Rural Factors Affecting Reimbursement Getting Paid 101

Transcription

1 Rural Factors Affecting Reimbursement Getting Paid 101 KATHY WHITMIRE APRIL 15, 2015 Rural Factors Affecting Reimbursement Reimbursement complexity growing due to: Effects of ACA Medicare value based adjustments Quality HCAHPS Readmissions HAC s Medicare Cost based reimbursement eroding with 30%+ going to Medicare Advantage plans Growing Complexity with 25+ payer platforms Commercial Payers implementing value based incentives and penalties for poor performance. Narrow networks exclude poor performing providers Self Pay / No pay growing mainly due to high deductible health plans with $5000 deductibles. 1

2 Rural Factors 30% reduction of Medicare Cost Reimbursement due to Part C growth Medicare advantage plans account for 30% of total Medicare spending diluting cost based reimbursement file:///c:/users/h/documents/medicare/medicare%20advantage/ medicare-advantage%20(1).pdf How are hospitals paid? Inpatient CAH Per diem, PPS MS DRG Outpatient CAH % of Charges, CCR PPS APC s, Fee Schedule 2

3 So how are rural hospitals reimbursed? Critical Access Hospitals CAH 25 beds or less Paid 101% of Cost Inpatient Per diem (based on previous year s total cost divided by number of Medicare days) Outpatient % of Charges (based on % of cost to charges Cost to Charge Ratio CCR So how are rural hospitals reimbursed? Perspective Payment System PPS 26+ beds Inpatient DRG Diagnosis Related Group (based on severity level bundled payment for all charges related to Admitting diagnosis) Outpatient APC Ambulatory Payment Classification (based on type of service bundled payment for outpatient procedures) 3

4 How DRG Payments are Calculated The Inpatient Perspective Payment System (PPS) is a complex calculation in which begins with each case being categorized into a diagnosis related group (DRG). Each DRG has a payment weight assigned to it. Payment weights are affected by factors such as: Acuity/Severity Level of the case Geographic location (cost of living adjustment factor), Area Wage Index (AWI) 42 Rural hospitals.75» Compared to MSA Metro Atlanta at.94 the number of low income patients (DSH adjustment going away under ACA ), whether that facility is a teaching facility (IME adjustment), APC Payment Calculation APC payments are determined by multiplying an annually updated ʺrelative weightʺ for a given service by an annually updated ʺConversion Factorʺ. CMS publishes the annual updates to ʺrelative weightsʺ (including adjustment factors) and the ʺconversion factorʺ in the November ʺFederal Registerʺ. The 2014 APC BASE RATE is $ (same in 2015) For example, to calculate the APC payment for APC 006 (includes Incision & Drainage of simple abscess CPT 10060): Relative Weight for APC 006 = Conversion Factor for 2014= $ X $ = $ payment for APC 006 for year 2014 (for the ʺaverage US hospital)ʺ. GO TO: 4

5 Hospital Remittance Advice Net Reimbursement Less Pat Resp Less 2% Sequestration Cut (CARC 223) Net Payment = CLEAR AS MUD 5

6 ACA driving Volume based care to Value based healthcare From an interview with consultant and health care futurist Ian Morrison, Ph.D... Weʹre in this shift, but thereʹs not much agreement and clarity about the exact pace of change. Thatʹs because when youʹre a volume based business, youʹre trying to fill a hospital; in the population health based model, youʹre trying to empty it. When people confront the financial and clinical realities of what that means, they say, ʺWait a second! # 1 Rural Challenge with Value based care First, rural hospitals struggle with clinical integration bringing doctors on board and building a culture of accountability for performance Accountable Care being held accountable for performance based on quality and economic efficiency. reluctance to implement Electronic Health records (EHR) Meaningful Use ICD 10 push back by physicians to document with specificity in order to code and be paid accurately 6

7 PPACA Payment Reform puts safety net hospitals at higher risk In order to achieve $716 Billion in Cuts: Value Based Purchasing VBP is a payment methodology that rewards quality of care through payment incentives earned from a 1.5% pot contributed by all hospitals. Readmission Penalty up to 3% for readmissions for same Dx within 30 days. Hospital Acquired Conditions top 25 th percentile will receive a 1% penalty on all Medicare payments Meaningful Use EHR Hospitals/Physicians that have not achieved Stage 1 MU will receive a 1% penalty each year up to 5% ACA initiatives mandate potential of 11% in Cuts to Medicare Reimbursement over 5 years ACA Billions in Cuts, Complexity of Value Based Care, = Rural Hospital Closures + SEQUESTRATION 2% 7

8 IN SUMMARY: What Does All This Mean? As many as Rural Hospital may close in next 24 months Access to rural citizens will be devastated. Telemedicine and tele monitoring (I phone I[ad e.g.) will become alternative access site Mid Levels will become a standard of care and customary way of doing business in view of major physician shortages What Does All This Mean? Reimbursement complexity will get even worse as insurers use precertification s and denials and narrow networks Employed physicians will approach a majority of physicians for the 42% currently employed This will influence access as networks are narrowed Insufficient physicians available to support ACA increased Medicaid coverage this overrunning the rural hospital ER s as an alternate for primary care thus more closures 8

9 What is the role of HomeTown Health to help Rural Hospitals Survive: EDUCATION EDUCATION EDUCATION Advocacy Grass Roots Local County Support Hospital Authority / Board Education on Reimbursement. Monthly Medicaid & Medicare Webinars providing hospitals with updates & training. HTHU.net Online university to educate rural staff on new regulations 7000 students across rural America Board Education Opportunities like today! THANK YOU! Questions? Jimmy Lewis, CEO theleadershipgrp@mindspring.com Kathy Whitmire, Managing Director kfw@windstream.net