The Changing Landscape of Healthcare and What it means to you!

Transcription

1 The Changing Landscape of Healthcare and What it means to you! Marc Leighton Imagination at work.

2 How do hospitals/providers get paid?

3 Introduction to Payment Mechanisms DRG- or APDRG-based mechanisms The Diagnosis Related Group (and All Payor DRG) mechanism reimburses a facility a single payment for all services on a claim. Various combinations of ICD-9 diagnosis and procedure codes are grouped into a DRG, which has a specific payment. The payment is not dependent on the charges on the claim. This is the most common mechanism for inpatient claims. There are approximately 500 DRG groups. APC-based mechanisms The Ambulatory Payment Classification (APC) mechanism reimburses a facility separately for each service on a claim, however, certain services are grouped together for payment. Various combinations of CPT/HCPCS codes are grouped into an APC, which has a specific payment amount. The payment is not dependent on the charges on the claim. This is the a very common mechanism for outpatient claims. There are approximately 800 APC groups.

4 Other Payment Mechanisms Fee Schedule Fee schedule based mechanisms establish a specific payment amount for every service on a claim. Services are not grouped like APCs The payment is not dependent on the charges on the claim. Discounted Fee for Service Discount-based mechanisms simply apply a percentage discount to the charges presented on a claim and pay the resulting amount. The payment is dependent on the charges on the claim. Per Diem Payor reimburses hospital based on number of days and level of care received by the patient Capitation Hospital receives negotiated per member per month ( PMPM ) fee to provide care for enrollees; hospital bears risk for costs above PMPM Value Based / Accountable Care Organization Providers are reimbursed based on health outcomes and population management rather than for services provided Medical Home / Patient Centered Care models

5 The Financial Outlook Facing Hospitals History Now The Concern REVENUE $ Margin Medical Assistance Medicare Uninsured Payor Contracting Specialty Competitors Consumer Competition Health Reform Barriers to Growth EXPENSES Malpractice Insurance Drug Costs Benefit Expense Organizational Complexity Clinical Technology Facility Upkeep Electronic Medical Record Clinical Outcomes and Population Health Management TIME

6 Hospital operating margins have declined steadily and total margins were punished by the recession Aggregate Total Hospital Margins, (1) Operating Margins, (2) and Patient Margins, (3) Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2008, for community hospitals. (1) Total Hospital Margin is calculated as the difference between total net revenue and total expenses divided by total net revenue. (2) Operating Margin is calculated as the difference between operating revenue and total expenses divided by operating revenue. (3) Patient Margin is calculated as the difference between net patient revenue and total expenses divided by net patient revenue. 6

7 Provider Challenges: Improving Collections & Access while maintaining excellent customer service Improving collections to net revenue & A/R Days as your Patient AR gets more difficult to collect Asking to do more, with less Placing standardization and rigor around referrals and authorization management

8 As revenue declines, costs continue to rise creating additional pressure on margins The annual payroll and out-of-pocket healthcare costs for a family of four are at an average of $9,695 1 Consumer contributions projected to increase by 24% between 2010 and In 2012, ~25% of hospitals had negative operating margins 4 In 2013, the average operating margin was 3.1% 5 Cost to collect increased 37% between % 3.6% 3.1% : 2014 Milliman Medical Index 2: Hospital revenue cycle operations: Opportunities created by the ACA, McKinsey : The Advisory Board Company, Benchmarking Revenue Cycle Performance, ST Advisors, Five Year Strategic Analysis, Executive Briefing Deck 5. Source: Modern Healthcare Financial Database

9 The downward pressure on margins is exacerbated by lost productivity and missed opportunities to improve efficiency Dollars Wasted Annually in Healthcare (billions) Hospital acquired infections Unnecessary emergency room visits Medical errors Hospital readmissions Ineffective use of technology Ignoring doctor s orders Claims processing Over testing $3B $14B $17B $25B $88B $100B $210B $210B $0 $50 $100 $150 $200 $250 Source: PricewaterhouseCoopers Health Research Institute It s been estimated that inefficient claims processing generates $210B in waste 71% Increase since 2011 in initial denials as a percentage of net outstanding A/R for high-performing quartile $42M Average dollar amount of discharged not final billed activity for hospitals in the low-performance quartile Source: The Advisory Board Company, Benchmarking Revenue Cycle Performance, 2013

10 A little bit about us

11 GE Healthcare IT Solution Portfolio Integrated Care Solutions Enterprise Imaging Care Delivery Management Population Health Management Financial Management Workforce Management System-wide Ambulatory Care Revenue & Risk Mgt Workflow Ambulatory EMR Data Control Revenue Cycle Mgt Time & Attendance Visualization Archiving Clinical Quality Reporting Healthcare Analytics Financial Risk Mgt EDI Staffing & Scheduling Patient Classification Collaboration Care Areas High Acuity Maternal-Infant Cardiology Radiology Care Coordination & Management Wellness & Patient Engagement Practice Mgt Profit Analytics Activity-Based Costing Contract Modeling HR & Payroll Contingency Staffing Pathology Utilization Management Enhance diagnostic speed & confidence Make care pathways more productive Lower cost of treating chronic disease Improve health system profitability Optimize workforce productivity DRAFT 1.9 November 13, 2014

12 Centricity Solutions for Financial Management A platform for revenue cycle success Centricity Solutions for Financial Management Better positioned for success Actionable insight Robust financial management Payer connectivity Reporting Business Intelligence Advanced Analytics Hospital Revenue cycle EDI Services Practice Management Outcomes through bestpractices Risk Management Client engagement approach Comprehensive analytics platform Built in reporting, KPI dashboard and a new predictive analytics solution to reduce costly denials. Robust enterprise financial management solution Supporting hospital, ambulatory and health plan needs Connecting providers & payers Leveraging EDI services going beyond claims and eligibility into clinical data exchange World class consulting services Outcomes based financial performance consulting and meaningful peer to peer benchmarking 1

13 Strategic & Development Takeaways Evolve with our customers adapt our solutions to keep pace with your needs and the challenges you face Payers & Providers: New Models Need New Connections Open Architecture: Get the best solution to you Customers determine our success! Revenue Cycle Influencers: Drive strong financial clearance (get it right upfront) Support exception-based processes allow your revenue cycle to get leverage Use sophisticated analytical data points to drive more efficient workflows (embedded in our products) Target financial outcomes to influence module/workflow development Leverage our clearinghouse