions for critical business issues faced by hospitals due to the readmission program
Move to a value-driven accountable care model:
· Manage episodes of care among target patient groups more effectively to reduce high readmission rates.
· Reduce readmissions by 30 to 50 percent with turnkey infrastructure, monitoring and service.
· Establish a framework to improve outcomes for entire patient population.
Identify patients at risk for re-hospitalization:
· Access to data for risk stratification.
· Leverage risk weighting methodologies to target most appropriate patients for care. Examples such as LACE and Johns Hopkins.
Coordinate care at pre- and post-discharge:
· Create a customized care plan for each patient.
· Provide transparency and awareness into the alignment between the care and discharge plan.
· Improve patient satisfaction and outcome through improved follow up and communications between all care providers.
· Support compliance with home health and social and community systems.
Click HERE to learn more about MedAssets Transitions of Care program.
Jeremy Belinski, senior vice president, Population Health, MedAssets
According to industry experts, reform is having a direct impact on the increase of mergers and acquisitions (M&A) and construction activity within the healthcare industry. The American Society for Healthcare Engineering (ASHE) reported that 47 percent of 531 survey respondents have acute care hospital construction projects underway, or planned within three years, and for 2012, the vast majority of construction projects involve renovations. Future projects most frequently cited by survey participants include emergency departments, outpatient facilities, medical office building expansions, primary care clinics and urgent care centers. The survey also noted that providers are looking to incorporate facility design to improve patient quality and safety. Forty-seven percent of survey participants are using features such as hand washing and/or hand sanitizing stations to help achieve this goal.
This uptick in demand for healthcare facility construction in a time of unprecedented economic challenge makes it imperative to identify and avoid the common, yet costly mistakes organizations make before, during and after a construction project. Below are some key strategies to consider when double checking portfolios, rewriting long-term plans and putting a sharp pencil to any building projects.
Where do most of the costs lie?
Recent statics show that approximately 13 percent of the healthcare facility life cycle cost is spent on planning, design, and construction. Within that percentage, 1 percent approximately is spent on planning and design alone. Because of these potential embedded costs, many hospitals are placing stronger demands on construction professionals to increase efficiencies and reduce change orders on project sites.
When is good too good?
Another pitfall is “over-design” which occurs when design plans call for state-of-the-art materials and high-end finishes, and inefficient space planning. It is a delicate balance to create the optimal “spa” design in support of the patient’s experience and healing process while managing shrinking, precious budget dollars.
Designing smart requires less capital and less capital expense and helps to improve the hospital’s bottom line.
It is why this is the year of “smart sizing.” Efficient designs can reduce a project's size by 20 percent, saving construction operational costs. A successful design for today’s time allows for a reduction in operational costs downstream for the next 20 years.
One means to avoid both of the above issues is adoption of Lean operation principles. These principles can be used to appraise the functionality of the new facility while still in the planning stages. It also can, for example, validate that the facility’s workflow supports reduced travel distances for staff, increased flexibility and eliminates unnecessary spaces.
What are the challenges and how can they be avoided?
Challenge #1: Poor pre-planning – Project teams become eager to demonstrate activity on the project so minimal time is spent on pre-planning efforts.
Tip: Invest resources in comprehensive pre-planning efforts to deliver a detailed design/build feasibility study which further improves the accuracy of budgeting processes for accurate project financing.
Challenge #2: Misalignment of key stakeholders – Getting all of the key stakeholders such as the owners, architects, engineers, builders and equipment planners on the same page is a difficult task and can result in project delays and misuse of budget spending.
Tip: Create a value-driven engineering and building process to get everyone on the same page. This proactive step will deliver operational advantages at many levels throughout the project.
Challenge #3: Poor guidance into accurate labor and supply costs – Most construction projects face the battle of high labor and supply costs and fail to accurately budget for them.
Tip: Aggregate and coordinate projects to begin in similar time frames to leverage buying power on equipment and materials. Promote connectivity across all business partners to view projects holistically.
Challenge #4: Lack of transparency – Management lacks visibility into the day-to-day tracking, monitoring and reporting of the project.
Tip: Utilize a solution that provides real time information into the project, budget and schedule. Using technology to keep key performance indicators in front of the team will keep the project on scope and within committed timeframes.
Learn how MedAssets can improve compliance, demonstrate ROI and help manage your construction projects HERE.
Cheryl Stoddard, vice president, Construction, MedAssets
Participating health systems and health plans in the Centers for Medicare and Medicaid Innovation (CMMI) Bundled Payments for Care Improvement (BPCI) process need to recognize they have been presented with a new landscape that presents significantly higher financial risk.
When CMMI announced new definitions for the BPCI proposed episodes it reflected a new, broader strategy. These changes made to the definitions will impact payment for readmissions, include more Medicare Part A and Part B services into an episode payment, and increase the inconsistencies in the criteria for DRGs and the related diagnoses. The wider inclusion criteria combined with the complexity of inconsistencies adds up to significantly higher risk exposure for participating providers. It is now more likely that services provided to patients will be reimbursed at the bundle’s fixed price versus fee for service. Providers should proceed with caution to understand how the new inclusions and exclusions criteria, as well as the impact of proposed policies for sample size and episode price adjustments on the episodes they are considering as part of their participation in the BPCI.
BPCI Changes Presenting New Risks
Our experts conducted an extensive analysis of the new inclusions, exclusions and conditions in the CMMI newly proposed episode definitions and identified the following list of risk concerns:
- Wider inclusion criteria. CMMI’s broader episode definitions mean more of the provider’s claims are likely to fall under the bundle’s fixed price vs. fee for service. The more claims filed for the same bundled payment, e.g. when the patient requires the full range of included services, the greater the potential for less yield and margin overall for the provider, per service line and per bundle.
- Highlighted Example: The episode for a total hip and knee replacement surgery now includes 502 MS-DRGs and 9,337 diagnosis codes, many of which are clinically irrelevant to the index condition.
- Readmissions. The newly released episodes address readmissions in a very broad manner, with the majority of definitions including all medical DRGs, regardless of whether the readmission conditions are relevant to the index condition. That means readmissions stemming from cancers, behavioral health, trauma and HIV treatment could end up as one episode payment.
- Highlighted Example: A patient’s services are included in an Acute Myocardial Infarction (AMI) bundle. If that patient is readmitted to the hospital for chemotherapy to treat cancer during the bundle duration the chemotherapy services will be included in the AMI bundle.
- Inconsistent Exclusion Criteria. There are many inconsistencies in the exclusions between DRGs (Medicare Part A) and diagnoses codes (Medicare Part B) for the same services. Case in point: Cancer diagnoses were excluded from Part B, but the cancer medical DRGs are still listed as included.Moreover, there are many exceptions where relevant Part B services are not included in the episode definition and should be billed as fee for service. Both instances create complexity for the provider to submit claims appropriately.
- Highlighted Example: The services the patient receives for their cancer treatment at a physician office are excluded from the bundle payment. Those same services are included in the bundle when the patient receives them as part of an inpatient stay.
- Highlighted Example: The new proposed diabetes definition does not include diabetic retinopathy. Sinusitis and many other respiratory conditions are not included in the new definition for COPD, Asthma and Pneumonia and must be billed as fee for service.
What are CMMI Applicants to do?
- Re-analyze patient data against CMMI’s new proposed changes to better understand how new inclusions, exclusions and conditions would impact the episodes that are being considered for program participation. Conducting re-analysis supports “eyes wide open” when selecting optimal episodes, finalizing applications and more informed negotiations.
- Do not wait. It is urgent to re-analyze patient data prior to episode submission by applicants to CMMI on Wednesday, Nov. 28. Final selection of episodes and episode-initiating partners must be made.
- Keep Deadlines. Make sure your organizational plan for participating in the BPCI accounts for critical dates. Below for reference is a timetable.
MedAssets is providing assistance to participating health systems on this issue through our robust modeling capabilities, and by careful evaluation of the potential for increased risk associated with the new CMMI episode definitions and policy changes. If your organization is participating in the BPCI program, please visit this link to request a CMMI re-analysis by our experts to support your organizational success.
You also can click here to request a Summary of Episode Changes from MedAssets. This document provides an overview of the new definition impact to readmissions, inclusion of additional Part A Services, inclusion of Part B Services, and inconsistent exclusion criteria for DRGs and related diagnoses.
Upcoming Critical Dates for CMMI Applicants:
- Oct 22 – Nov 2, 2012 CMMI will hold two webinars a week to keep candidates updated
- Nov 5 - Nov 16, 2012 CMMI will hold individual candidate awardee interviews
- November 28, 2012 Feedback required from all candidate awardees (Clinical episodes and episode-initiating partners may be added at this time, as well as special model considerations)
- January 10, 2013: Candidate profile must be returned to CMMI
- TBD: Awardee agreements and implementation
Click here for more information on CMMI and Bundled Payments.
Gilbert D’Andria, senior vice president, B2B Partnerships, MedAssets
Integrating supply chain (purchases) and revenue cycle data (charges) arms healthcare organizations with a defensible pricing strategy that improves overall revenue capture and reimbursement. In a recent sit down, Kelly Barnes, Director of Consulting at MedAssets discussed the challenges and importance of linking the charge description master (CDM) with the item master (IM), in addition to offering sure-fire tips for a successful integration.
Q: What are the top three concerns that you have witnessed that cause hospitals to hesitate with the implementation of linking the chargemaster (CDM) with the Item Master (IM)?
A: The first concern is resource limitations and deciding who from each department will oversee the implementation process to ensure accuracy and its completion. This effort could become a full time job for those involved, so determining how to link the Revenue Cycle and Materials Management departments with minimal disruption is critical. The second concern is the poor cross-functional relationship often found between these two functional areas. These departments typically have no need to work together so it’s beneficial to create an overarching body to steer both sides down the right path towards a successful implementation. The last concern relates to data analytics. The lack of a solid working relationship creates a lack of understanding that this new data linkage has a direct impact on global organizational data analytics. In other words, if the data isn’t clean, then an inaccurate data output will occur.
Q: What are some of the pitfalls that can emerge when linking the CDM with the IM?
A: One common pitfall is not accounting for the different clinical information systems, and the separate databases, that house the CDM and supply items. If the chargemaster is decentralized, the same item can be utilized and charged for differently within the various departments. Another difficult challenge to overcome is the lack of internal controls to monitor and track the established integration between the CDM and IM. Lastly, a third pitfall -are knowledge gaps in understanding which charge codes should be identified with a particular supply or implant. This knowledge gap can lead to inaccurate revenue code and HCPCS assignment resulting in lost revenue.
Q: If you were to break down the acute healthcare industry into three distinct groups – one group that does not link the CDM to the IM, another that links the two but maintains separate databases and a third that links the two in a common database, what percentage of hospitals do you believe occupy each group and why?
A: No links: 5 percent – This percentage comprises smaller hospitals that do not have the ability or systems in place to initiate this CDM to IM process.
Linked, but in separate databases: 85 percent – It’s typical that hospitals utilize multiple software systems from various vendors which do not “talk” to one another to automate supply charge capture. The supply to charge code link is also maintained differently within each of the software systems based on available resources.
Linked with a common/shared database: 10 percent –The majority of hospitals try to establish a standardized process for supply to charge code linkage; however, the lack of tools and technology lessens the ability to maintain and coordinate supply automation activities.
Q: What is the importance of having each charge code correspond to an item master number?
A: It’s very important that every chargeable item have a corresponding charge code. Having a charge code gives the organization the ability for accurate charging which leads to enhanced reimbursement.
Q: What are five tips for linking the CDM to the IM successfully?
A: Tip #1: Establish executive sponsorship within both the Revenue Cycle and Materials Management departments.
Tip #2: Utilize technology solutions and knowledgeable experts to interpret and synthesize data and processes for the overall project.
Tip #3: Use the item master as the source of truth for establishing the charge code linkage.
Tip #4: Create best practice workflows and policies to maintain CDM to IM linkages. The Revenue Cycle department should possess ownership of establishing the charge code link.
Tip #5: Establish key performance indicators and metrics to track financial opportunities throughout the process.
To learn more about integrating your item master with your charge master, click HERE.
Kelly Barnes, director of Revenue Cycle Consulting, MedAssets