How to Incorporate Bundling into the Revenue Cycle

Transcription

1 How to Incorporate Bundling into the Revenue Cycle Len Kalm HCA VP Managed Care Shannon Dauchot Parallon Business Solutions SVP Corporate Operations Revenue Cycle 1

2 Headquarters based in Nashville, TN 163 Hospitals in the US 79 Imaging Centers 108 ASCs 49 Oncology Ambulatory Centers 19 Free-standing ERs ~3,000 employed physicians and extenders ~32,000 affiliated physicians Provide approximately 4-5% of all US hospital services with approximately 18M patient encounters per year 2

3 Session overview Types of bundling and market drivers HCA s perspective and approach Development and approval process Pilot examples Revenue cycle considerations Our view of payor readiness Closing thoughts 3

4 Our Definition. Bundling is a reimbursement arrangement with commercial and government payors based on an approach other than pure fee-for-service. Bundling involves: a grouping of medical services wherein selected professional services and selected facility services are combined pre-defined start and end to a bundle pre-defined indicators, codes or conditions to identify the bundle. 4

5 Types of Bundles Bootleg Bundling Commercial Payor Bundling CMS Bundling Other Government Sponsored Bundling Research and Employer Based Bundling 5

6 Procedure vs. Condition Based Bundles Procedure based bundles are predicated on an event (e.g. surgery). These bundles are easier to define boundaries. Condition based bundles are predicated on a diagnosis or group of diagnoses and then use time to further define the bundle. 6

8 Bundling Continuum Fee-for-service (FFS) Itemized charges and various forms of reimbursement (e.g., per diem or case rate) Hospitalists or bundling with HBPs Includes fee-forservice or case based charge plus fees for hospitalbased physicians (e.g., radiologist) Acute Care Episode Bundles Episode-based charges including fees for all treating physicians for selected acute episodes (e.g., CABG) Post-Acute Care Episode Bundling Bundled charges including post-acute care (e.g., rehab) Population Risk System receives premium EXAMPLE Hospital fee... Total hip replacement O/R Fees Drug charges Implant charges + Anesthesiologist, radiologist, hospitalist fees + + OR Surgeon fees Rehab fees Per patient premiums HCA Management Services, LP All Rights Reserved. Confidential and Proprietary. For Internal Use Only. Do Not Distribute or Copy.

9 Why Should a Provider Consider Bundling? Volume Based Member Incentive Physician Incentive Payor Incentive Value Based Clinical Integration Aligning Provider Incentives Outcome Improvement 9

10 Examples of Bundles Bootleg Bundles Bariatric Surgery Transplants Gamma Knife Plastic Surgery Commercial Payor Bundles Knee Procedures CV Surgery Procedures Hip Procedures Outpatient ER Bundles Outpatient Cataract Procedures 10

11 Examples of Bundles Other Government Program Bundles VA Program CV Bundles Radiation Oncology Bundles Research, Employer and Other Bundles Prometheus Evidence Case Rate (ECR s) Geisinger s ProvenCare Integrated Healthcare Association (Aetna, McKesson) South Dakota State Employee Health Plan 11

12 CMS Bundling Initiative ACE Demonstration Program and Results CBO Evaluation shows that most programs have not reduced Medicare spending. (CBO, January 2012) The heart bypass demonstration yielded savings because Medicare was able to negotiate bundled payment rates lower than separate payments Affordable Care Act CMS Bundled Payment for care Improvement Initiative Four Models Available Three year commitment, without termination Minimum 3% discount 12

13 HCA s Perspective Allow for market level innovation and development of Alternative Payment Methodology (APM) opportunities, including bundles Explore top level bundling interest with major payors Centralize a multi-disciplinary review and approval process to narrow and prioritize the requests, and to improve the chances of success Cautiously consider the CMS Bundled Payment Initiative 13

14 APM (Alternative Payment Methodology) Development and Approval Process: featuring the Request for Alternative Payment (RAP) Form 2011 HCA Management Services, LP All Rights Reserved. Confidential and Proprietary. For Internal Use Only. Do Not Distribute or Copy. 14

16 Example of RAP Entity requesting APM service proposal review: [hospital(s), ASC(s), other OP entity] To be completed by submitter Hospital, Freestanding ED s To be completed by HCA Strategic Pricing & Analytics Reference Number: [assigned by HCA Strategic Pricing & Analytics) Market: Test HCA service line lead: Division: Test HCA SP&A lead assigned: Prepared by: Name of Requestor Submission Receipt Date: Submission Date: 10/27/2010 Section 1: Business Scope 1. Please provide a summary description of the bundling request and the services to be Alternative Payment Methodology. Test A Medical Center and Test B Medical Center currently have a contract with Test Payor for Core Hospital services. ED visits are paid at a single rate per visit. We have proposed and Test Payor has agreed to consider a 5 Tier ER Case Rate, bundled with ER Doctor and Radiology Read Fees. 2. What is the strategic rationale and market dynamic - leading to such a request? Is this an offensive initiative to grow volume or defensive to protect existing volume? If there is a specific deadline (e.g. a RAP must be responded to) please explain the RAP and provide the date. Please Note: This rationale should be hospital/plan focused and physician focused. This is an offensive initiative. It is part of a 7 year contract extension negotiation and will result in protected ER volumes as well as growth potential. Target date for approvals is 2/1/11 as we desire to complete negotiations. 3. Identify the Alternative Payment Methodology Service(s). Please list the DRG s, CPT s or ICD9 codes, from the hospital or ASC perspective, that would be included. Also list the CPT or other relevant codes from the physician s or other Alternative Payment Methodology provider. Please explain if there are carve-outs on any items. We have proposed HCA approved and standardized ER Tiers (5 levels). Physician s fees will be bundled with those tiers. Physician fees will be a single case rate, regardless of tier. Physician fees must be a single case rate because their coding does not necessarily match hospital s. 4. What is the expected total volume of the Alternative Payment Methodology service(s)? What is the percentage of this Alternative Payment Methodology compared to the total volume of the service(s) and total facility volume? For 9 months ended 9/1/2010, there were 7,866 Test Payor ED visits in the entire Test Division market. This APM would impact approximately 88% of these ED visits. (Attachment 1). 16

17 HCA s Criteria when considering Pilots Business Model Measurement Limited Investment Risk Market & Timing Export Support Exit Strategy Sweet Spot Is the business model acceptable? Can performance be measured? Is potential loss limited to initial investment? Will creation of pilot cause a stampede by competition to start additional pilots? Can it be exported to multiple HCA markets? Can HCA s administrative resources support it? Does one exist, if needed? Will HCA realize volume & margin expansion lower cost, better outcomes, higher patient satisfaction? HCA Management Services, LP All Rights Reserved. Confidential and Proprietary. For Internal Use Only. Do Not Distribute or Copy.

19 New Bundle Prep & Lessons Learned Bundle 1 County in Northeast Ortho Services for County employees, dependents and early retirees 50 to 80 cases annually 2 IP Elective Surgeries: total HIP and total KNEE replacements 4 OP Elective Surgeries Includes: Pre-admit testing pre-surgery education Surgeon, Anesthesiology, Radiology fees Intra-operative imaging Implant devices Hospital stay IP PT and OT DME at discharge Post-op Home Health Services Post-op Physical Therapy Post-op Physician office visits (up to 3 months) 19

20 New Bundle Prep & Lessons Learned Bundle 2 limited bundle, CABG with major plan in the Southeast 2 CABG without major complications DRG s 234 and 236 Hospital to provide Clinical Performance Measures back to Plan Includes: CV Surgeons and surgical assistants, Anesthesia Hospital case rate Does Not Include*: Post-op readmissions Post-op additional related surgeries Post-op related ER Visits *to be negotiated within 6 months of initial agreement 20

21 Examples of Revenue Cycle Impact Areas Patient Responsibility/Copay Scheduling and Registration Charging and Billing Collections and Support Services Payment Processes Accounting/Finance Other 21

22 Patient Responsibility/Copay Example Complicating factors: Need clear info on patient responsibility, when payment is due, and whether we must collect on behalf of other providers, and how much If payment not collected at time of service, how do we handle less than full payment? Payer EOB format should be modified to prevent confusion Patient statements should be evaluated Handling incoming calls for other provider services 22

23 Scheduling and Registration Example Complicating factors: Define who would be responsible for obtaining auth/precert on behalf of all providers? Potential for denials if not handled correctly Identifying re-admits and whether they fall in the bundle may be difficult Subsequent services not in bundle will demo recall with bundle i-plan 23

24 Charging and Billing Example Complicating factors: Identifying which encounters to combine Would payer still receive electronic submissions? Would payer have new edits to stop/hold these claims? What if patient experiences complications during the encounter or has services unrelated to the bundle? What if payer expects one claim submission for all services? Billing compliance concerns (edits) Identification of all providers involved with care and pursuing the claims info from them Billing timeliness expectations for all providers, delay in cash flow (immediate episodic billing vs post-acute) Different claim types (UB04 vs 1500) Chargemasters and charging logic vary by provider, even of same provider type 24

25 Collections and Support Services Example Complicating factors: Each account (hospital and other visits) may track in AR system separately. Would need to understand what triggers claim to pay Will accounts be subject to MR requests prior to payment? If so, from all providers? How to handle patient calls for other provider charges? If pursuing payment from insurance, would need to have clear documentation of bundled amount, even if different than what tracks for hospital 25

26 Payment Processes Example Complicating factors: Systems may not be designed today to calculate entire bundle and each account may show as a payment discrepancy and require special handling Would need clear allocation of the payment Complicated if underpaid or denied Would payer be able to use current ERA process? Would payment remit formats be changed? 26

27 Accounting/Finance Example Complicating factors: Separate balance sheet clearing accounts for all provider payment transactions in and out Educate Provider Finance teams to properly account for net receivables during month end Need to only record expected receivable for each provider s portion of bundle on their financials May need to bill other providers for revenue cycle services rendered during the bundle transaction Cost accounting implications 27

28 Other Considerations Providers will likely want to track these patients separately What happens if a provider is used that is not subcontracted through a PSA? Education across all participating providers and process areas including those typically overlooked (Case Management, Revenue Integrity, OR Scheduling, etc.) Challenges related to assisting Finance departments in Net Revenue Analysis Pricing the various providers portions of the bundle Handling any inquiries from various non-hospital providers throughout the process 28

29 HCA s Revenue Cycle Ideal Scenario Hospital designates care managers No patient financial responsibility to collect Service is authorized in advance and well-documented All providers bill directly to payer Payment is generated from Payor s receipt of Hospital s claim or in advance (meaning, no cash flow delay) HCA receives the entire bundled payment and distributes funds to contracted providers 29

30 Payor Readiness our view Payers may also not be equipped from a system or process perspective to handle the tactical side Pricing challenges One or many authorizations and claims identifying each in the bundle Handling patient responsibility decisions benefit redesign Revamping EOB s and remits Avoiding payment errors Potential manual review of the bundled claims/payments Responding to provider and patient inquiries/customer service concerns 30

31 In Closing. Carefully consider the reason for bundling. Is it volume or value driven? Consider different payor segments Formalize a review process without stifling ideas from the field or the floor Work carefully with payor partners to evaluate all payor and provider process flows and potential limitations Ensure you understand the revenue cycle and administrative impact Thank You! 31