Reimbursement: Trends & Strategies in Emergency Medicine January 12-14, 2015 Las Vegas, NV

Transcription

1 (*) Michael A. Granovsky, MD, CPC, FACEP Reimbursement: Trends & Strategies in Emergency Medicine January 12-14, 2015 Las Vegas, NV Rapid Fire Revenue Streams: Observation, Free Standing EDs, and Urgent Care Identify opportunities for ED revenue stream expansion and diversification Analyze expanded ED business lines including: Observation, Free Standing EDs, and Urgent Care Discuss the economics and contract implications of venturing into these service lines President, LogixHealth; Editor ED Coding Alert, Subject Matter Expert AAPC ED Subspecialty Certification Exam; Member Reimbursement Committee, Course Director National ACEP Coding and Reimbursement Conference, Professor George Washington University, Department of Emergency Medicine Subject Matter Expert ACEP Panel fopr quality measure development. (+) Jennifer L. Wiler, MD, MBA, FACEP Vice Chair and Associate Professor, Department of Emergency Medicine, University of Colorado, Denver, Colorado 1/13/2015 8:00:00 AM-9:30:00 AM DISCLOSURES: (*) Ownership Interest: President Logix (+) No significant financial relationships to disclose

2 Rapid Fire Revenue Streams: Urgent Care, Observation, Free Standing EDs Michael Granovsky MD, CPC, FACEP President, LogixHealth Jennifer L. Wiler, MD, MBA, FACEP Vice Chair, Emergency Medicine, Associate Professor, University of Colorado School of Medicine & University of Colorado Denver, School of Business The Continuum of Outpatient Services Urgent Care centers Free standing EDs Observation 1

3 Case Study The Entrepreneur: Urgent Care 45 year old BC ED physician working in a busy level 1 trauma center for 15 years has entrepreneurial spirit and is looking for extra revenue. Also interested in a more diverse practice environment. Spends 10k on consultants to find an urgent care site with an optimal payer mix. 600K on the build out. Negotiates payer contracts. Hires some part timers. 2 years later, now works 2-3 days a week in the UCC. 6 shifts a month in the ED. UCC profit 250k per year. Plans to open 2 nd UCC in the Spring. Urgent Care Center Considerations Considerations Volume/Patient Flow Signs 50% SEO 35% Market potential Payor mix Contracting Hours of operation Staffing No EMTALA* requirements Entrepreneurial Spectrum Go it alone Consultants light Hardware and software Scheduling Coding Billing Consultants & services Franchise 2

4 More Common: Hospital Partnering Hospital Partnerships Cost plus for FTEs PA/NP MD at X $ per hour of staffing Bill the Professional E/M fee for service Need adequate volume to break even (>25) Joint venture with the hospital Split all revenue Minority owner ED contract security Majority owner can lead to a sale down the road The Big Boys By The Numbers Top 10 Hospital Urgent Care Operators 1. Aurora Urgent Care (Wis.) Intermountain InstaCare (Utah) Carolinas HealthCare Urgent Care (N.C.) CentraCare (Florida Hospital) St. Johns Urgent Care (Mich.) Norton Immediate Care (Ky.) Health Partners Urgent Care (Minn.) Advocate Health Immediate Care (Ill.) Marshfield Clinic Urgent Care (Wis.) Primary Health Urgent Care (Idaho) 10 3

5 Demographics and Growth 9,000 U.S. Urgent Care Centers 4,000 EDs 40% expanding or adding new sites 75% suburban, 15% urban, 10% rural ½ free standing... ½ part of a retail complex 69% wait time < 20 minutes 3% > 40 minutes 30% of ED visits touted as could take place at an Urgent Care Health Affairs Compilation ACA HDHP create enormous consumer discretionary pressure ED $550 > PMD> $160 > UCC $150 ER copays >$150 frequently UCAOA median MD compensation $175,000 Trends of Successful UCCs Walk in service, retail street level appeal Super easy parking Most insurance accepted but not required Can process POS cash MD perhaps Board Certified ER physician on site Open 10 hours a day 7 days a week Private exam rooms Comfortable, attractive triage and waiting areas Treatment of episodic illness in all age groups Digital x rays, labs, EKGs, IVs, splinting 4

6 The Carriers Increasingly large Carriers contracting with UCCs Low cost alternative Save the ED facility fee Global or Fee for service Need to build market share Build the right volume Volume determines the opportunity payer mix determines the profit Urgent Care is not an ED CPT Definition for the use of codes: Organized hospital based facility for the provision of unscheduled episodic services to patients who present for immediate attention. The facility must be available 24 hours a day. ED (POS 23) No distinction re: new vs established patients Urgent Care (POS 20, POS 22, POS 11) Must use office/other outpatient codes new established Penalty relative to ED codes and new patient codes 5

7 Provider Based Urgent Care If meets the definition of Provider Based some bill a separate facility fee Same hospital license, governance, signage, integrated lab/medical records/accounting, same HR policies, hospital financial control Previously popular due to revenue Movement away from this model with UCCs playing a larger role in cost control culture EMTALA applies New vs. Established Patients for Urgent Cares Does the current treating physician have the same tax ID # as the physician who provided a separate service w/in the past 36 months? Yes: The patient is Established No: The patient is New AMAʹs ʺnew vs. establishedʺ flowchart in the ʺProfessional Editionʺ p.5 of the 2015 CPT Manual 6

8 UCC RVU Comparison Emergency Department New Patient Established Code RVUs Code RVUs Code RVUs UCC Non E/M Revenue Labs DME X Rays EKGs POC Testing Splinting Medications Hydration and Infusions 7

9 Financial Impact Issues Need a threshold volume Roughly 25 to cover costs Minute Clinic cannibalization Competes with your ED Fast Track if close by Cash Only tough to generate volume Location, Location, Location Determines payer mix and foot traffic Contracts are key to success! Cyclical Issues Local unemployment Seasonal variance: Snow Birds, Vacationers Man Power Considerations Will only be profitable if someone s Baby Overhead categories: Build out of space Personnel Nurse, technician, specialty technician (X Ray), clerical support, PA/NP Super Cross Trained tech is the holy grail The Xceptionist Practice management software Legal Accounting, Billing Equipment and maintenance Total Start Up Cost $600k $800k 8

10 Expenses Start Up 3 6 month ramp up Cover start up costs Build out of space Purchase Equipment Recruit Personnel Practice management software Legal, Accounting, Billing Total Start Up Cost $700k $900k Rent Payroll MD, Nurse, Tech, Reception Ongoing Management Ongoing Legal Accnting. Insurance Billing Equipment Maintenance Debt Service start up costs Ongoing Expenses $60k $80k per month Revenue Considerations Reasonable Acuity: Services: X Ray, Lab, patient follow up, IV medications, Nebs etc. Global Contract with Insurance Companies Carrier looking for cost savings Very Market Dependent As high as $175 per patient Typical Site $100 $120 per visit Open 312 days a year (6 X 52), 25 patients a day, $110/patient $858,000/year Increase to 40 patients a day: $1,372,800 9

11 Revenue/Volume Case Study: Need roughly 25 patients per day 600 per month 60k per month in revenue Barely Making it Site A Sep 14 Charges $126,058 # of Visits 532 Avg Chge/Pt $237 Collections $56,464 Avg Collect/Pt $106 Avg Daily Charge $4,202 Making up for Collections with volume Site B Sep 14 Charges $208,861 # of Visits 871 Avg Chge/Pt $240 Collections $93,800 Avg Collect/Pt $108 Avg Daily Charge $6,962 Collections Carry the Day Site C Sep 14 Charges $161,760 # of Visits 647 Avg Chg/Pt $250 Collections $113,379 Avg Collect/Pt $175 Avg Daily Charge $5,392 Urgent Care On Steroids: Urgency Room CT, US, Labs, IV Meds No CON No EMTALA May or may not participate with Medicare and Medicaid No Facility E/M Pro fee plus ancillaries Frequently staffed by an ER doc 10

12 Urgency Conditions Chest pain Severe abdominal pain High Fever Dehydration, nausea, vomiting Respiratory or breathing problems, including asthma Kidney stones Severe headache, migraine Heart rhythm disturbances Acute injury evaluation Broken bones Pregnancy bleeding or spotting Dislocations, sprain, strain Serious cuts requiring stitches Severe nosebleed Eye pain and injury Blood clots Head injury Take Home and Strategies Requires investment of time and money Entrepreneurial spirit and risk appetite Location is critical Think in terms of likely volume and volume required to break even Payer mix is key Volume, volume, volume 11

13 Case Study: Observation Services A 45 year old female presents with a HA. This is worse than her usual migraine. She took Imitrex PTA with no effect. After 2 rounds of a headache cocktail her headache is only slightly improved. She is admitted to the CDU per the Headache Pathway. Observation Is. Space ED Observation Unit (EDOU) Clinical Decision Unit Short Stay Unit Chest Pain Unit Rapid Diagnosis & Treatment Unit Status Family of CPT codes ( , ) 12

14 Observation Care Summary Short term treatment, assessment and reassessment before a decision can be made to admit to inpatient or discharge home. ** Lack of diagnostic certainty, OR Therapeutic intensity required, Most ED based Obs units recommend disposition decision in 23 hours No mandatory diagnosis **CMS Transmittal 20.5 rev 42 Outpatient Observation Services Documentation Requirements Reason for observation services Timed Admission Order Admission note Progress notes Discharge note 13

15 OBS RVU Comparison, 2015 Emergency Department Codes Initial Observation Status Service Codes Subsequent Observation Status Observation Admission and Discharge Codes CPT code RVUs CPT code RVUs CPT code RVUs CPT code RVUs Composite APCs: Extended Assessment and Management Composite (was new in 2014) CMS combined two Observation codes into one APC hr minimum Obs care required to bill The 2015 payment is $1,234 a two percent increase from

16 Professional FFS vs Facility No preceding service requirement for physician billing Physician E&M billing is waived when Obs is billed A few exceptions (critical care, different TIN) Required 8 hr stay for admit/dc same day for CMS facility billing CPT describes typical time for face to face physician encounter Role of EM in Observation Care Recommend adopting systems to even out the flow of patient admissions and implementing 23 hour observation units 2007, IOM. Future of emergency care: Hospitalbased emergency care at the breaking point. Washington, DC: National Academies Press. 15

17 Why EM? Observation Care Trends Wiler et al, AEM, % short stay inpatients nationwide could be treated in a Obs unit (Health Aff, Dec 2013) 16

18 OBS Care Trends Use of observation hospital services increased 26% for Medicare beneficiaries from 2006 through 2008; while Inpatient stays decreased by 4% in a similar period. (Medpac, 2013) OBS length of stay (LOS) rose from 26.2 > 28.2 hrs from (Health Aff, 2012) Avg LOS in EDOU is 15 hrs (Ann EM, 2003) Best Practice Pathways 17

19 Example of EDOU Pathway Good ED Obs Candidates? 1 Allergic Reaction 2 Cellulitis / Soft T issue Infection 3 Chest Pain (Low risk) 4 Chest Trauma 5 CHF 6 Drug Overdose, Toxic Exposure, and Ethanol Intoxication 7 ETOH Withdrawl (ED->ICU) 8 Flank Pain (pyelonephritis/renal colic) 9 Hyperglycemia 10 Hypoglycemia 11 Infusions / Transfusions (Dehydration, Blood Transfusion, Electrolyte Disturbance) 12 Minor Extremity Trauma 13 Minor Head Injury 14 Pneumonia 15 Reactive Airway Disease 16 Trauma - serial labs 17 Treatment of Headache 18 Undifferentiated Abdominal Pain 19 Vomiting / Hyperemesis Gravidarum 18

20 Trends Wiler et al, AEM, 2011 Typical Staffing FTE Coverage APP hr/d Physician Rounds 1 2 times per day RN Vary, Typically inpatient vs ED ratios (1:6 8 vs 1:4 5) Medical Director Perform QI, utilization Utilization Review 1 19

21 Why Delivery ED OBS Care? Decreased Hospital Crowding 1 CDU bed opens up approximately 2.5 ( ) hospital inpatient beds which contributes $2,908 to hospital revenue for every CDU patient. Acad EM 2008;15: Why Delivery ED OBS Care? Decreased Costs Compared to Inpatient Treatment Average 40% Total direct hospital cost per TIA pt ($2,511 CDU vs. $4,154 inpt costs). (Ann Emerg Med 2007(50): ) CP pts ($893 CDU vs. $1349 inpt). (JAMA 1997(278): ) Asthma pt ($1,202 vs. $2,247). (Med Care 36 (1998), pp ) 20

22 Why Delivery ED OBS Care? Improved Inpatient Hospital Operational Performance Shorter LOS vs. Inpatient Treatment Average 43% Avg. 15.8hrs vs. 28.5hrs inpt (Ann Emerg Med May 2003;41(5) TIA pts (29.5 vs 50.3hrs). (Ann Emerg Med 2007(50): ) CP pts (JACC July 1996;28(1):25 33 Why Delivery ED OBS Care? Improved ED Operations Decrease ED left without being seen rates Acad Emerg Med 2001(8): Decrease ambulance diversion. Acad Emerg Med 2001(8): Increase in revenue for ED CDU services vs ED E&M services 21

23 Why Delivery ED OBS Care? Prevent Hospital Admission and Subsequent Readmission(s) Ann Emerg Med Jul;56(1):34 41 Improved Audit Risk Why Delivery ED OBS Care? Prevent Hospital Admission and Subsequent Readmission(s) Ann Emerg Med Jul;56(1):34 41 Better Patient Satisfaction Ann Emerg Med (1997(29): ; Acad Emerg Med 6 (1999), pp ) Better Physician Satisfaction Pediatr Emerg Care 2004(20): ) 22

24 Why Delivery ED OBS Care? High Quality Patient Outcomes Comparable or Superior to Inpatient Treatment Chest pain pts (NEJM 1998(339): ). Asthma pts (Med Care 36 (1998), pp ) Syncope (Circulation 2004(110): ). Why ED Based Obs Out Performs Qhr vs Qday rounding mindset In ED vs inpt: Inpt DC if studies justify, ED admit if studies justify Inpt beds really not designed to take care of 6 24hr LOS pts Decreased rework by another department High probability of success with CDU time from (70 80% DC home) Pathways simplify work decrease variability, improved quality CDU care is safer Decreased hospital acquired conditions 23

25 Dedicated Obs Unit B Plan Dedicated OBS units with defined protocols have 23 38% shorter LOS, 17 44% lower prob. of subsequent inpt admission, est $950 million in potential annual national cost savings. (HA, 2013) Est avg $1,572, cost savings/pt annually (HA, 2012) With possible savings of $5.5 $8.5 billion annually. (Health Aff, 2013) Other Side (?) Loses an average of $331 for every patient in observation care compared to a net of $2,163 for patients who are admitted. (JAMA, Nov 2013) Depends on back fill, payer mix, inpt LOS and inpt capacity Use as a risk mitigation strategy capitates inpt payments 24

26 From the Patients Perspective 25

27 Per CMS. The decision for inpatient hospital admission is a complex medical decision based on your doctor s judgment and your need for medically necessary hospital care. An inpatient admission is generally appropriate when you re expected to need 2 or more midnights of medically necessary hospital care, but your doctor must order such admission and the hospital must formally admit you in order for you to become an inpatient. Take Home Points ED based observation services is growing The ED is posed to develop a business plan that looks at cost mitigation by preventing hospitalizations Best practice is a use of pathways/ordersets Expect more pts to ask about Obs status 26

28 Case Study A Group Decision: Free Standing ED 19 physician ED group staffing 2 hospitals in a single system feel very pushed around by their hospital. At contract renewal a 90 day out clause is inserted. The group is committed to the area and schools with their families. They borrow $3M build out a Free standing ED and run it employing all staff directly. Free Standing EDs CPT Definition for the use of : Organized hospital based facility for the provision of unscheduled episodic services to patients who present for immediate attention. The facility must be available 24 hours a day. If the facility fails this definition typically then defined as an Urgent Care Impact revenue dramatically Typically no facility E/M New vs Established patient issue 27

29 Free Standing EDs FSED: can perform essential functions of a hospital based ED except admit patients: Accepts EMS Blue hospital signs CT/MRI/US and Labs Plain X Rays State licensing issues Certificate of Need (CON) issues state by state Texas, Arizona good Michigan, Maryland, Virginia Not so good Location, location, location.determines payer mix First Issue: CON (Certificate of Need) States with a CON process require you to prove a community need for your proposed ED Extremely hard to overcome the local hospital system s objections Non Con states land, build out, equipment lease bill both a professional and facility fee Roughly 12 patients per day to break even 28

30 FEDERAL REGULATIONS 42 CFR (b) Definition of an ED Dedicated Emergency Department Any department or facility of the hospital, regardless of whether it is located on or off the main hospital campus, that meets at least one of the following requirements: Licensed by the state as an emergency department Held out to the public (by name, posted signs, etc.), as providing care for emergency medical conditions without requiring a scheduled appointment During the prior calendar year, 1/3 of the visits were for the treatment of emergency medical conditions without requiring a previously scheduled appointment. Federal Regs: Medicare Conditions of Participation Emergency Services (42 CFR ) Services Organized Under Direction of Qualified Member of Medical Staff Services Integrated with Other Hospital Departments Policies and Procedures Established by and Ongoing Responsibility of Medical Staff Supervised by Qualified Member of Medical Staff Adequate Medical Staff and Nursing Personnel to Meet Written Emergency Procedures and Needs Anticipated by the Facility Accreditation: Same as Hospital and Joint Commission 29

31 State Level Regulations The big one: CON Facility Design, Operation and Maintenance Standards Equipment Standards Number and Qualification of Emergency Medical Personnel Including Having at Least One Board Certified Emergency Physician Present at All Times Provide Comprehensive Emergency Service Report Patient Transfers Submit Mortality Reports Example: Michigan Specific FSEDs Michigan, requires providers to document the community need for all regulated services regardless of cost, while others such as South Carolina do not require CON approval for any project under certain cost thresholds. Can not simply build an ED in Michigan 30

32 MI Public Health Code Act 368/1978 Section Except as otherwise provided in this part, a person shall not do any of the following without first obtaining a certificate of need: Acquire an existing health facility or begin operation of a health facility at a site that is not currently licensed for that type of health facility. Make a change in the bed capacity of a health facility. Initiate, replace, or expand a covered clinical service. (iii) Provide 24 hour emergency care services at that site. Hospital Owned FSED 31

33 Free Standing EDs the lighter side Imperatives: Full Service 24/7 Operates as an ED Transfer agreements Referrals Market potential Volume and payer mix? Hospital Owned Free Standing EDs Economics If hospital owned and fee for service possible to be profitable Need volume or a hospital stipend Typically 16k visits Sweet spot is 21k single coverage plus PA Be aware of lower acuity If throughput focused can be a winner 32

34 Type B Emergency Department Meets the definition of an Emergency Department Not open 24/7 Has EMTALA Obligations Professional codes and revenue similar Facility Revenue significant decrease Still falls under CON and conditions of participation Proliferation of Free Standing EDs State May Get It s First Freestanding Emergency Department Emergency Care Not At A Hospital Quality Matters: My Night at EliteCare 33

35 Free Standing Independently Owned Bill both a pro and facility fee Frequently no EMTALA and No Medicare or Medicaid participation Typically seek out Cadillac Insurance mix Facility Collections times the pro side Single patient potentially generates $800 $2000 Multimillion dollar build out and start up Large ED group or investor partnering Lots and Lots of FTEs and issues to manage Breakeven as low as 12 patients per day Healthcare reform, state reform, and insurance industry reform uncertainty FSED Evolution Texas Association of FSEDs Active trade association Represents 20 companies at over 70 sites Opportunity for worker/owner model ACEP free standing ED section FSED successful IPO hub and spoke model in AZ $1450 per patient visit 10 patients per day 34

36 Independent Free Standing EDs: The Future Increased State regulation Texas (150 FSEDs) evolving legislations Equipment and service minimums Must stabilize and transfer emergencies 16 states have laws for FSEDs with varying requirements Delaware 24 hours a day physician ownership OK Rhode Island open < 24 hours Idaho must be owned by a hospital Might consider joining an established entity State specific research before taking the plunge! Conclusions Urgent care with volume, demographics, and good contracts can generate a profit Observation great opportunity to add hospital and patient value Independent FSED big CON barriers in most states Hospital owned FSED just need volume Lower acuity and expedited throughput can be a winner 35

37 Contact Information Michael A. Granovsky, MD CPC FACEP President of LogixHealth Jennifer L. Wiler, MD, MBA, FACEP Vice Chair and Associate Professor University of Colorado Educational Appendix 36

38 and Guidance/Guidance/Manuals/downloads/ clm104c04.pdf CMS Definition (1) Observation care is a well defined set of specific, clinically appropriate services, which include ongoing short term treatment, assessment, and reassessment, that are furnished while a decision is being made regarding whether patients will require further treatment as hospital inpatients or if they are able to be discharged from the hospital. 37

39 CMS Definition (2) Observation services are commonly ordered for patients who present to the emergency department and who then require a significant period of treatment or monitoring in order to make a decision concerning their admission or discharge. CMS Definition (3) Observation services are covered only when provided by the order of a physician or another individual authorized by State licensure law and hospital staff bylaws to admit patients to the hospital or to order outpatient services. Medicare Claims Processing Manual, Pub , chapter 4, section 290, Outpatient Observation Services. 8/

40 FSED Resources ACEP summary white paper Practice Management/Freestanding Emergency Departments/ ACEP policy Practice Management/Freestanding Emergency Departments/ Contact Information Michael A. Granovsky, MD CPC FACEP President of LogixHealth Jennifer L. Wiler, MD, MBA, FACEP Vice Chair and Associate Professor University of Colorado 39