reinventing health insurance brings challenges for hospitals 1
3 Introduction 4 01 / Containing costs while increasing access and quality 5 02 / Coordinating patient care 6 03 / Boosting training and development 8 04 / Planning for ICD-10 10 Conclusion
introduction Insurance companies today are facing numerous challenges due to demographic shifts in the ages of populations, trends in transitioning toward virtual healthcare, and the effects that will be felt when the Affordable Care Act (ACA) sends an influx of newly insured Americans to healthcare providers beginning in 2014. In addition to providing coverage for millions of low-income Americans, insurers can no longer deny coverage for people with pre-existing conditions so the surge in new patient claims may be challenging. Significant changes are on the horizon for hospitals and healthcare providers in partnering with insurance companies to adapt to this new legislation. Hospitals have been major hubs of healthcare in America for many years. Part of the driving force behind the sweeping healthcare reform law was to unburden hospitals from providing patient care for free by requiring universal coverage and expanding Medicaid eligibility. But if lowincome Americans opt for high-deductible plans that have the most affordable premiums and they cannot pay their medical bills, then hospitals will still not be paid by those patients and may also struggle to make up for billions of dollars in ACA-mandated cuts to federal reimbursements. It remains to be seen how dramatically the ACA will affect hospitals, but there is no question that they will have to transform their operations to meet new challenges. On the positive side, hospitals could find themselves being paid by insurance companies for services they now provide free to uninsured patients. However, many newly insured patients may be people who have been putting off tests or treatments, and these new demands could put heavy burdens on hospital staff, physicians, and other healthcare providers who are already overworked. 3 3
01 increasing Containing costs while access and quality For insurance companies, the primary business shift resulting from healthcare reform legislation will be in focusing on patients rather than on sales. Some insurance companies are combining efforts to be more efficient by creating a private exchange network with a defined contribution approach. For example, Blue Cross and Blue Shield has begun creating retail centers throughout Florida that will not only sell health insurance, but also offer free screening and wellness facilities and health coaching. BCBS is also expanding their online presence to offer more health information on their websites, and they have established bilingual call centers to meet a new federal mandate requiring insurers to communicate with consumers in a linguistically and culturally appropriate manner. Making the process of serving patients more efficient enables insurance companies to focus more on disparities in healthcare and reach a broader audience. For hospitals, the dilemma is how to lower costs and boost efficiency while simultaneously increasing access to services. Hospitals will need to develop innovative strategies to adjust to getting paid less, but doing more for patients, says Pam Burnette, MBA, BSN, RN, director of healthcare product, Kelly. As a result of new healthcare legislation, hospitals will be transitioning from a model where earnings are based on volume to a model where they are rewarded more for the quality of care. Successful outcomes are going to be the most important measure of a hospital s performance. But because of funding cuts, government and private insurers will be paying hospitals less so providers need to find ways to drive efficiencies and contain costs while providing quality care to patients. The ACA doesn t spell out a definition of quality care, but the government will evaluate performance using patient satisfaction surveys and clinical outcomes, and offer financial incentives to hospitals that perform well. On the other hand, poor performance will result in penalties. Hospitals with excessive readmission rates and high rates of hospital-acquired infections have already had their Medicare reimbursements decreased. If their performance has not improved by 2015, they will see another reimbursement rate cut. 4
02 patient Coordinating care One way hospitals can focus on increasing efficiency and cutting costs is by establishing an accountable care organization (ACO) to accommodate the changing healthcare marketplace. An ACO is a group of physicians and other healthcare providers who come together to deliver services more efficiently and provide high-quality care to patients. The partners in an ACO must exchange health information across diverse systems in order to manage care, track patient histories, and analyze results. The technology required for a successful ACO may include a Health Information Exchange (HIE), business intelligence programs to analyze data in order to calculate reimbursements or make necessary upgrades, and healthcare portals that provide access to patient information. A properly designed and managed ACO gives healthcare providers the tools they need to share patient care data successfully and efficiently. The goal of coordinated care is to ensure that patients get the right care at the right time, while avoiding unnecessary duplication of services, says Burnette. ACOs encourage collaboration by making hospitals and providers directly accountable to both patients and insurance companies. Some hospitals have followed an accountable care model for years, but the difference now will be volume. It s hard to predict the impact of having many people entering the market at the same time. Some hospitals are preparing to meet the demand by streamlining communications systems, hiring more bilingual workers, and implementing integrated delivery systems to treat more patients with primary care physicians instead of in emergency rooms. But this solution brings its own challenges because there is a shortage of physicians. According to the Association of American Medical Colleges, the nation could face a shortage of as many as 150,000 doctors in the next 15 years. The ACA may actually address the shortage of physicians, at least in the short term, because it requires the healthcare industry to move toward delivery systems that depend more on nurse practitioners and physician assistants for many tasks, says Burnette. Nurse-managed health centers (NMHCs) are a critical component of the ACA, and they use a mix of providers. The new systems that will become more common due to the ACA could soften the strain of a shortage of physicians. Putting all medical providers under the same umbrella, with the doctor as sort of a team leader and other caregivers reaching out to patients to manage their medical care, will hopefully improve the quality of patient care. 5
03 and Boosting training development Because the ACA will likely result in an explosion of demand for healthcare providers and services, and there is already a shortage of doctors and nurses, hospitals will need to anticipate shortages and design strategies for training and developing existing healthcare workers. One way hospitals can address these demands is by creating physician-led teams of licensed and unlicensed health professionals to provide an expanded scope of patient care, and also educating patients in ways to provide more of their own care. + Nurses, physical therapists, respiratory technicians, and other licensed healthcare personnel can be trained to provide care for uncomplicated medical issues, such as back pain, high blood pressure, respiratory and urinary tract infections, diabetes, and high blood pressure. + Unlicensed medical assistants can be trained to assume responsibility for coaching patients about managing chronic conditions, such as high cholesterol, diabetes, and high blood pressure. + Patients can be trained in the use of new diagnostic technologies to self-diagnose and administer their own medications for conditions, such as diabetes and cardiovascular diseases. The ACA requires hospitals to increase the ethnic and racial diversity of physicians, nurses, and other healthcare professionals to represent the new marketplace. To help meet this mandate, some hospitals have created resource groups to connect with an increasingly multicultural patient base by conducting health education and prevention screenings. Resource group staff often live in the communities they serve, so patients are more likely to trust them and follow their recommendations, says Burnette. For hospitals without resource groups, it will be important to increase the level of cultural competence training for their workers. The understanding of health varies by culture, and because hospitals will be treating increasingly diverse populations, they need to customize patient care to serve diverse cultures in addition to individuals. 6
+ The ACA requires hospitals to increase the ethnic and racial diversity of physicians, nurses, and other healthcare professionals to represent the new marketplace. 7
04 Planning for ICD-10 One challenge the healthcare industry is facing has been on the horizon since before the ACA was even written. The International Statistical Classification of Diseases and Related Health Problems (ICD) is a medical classification list created by the World Health Organization (WHO). The ICD code set specifies different codes and sub-classifications that enable the tracking of diagnoses. The 17,000 codes in ICD-9 code sets have been in use for 30 years without being updated, so they use outdated terminology and are not specific enough to cover the hundreds of new diagnosis codes submitted each year. The current ICD-9 code sets will be replaced by 141,000 codes in ICD-10, and there are significant differences between the two sets. The deadline for implementing the new codes has been delayed twice already, and the new deadline is now October 1, 2014. There is no grace period, and opting out is not an option. If providers are not ready to use ICD-10 codes when the deadline arrives, insurance claims will be rejected and transactions will need to be resubmitted with the correct codes, thereby delaying reimbursements and affecting cash flow. Obviously this is a critical and necessary update, says Burnette. The switch to ICD-10 will help the U.S. healthcare system more accurately compare healthcare data with other countries and track data better to measure quality of care and improve clinical, administrative, and financial performance. But the transition from ICD-9 to ICD-10 is going to be a complex and costly process that will impact all providers. It will result in changes throughout the healthcare industry, from small clinics and laboratories to national health organizations. It will require significant planning, training, and upgrades to software and systems. This transition is a tremendous undertaking for the healthcare industry, and the challenge is compounded by adjusting to new ACA mandates. 8
+ The transition from ICD-9 to ICD-10 is going to be a complex and costly process that will impact all providers. It will result in changes throughout the healthcare industry, from small clinics and laboratories to national health organizations. Pam Burnette, MBA, BSN, RN, director of healthcare product, Kelly Many healthcare providers have already begun planning for the shift to ICD-10, but there are several key considerations that can make the transition to ICD-10 more successful: + Develop a transition plan that involves both IT and business leadership. + Prepare a budget and secure a line of credit in case the transition significantly impacts cash flow. + Track current coding productivity, backlog, and accuracy for benchmarking. + Begin planning and budgeting for customer education and in-depth staff training. + Update or upgrade IT systems to handle the expanded character sets required for ICD-10. Providers should take full advantage of the delayed deadline to analyze the areas within the organization that will be impacted the most, and adjust plans accordingly, says Burnette. Waiting until the last minute to prepare for the transition to ICD-10 can put an organization in financial jeopardy and waste valuable preparation time. This overhaul involves so much more than just changing technology; this is an organization-wide business process transformation. Doing as much as possible now to get ready will ensure that operations continue efficiently throughout the transition. + Educate physicians and other providers about the increased demand for thorough and detailed documentation. 9
Conclusion As the U.S. works to overcome the challenges of healthcare reform, the primary goals of hospitals, providers, and insurance companies are essentially the same to improve the availability and quality of healthcare and cut overall costs in the long term. But expanding insurance coverage to all Americans will increase demand for healthcare services in a marketplace where there is already a shortage of nurses and physicians. Workforce planning will be difficult until the healthcare industry has a better grasp of how new mandates will affect providers and patients. Despite the uncertainties, significant changes are on the way for the healthcare industry. To make these changes as seamless and efficient as possible, hospitals and providers need to assess their current business models, design and implement strategies to address policy reforms, and train and develop a high-performing health workforce that can meet marketplace demands. Rational reform of the healthcare industry will result in a more efficient healthcare delivery system and better outcomes for patients, even if the road to those results is a challenging one. Having a well-developed transition plan in place will help hospitals and providers overcome those challenges successfully. + Rational reform of the healthcare industry will result in a more efficient healthcare delivery system and better outcomes for patients, even if the road to those results is a challenging one. 10 10
References DuBois, Shelley. Hospitals face whole new world under health law. USA Today, October 20, 2013. Frankel, Barbara, with Robyn Heller Gerbush and Stacy Straczynski. Hospitals, insurance companies, pharmas: Who benefits from the Affordable Care Act? DiversityInc, September 2012. Natale, Carl. Top 3 stories that shaped ICD-10 implementation in 2012. Healthcare IT News, ICD10Watch, December 26, 2012. Awarded the Gold Seal of Approval TM The Kelly healthcare specialty service was awarded the Gold Seal of Approval from The Joint Commission by achieving certification for Health Care Staffing Services (HCSS). This highly credible and reputable designation demonstrates our compliance with the highest quality and safety standards in the healthcare staffing industry. About Kelly Services Kelly Services, Inc. (NASDAQ: KELYA, KELYB) is a leader in providing workforce solutions. Kelly offers a comprehensive array of outsourcing and consulting services as well as world-class staffing on a temporary, temporary-to-hire, and direct-hire basis. Serving clients around the globe, Kelly provides employment to more than 560,000 employees annually. Revenue in 2012 was $5.5 billion. Visit kellyservices.com and download The Talent Project, a free ipad app by Kelly Services. Our healthcare specialty places professionals across all levels of healthcare in multiple disciplines, including medical laboratory, medical device, pharmacy and pharmacology, nursing, allied health, behavioral health, healthcare billing/coding, utilization, case management, occupational health, special education, and physical therapy. Want more information? Visit kellyservices.us/healthcare today. This information may not be published, broadcast, sold, or otherwise distributed without prior written permission from the authorized party. Kelly Healthcare Resources is a registered trademark of Kelly Services All other trademarks are property of their respective owners An Equal Opportunity Employer 2013 Kelly Services, Inc. Y1492A kellyservices.us/healthcare exit