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9 ways to cut hospital debt


Meg Bryant, writing for Healthcare Dive, discusses nine ways in which hospitals can reduce debt:

1. “Understand your costs of care. Hospitals make money taking care of patients, so their debt needs to be clinically proportionate to the types of services they provide….If a hospital has large surgery needs, it will require lots of operating rooms, which are expensive to implement and maintain. …. Make sure the capital structure is appropriate to the model of care needed or the risk profile of the patients the hospital treats.”

2. “Improve ICD-10 coding on claims forms. Not coding appropriately and not coding for the proper amount of time the doctor sees the patient or for interactive effects can cause reimbursement rates to plummet….”

3. “Renegotiate rates with insurers. Larger, more prestigious hospitals and health systems are able to extract much higher reimbursement from private payers than less prestigious ones, even in the same geographic area. Hospitals can increase volume and revenues by convincing health plans to increase rates and then direct patients toward the less-expensive hospital.”

4. “Increase efficiencies and productivity. Another thing hospitals can do is make sure nurse practitioners, nurse, LPNs, and other clinicians are operating at the top of their license. {N}urse practitioners can perform many of the tasks a physician does, but at a lower cost of care.”

5. “Manage risk. This is something that all hospitals are having to do under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), but it is also a good way to reduce costs and knock out debt. Focusing on high-risk patients to reduce costly inpatient stays can have a rapid return on the bottom line. Coupling that with narrow networks of high-quality, low-cost physicians may increase referrals from health plans and enhance reimbursement rates.”

6. “Refinance or restructure to cut debt. Hospitals can also work with capital market organizations to see if there are ways to refinance or restructure to reduce the debt burden….”

7. “Divest property.

8. “Reduce ‘bad’ debt. To increase the odds of getting paid, some hospitals are training patient access staff to identify patients who may default on payment and putting in point-of-service payment plans. Some hospitals have also set up space to enroll uninsured patients in Medicaid….”

9. “Join a health system.”  Get  the efficiencies from being in health systems, as opposed to being a single hospital. With a system you have the credit worthiness of the whole system behind you, probably getting you lower interest rates.

To read the entire article, please hit this link.

ICD-10 going well, but possible dangers loom



Medscape reports that implementation of  the new ICD-10 diagnostic codes by physician practices “resembles a calm, glassy stretch of ocean broken by a solitary shark fin.”

The news service reports that “by almost all accounts, the switch from the old ICD-9 codes to their more voluminous and complicated replacements has not produced a feared spike in rejected or denied insurance claims that would interrupt cash flow. Physicians who code claims and third-party payers that process them are mostly getting ICD-10 right.”

“However, a few experts have heard unsettling boos about rising denial rates, and almost everyone with something to say about codes and claims processing is apprehensive about what will happen after Oct. 1. That date marks the end of a 12-month grace period set by Medicare and a number of large health insurers for tolerating less than perfect ICD-10 coding. If and when these payers bare their teeth over ICD-10, there could be blood in the water.”

Also, “A March survey by the Workgroup for Electronic Data Exchange found a slight decrease in productivity for healthcare providers who grapple with code selection and required clinical documentation. However, it is likely that with time, more providers will master the demands of ICD-10 coding and resume their former pace.”

Early reactions to ICD-10

Read here  how physicians are reacting to the early days of ICD-10.

Income implications of new ICD-10 and HCCs

This Medscape piece by Greg A. Hood, M.D., looks at the need for providers to better understand the income implications of the new ICD-10 codes as they relate to hierarchical condition categories (HCCs).

Dr. Hood notes:

“HCC codes have been affecting insurance products and physician reimbursements for years, though most clinicians have under-appreciated them at best or more plainly ignored them. They’ve been a cornerstone of` reimbursement for Medicare Advantage plans for over a decade.

“Because HCCs, which are gathered from encounter claims data, are used to estimate predicted costs for plan members in the year to come, they’re integral in calculating benchmarks for (ACOs) as well as for the hospital value-based purchasing program.”

He goes on:

“CMS and other insurers that incorporate HCC methodology into reimbursement will probably exclude codes that lack the relative degree of specificity achievable with many ICD-10 codes. This means that providers will probably be unable to avoid coding in extreme … detail. It’s important to note that the ICD-10 codes that do venture into highly detailed specificity do not necessarily connote a meaningful HCC score. In other words, it’s not the degree of detail that predicts expenses, but rather the severity of the condition represented by the diagnosis code.”


No screams yet with ICD-10 implementation


It’s early, but so far anyway, the implementation of the ICD-10 diagnostic and procedural codes   has not created any disasters.

Modern Healthcare says: “Health information technology cognoscenti predict most providers of size—large hospitals and health systems, large physician groups and large health plans—will swim right along in a sea of far more numerous, complex and very specific new codes.”

“And after three government-induced delays totaling four years, most providers should have been ready.”

Still,  insurers might be forced to delay reimbursements if codes aren’t submitted properly.

“The American Medical Association, numerous state medical societies, and other physician groups had fought the conversion for years, almost to the bitter end. The AMA didn’t throw in the towel until July, cutting a deal with the CMS in which physicians were given one year’s worth of wiggle room via a pledge by the agency not to bounce Medicare claims incorrectly coded.”









How a system plans to deal with ICD-10 confusion


The Lorenz attractor displays chaotic behavior.

CMS’s recent granting of flexibility to physicians in meeting the Oct. 1 deadline for ICD-10 has caused some confusion for hospitals. Linda Reed, R.N., is vice president, behavioral and integrative medicine, and chief information officer at Atlantic Health,  explains how her system  plans to cut through the confusion,

She notes:

“While it appears there is flexibility on the part of the physicians, there does not appear to be any such flexibility for hospitals and other health care organizations. As hospital providers, we are at the mercy of what our physicians order and the codes that are part of those orders. A nonspecific code may be acceptable for physician billing, but it is still not acceptable for hospital billing. ”

“At this time, we are planning for the worst and putting in place processes for dealing with prescriptions that have incorrect or incomplete codes. The plans include: How do we ensure that there are no long lines and wait times? Who will work with the patient? Who will help them call their physicians to get the right codes? How do we ensure customer satisfaction and service recovery? How do we make sure patients get the services they need in a timely fashion?”


Many hospitals are cost-cutting in wrong places


Navigant Healthcare Managing Director Bruce Hallowell says in a recent interview in  RevCycleIntelligence  that too many hospitals and healthcare systems overlook where there is management duplication. He says that they may be focusing on the wrong places.

He  asserts, that, among other things:

When hospitals do cost reductions, they look at cost, not outcomes. This takes their bottom line away. There is a bad habit in healthcare of treating everybody like a Medicare patient, so Medicare pays on DRG (diagnosis-related group) and we don’t get paid based on things like length of stay. There’s a huge effort to cut length of stay. When I’m cutting cost, I need to cut costs in the appropriate area.”

He says the best overall way for hospitals to consider costs is: “You have to look at it from the holistic approach. What are the costs that are actually costing me something in my different payer levels? Is it a utilization or a variation? How do I get rid of variation and not worry about the number of days?”

His view of  changes from  new payment methodologies:

If you have two underperforming units at two different hospitals that are five miles apart, if we moved them to one facility, they would be a high-performing function, but we don’t want to make those tough decisions. The new payment methodologies will force the healthcare industry to make tough decisions, such as do I really need four OB units within ten miles of each other or do I need one? ACOs (Accountable Care Organizations) – basically capitation with no control – are starting to look at risk components, making sure we get continuing of care from beginning to end provides an idea of how cost is structured.”

On ICD-10’s effects on  hospitals’ revenue and reimbursement situations:

ICD-10 is going to have a bigger impact on hospitals from a revenue and cash standpoint than anything else that’s coming right now. I have to get past that before I can deal with ACOs  and bundled payments. ICD-10 is the biggest threat to any income. ” (For laypersons: ICD-10 is the 10th revision of the International Statistical Classification of Diseases and Related Health Problems.)

“People who are not taking it seriously understand it from a technical standpoint and not a process standpoint. The threat is impending change that has a direct impact on reimbursement and that’s where my cash and investment comes from….”


Move to make ICD-10 transition easier


The CMS has made a concession in the transition from ICD-9 to ICD-10.

Modern Healthcare reports that for one year past the Oct. 1, 2015 deadline for adopting ICD-1o, the Centers for Medicare & Medicaid Services “will reimburse for wrongly coded claims as long as that erroneous code is in the same broad family as the right one. There had been concerns among providers that they wouldn’t be paid if they made minor mistakes trying to implement the new complex coding system.”

And so the American Medical Association, which has long criticized
the Obama administration’s order to move from ICD-9 to ICD-10 coding for diagnoses and inpatient hospital procedures, has decided to team  with the CMS to make the transition easier for physicians.


Benefiting from the ICD-10 delay

Three hospital executives discuss how to take advantage of the ICD-10 delay.


Worried about another ICD-10 delay


 “Sisyphus,” by Titian.

Physicians have long lobbied the Feds to delay implementing the ICD-10 diagnostic coding set.

But the W0rkgroup for Electronic Data Interchange, in a survey of 1,100 physicians, payers and vendors about the  ICD-10 implantation date looming on Oct. 1, a survey of more than 1,100 physicians, payers, and vendors, finds that the biggest  barrier to readiness is the  fear that there will be yet another delay.

The sector is crying out for predictability. It reminds us a bit of the stock market, where  nervous investors often prefer actionable bad news to uncertain, and thus not actionable, good news.

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