Dealing with a Surge in Uncompensated Care

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Although there has been a drop in numbers of uninsured patients following the rollout of the Affordable Care Act, the remaining uninsured have driven up “uncompensated care” to an all time high.

 

Uncompensated care—the combination of bad debt and charity care—totaled $45.9 billion in 2012, or 6.1 percent of hospitals’ expenses, according to the American Hospital Association. And healthcare trends, including increased patient cost sharing, are expected to send bad debt to $200 billion by 2019, according to an analysis of 2011 Medicare and Medicaid statistics. (“Report: Payment Options, Pre-Service Could Push Back Surge in Uncompensated Care for Hospitals, HFMA Weekly News, December 5, 2014)

 

Hospital Strategies Highlighted

 

Hospitals can alleviate some of the strain from an expected 300 percent increase in uncompensated care over the next five years through better pre-service financial clearance and more consumer-friendly collection practices, according to a new report from Deloitte.

 

Authors of the Deloitte report suggested that hospitals should:

 

 

  • Clarify their charity care policy and implement it consistently

 

  • Ensure the accuracy of the community service adjustment, which reduces charges for self-pay patients by reducing mark-ups

 

  • Review their processes and technologies to better engage patients in financial communications prior to leaving the hospital, such as during scheduling/registration or check out

 

  • Implement financial clearance processes before a patient receives scheduled care to identify the correct payer, determine eligibility and benefits, and collect patients’ out-of-pocket costs for the scheduled procedure

 

  • Improve revenue collection after care, including communicating payment responsibility through multiple channels and offering a financing program at reasonable interest rates

 

Other suggestions include:

 

  • Self-pay policies for elective procedures that require an upfront partial or even full payment. (Many hospitals already have this in place including pre-service collections that include processing secure payments over the phone.)

 

  • Running patient liability estimators programs prior to each visit, or at check out when a patient hasn’t preregistered for care. Liability estimators use fee schedules and contracts to approximate patient out-of-pocket expenses.

 

Out-of-pocket healthcare expenses for consumers reached $672 billion by 2012. That amount is expected to increase substantially as more employers shift to high-deductible insurance and more people gain coverage through public health insurance marketplaces, which are dominated by high-deductible plans, according to Deloitte. (“Report: Payment Options, Pre-Service Could Push Back Surge in Uncompensated Care for Hospitals, HFMA Weekly News, December 5, 2014)

 

 

 

iProtean subscribers, Governance of Integrated Delivery Systems is in your library. Featuring noted governance experts Barry Bader and Pam Knecht, this course focuses on the changes in governance necessitated by structural changes within healthcare, specifically the move to integrated delivery/care systems. Specific topics include key changes in governance, changes in governance structure, best practices and the role of local/subsidiary boards.

 

In early January, look for the new advanced Quality course, Board Mindsets to Drive Value, featuring Stephen Beeson, M.D., and Larry McEvoy, M.D.

 

 

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Two Reports Suggest Meaningful Systemic Change in Care Delivery

Two recent reports on hospital quality and growth in healthcare spending suggest that healthcare providers are making meaningful systemic changes that are improving the value of U.S. health care, according to a Healthcare Financial Management (HFMA) senior executive.

 

The Department of Health and Human Services (DHHS) reported a 17 percent decline in the rate of hospital-acquired conditions (HACs) from 2010 to 2013. This decline represents an estimated 50,000 lives and $12 billion. The rates of both saved lives and reduced costs appeared to accelerate during the study’s time frame, with the largest improvements coming in 2013. (“Hospital-Associated Infections Fall 17 Percent,” HFMA Weekly News, December 5, 2014)

 

The Bureau of Labor Statistics (BLS) reported that the hospital producer price index (PPI) last month rose by 1 percent from October 2013, the smallest since a 0.17 percent increase in 1997.  Compare this to a 2.2 percent increase from 2012 to 2013. (“Hospital Prices Continue Slow Rise,” HFMA Weekly News, December 5, 2014)

 

Decline in HACs

 

DHHS noted that declines in HACs were broad-based; i.e., across the listed conditions, but reductions in the rates of pressure ulcers and adverse drug events declined the most significantly.

 

The reported noted that the safety improvements occurred in conjunction with concerted hospital efforts to reduce adverse events. Those efforts “were partially driven by initiatives of the Affordable Care Act, such as Medicare bonuses and penalties linked to quality of care and the HHS Partnership for Patients initiative.” (“Hospital-Associated Infections Fall 17 Percent,” HFMA Weekly News, December 5, 2014)

 

Slowed Growth in Health Spending

 

Within hospitals, outpatient PPI grew by 1.1 percent and inpatient PPI rose by 1 percent since October 2013, according to a BLS news release. More recently, hospital outpatient prices increased by 0.1 percent from September to October, while inpatient prices rose by 0.6 percent.

 

Other sources also reported a decrease over the last two years:

 

  • Health Care Cost Institute—U.S. health spending in 2013 continued the slow growth that has been in effect since the start of the recession.

 

  • Office of the Actuary for CMS reported in 2013 that hospital spending increased by 1.5 percentage points in 2012.

 

“The causes of these improvements have been the subject of much debate in the policy community, with some attributing decreased rates of spending to a weak economy,” said the HFMA executive. “As the trend in lower rates of increase continues, however, and is combined with reports of improved quality of patient care, the evidence tilts increasingly toward the likelihood that healthcare providers are making meaningful systemic changes that are improving the value of U.S. health care.” (“Hospital-Associated Infections Fall 17 Percent,” HFMA Weekly News, December 5, 2014)

 

 

To read the report on hospital acquired conditions click here.

 

To read the article from Health Affairs on slower growth in health spending click here (subscription required to read the full article).

 

 

 

 

iProtean subscribers, Governance of Integrated Delivery Systems is in your library. Featuring noted governance experts Barry Bader and Pam Knecht, this course focuses on the changes in governance necessitated by structural changes within healthcare, specifically the move to integrated delivery/care systems. Specific topics include key changes in governance, changes in governance structure, best practices and the role of local/subsidiary boards.

 

In early January, look for the new advanced Quality course, Board Mindsets to Drive Value, featuring Stephen Beeson, M.D., and Larry McEvoy, M.D.

 

 

For a complete list of iProtean courses, click here.

 

For more information about iProtean, click here.

Providers Would Get a Boost Under Proposed Rule Changes to MSSP ACOs

Medicare Shared Savings Program Accountable Care Organizations (ACOs) would have three extra years before they could be punished for poor performance, according to a new proposal from CMS.

 

The proposal is one of dozens of changes to rules governing ACOs that CMS wants to implement. ACOs are affiliations of doctors, hospitals and other providers that jointly care for Medicare patients with the goal of receiving a portion of what they save the government. Those that spend above Medicare estimates stand to lose money. The objective is to reduce U.S. health spending with new incentives to improve the quality and efficiency of healthcare.

 

The incentives have been a source of controversy. “Policymakers have sought more substantial incentives—penalties as well as rewards—as a means to hasten changes to the way healthcare is delivered. Hospital officials and physicians have called for less financial risk so they can build the infrastructure and expertise they need to succeed.” (“Draft Medicare ACO rules would allow more time with less risk,” Modern Healthcare A.M., December 1, 2014)

 

More than 330 Medicare Shared Savings ACOs care for about 5 million people. (There are substantially fewer ACOs outside the Medicare Shared Savings Program, and these are not addressed in the new proposal from CMS.) The revisions to the program are intended to entice providers to form new ACOs and to keep existing ones in the program, which is voluntary.

 

The new rule would give both new and existing ACOs an extra three years before they faced penalties, for a total of six years.

 

Some of the details include the following:

 

  • ACOs that after their first three years decide to avoid penalties for the next three could keep no more than 40 percent of the money they save Medicare, rather than the 50 percent maximum they can keep during their first three years.
  • Providers that want a chance to earn the biggest savings while also being a higher risk for repayment if they fall short would transfer to a new model called “Track Three.” Many ACOs in the Pioneer ACO Model would transfer to this new model. These ACOs would keep up to 75 percent of the money they save Medicare. If they cost Medicare extra, they would be responsible for up to 15 percent of the excess spending. Currently ACOs cannot be held responsible for more than 10 percent.
  • The Third Track model would use new methods to identify which patients are included in the ACO. These ACOs would have a list of patients at the start of the year whose care and costs they must manage. Under the current rules, Medicare identifies beneficiaries as included in the ACO at the end of the year based on how much care they received from the providers in the network. ACOs have asked CMS to identify the patients at the beginning of the year to allow more focused improvement efforts.
  • Because some ACOs have complained that providers that are already practicing efficiently are having a harder time producing savings than less efficient ones, CMS would offer an option that compares ACO spending to the average spent by other doctors and hospitals in the region that are not part of an ACO.
  • The government is also soliciting views on alternative ways of deciding whether an ACO has saved Medicare money. Currently, Medicare estimates what the participants of the ACO spent in the past and uses that as a benchmark.

 

The public has until Feb. 6 to comment on the proposed rule.

 

(The major source for the information above is from Kaiser Health News; “New ACO Rules Would Delay Penalties An Extra Three Years,” Jordon Rau, Kaiser Health News, December 1, 2014. Kaiser Health News (KHN) is a nonprofit national health policy news service. KHN content is produced as part of a reporting partnership with NPR and public radio member stations.) 

 

To read the CMS proposal, click here.

 

 

iProtean subscribers, Governance of Integrated Delivery Systems is in your library. Featuring noted governance experts Barry Bader and Pam Knecht, this course focuses on the changes in governance necessitated by structural changes within healthcare, specifically the move to integrated delivery/care systems. Specific topics include key changes in governance, changes in governance structure, best practices and the role of local/subsidiary boards.

 

In early January, look for the new advanced Quality course, Board Mindsets to Drive Value, featuring Stephen Beeson, M.D., and Larry McEvoy, M.D.

 

 

For a complete list of iProtean courses, click here.

 

For more information about iProtean, click here.