The Quill Exchange. S o u t h D a k o t a H e a l t h c a r e F i n a n c i a l M a n a g e m e n t A s s o c i a t i o n. Inside this issue:

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1 S o u t h D a k o t a H e a l t h c a r e F i n a n c i a l M a n a g e m e n t A s s o c i a t i o n The Quill Exchange October 2012 Reprinted with permission from the Deloitte SPECIAL EDITION Monday Memo Health Care Reform Update My Take By Paul Keckley, Executive Director, Deloitte Center for Health Solutions and HFMA Healthcare Leadership Council Member As President of the Student Government Association in college, I ran against four qualified candidates and enjoyed the week-long race. I won. But then the work started, and for every moment of recognition, there were hours of behind the scenes consensus building and hard work. It seems a distant memory but the lessons learned stuck with me. With the re-election of President Obama, and the party controls in the U.S. House and U.S. Senate unchanged, the work ahead is now the focus. And health reform, the issue second only to the economy in the $6 billion campaign, which ended yesterday, is at the top of the list. The election marks the start of Phase Three in U.S. health system s transformation: Phase One: Health reform legislated (February 2009-March 2010) Health reform legislation passed including the Affordable Care Act (ACA) and others sparking a vigorous national debate about the role, scope, and strategy of government in transforming the health system. Continued on Page 4 Inside this issue: My Take by Paul Keckley 1, 4-6 President s Message, by Renae Tisdall 2 Region 8 Connection, Mike Dewerff 3 Medicare DSH Appeals by Kristin L. DeGroat 7 HHS Adopts New Reg by Amber Vanderwal 8 340B Expansion and Compliance by Keith Chop 9-10 SDHFMA Pictures 11 Platinum Sponsor Spotlight SDHFMA Sponsors 14 Upcoming Meetings 15

2 PRESIDENT S MESSAGE By Renae Tisdall As I attempt to write this letter, I need to be reminded to remember what is right in healthcare? The simple answer to this question is to provide the highest quality care to all who need it. The complicated part of this simple theory is having the financial ability to do so. The challenges that we face in healthcare will continue to be reimbursement cuts, an increase in patient volumes, and not to mention an aging workforce. This is where HFMA provides resources. These resources are abundant at a National level as well as a State level if you seek them out. I encourage our membership to use these resources to help tackle the challenges that we see every day, and to reach out to each other. This year s theme says it all, Leadership Matters! I most recently had the privilege of attending the Fall President s Meeting in September with all Region 8 Presidents and Vice-Presidents. We had a very successful meeting for South Dakota! I am honored to welcome Ms. Julie Norton back into the leadership role within Region 8 as the incoming Regional Executive Elect. The Regional Executive nominees are presented to the Vice-Presidents and voted on. The Regional Executive s responsibilities include being a liaison between our local chapter and our Region with National HFMA. She will be a great advocate for SD and Region 8. Julie will begin her new responsibilities in May. Congratulations Julie! Region 8 continues to collaborate and provide educational opportunities for our membership. We have continued to organize monthly webinars to offer low cost education. Each chapter within the Region is responsible for one webinar throughout the year, and usually the cost for attending the webinar is a $30 per site fee. The facility could have thirty people attend for the one very low cost. I again encourage our membership to take advantage of these opportunities as well. The content of the webinars is very pertinent to today s issues that we continue to face. Another very exciting action item that came out of the Fall President s meeting is that our Region is now planning a Region 8 meeting. This meeting will be held in St. Louis in August. All nine chapters in our Region are on board and are stepping up in planning this event. I anticipate National speakers, great networking opportunities, vendor opportunities, and a lot of funj I would like to thank SDHFMA for putting your trust in me to be your President. I am proud to be your President for the year, and you should be proud to be a member of a nationally recognized organization and of the SD Chapter. We have a very successful chapter because of great volunteers and great sponsors. I continue to encourage our membership to take advantage of the resources available through HFMA. I will end my message in a similar way as I started it. Remember what is right in healthcare. Being fiscally responsible is a huge piece of the puzzle. Somehow as leaders in healthcare finance, our jobs are to find the right balance to provide high quality and be affordable for the patient and our facilities. October 2012 Page 2

3 Region 8 Connection Mike Dewerff, Regional Executive HFMA Board of Directors Strategic Planning Session The HFMA Board of Directors met in August to focus on long-term strategic planning for the Association. The retreat began with an overview to develop a shared understanding of HFMA s position, trends, and response for membership, products, services, and engagement. The discussion shifted to identifying the strategic parameters for HFMA as we plan our future direction. The board was asked to define, at a high level, the scope and boundaries within which the organization will accomplish its mission. The output centered around becoming "The" leadership organization for strategy, finance and measurement and being known as the credible convener and the go-to source for information, education, networking, and other resources to solve organizational problems. Healthcare Leadership Council (HLC) The HLC was created in 2009 to complement the guidance provided by the HFMA Board of Directors and to serve in an important advisory role to HFMA s leadership for key issues that impact HFMA members and healthcare finance. The current HLC members are: Suzanne Delbanco, Executive Director, Catalyst for Payment Reform John Glaser, Ph.D., CEO, Health Services, Siemens Healthcare Karen Ignagni, President & CEO, America s Health Insurance Plans (AHIP) Paul Keckley, Ph.D., Executive Director, Deloitte Center for Health Solutions Judith Persichilli, R.N., B.S.N., M.A., President & CEO, Catholic Healthcare East Lee B. Sacks, M.D., Executive Vice President and CMO, Advocate Health Care; CEO, Advocate Physician Partners Simon Stevens, Executive Vice President, UnitedHealth Group Discussion with HFMA s Healthcare Leadership Council and the HFMA Board in July centered on macro challenges affecting the industry including cost containment and clinical transformation to reduce variation; Accountable Care Organizations (ACOs), bundled payment, and value-based purchasing; and engaging employers and patients to drive change. Information gathered from the HLC meeting fed into the August HFMA Board of Directors discussions about the implications of reform and market shifts for HFMA. October 2012 Page 3

4 My Take continued By Paul Keckley, Executive Director, Deloitte Center for Health Solutions Phase Two: Health reform validated (March 2010-November 2012) The Supreme Court ruled the ACA constitutional (June 28, 2012), and voters returned many lawmakers to Congress and the White House that support the law. Phase Three: Health Reform Tested (November 2012-December 2016) In this phase, the substantive changes of the ACA will be implemented against a backdrop of economic recovery and a divided electorate. At the top of the list: Implementation of health insurance exchanges (HIX) by states. States blueprint applications are due to HHS in 9 days and states must be fully capable of determining eligibility and handling enrollment in 11 months. In tandem, health plans must determine whether and how they ll participate in HIXs. Key questions: will commercial plans play or pass? And will the federal government be prepared to step in if states aren t ready? Expansion of programs for those lacking health insurance. For states, it s a matter of math: are the costs associated with expanding the Medicaid program offset by other benefits? And for those eligible for federal health insurance subsidies: are the subsidies adequate to purchase coverage and do the penalties for lacking coverage create the desired outcomes? Key questions: do the benefits of expansion outweigh the risks? What s the best way to deliver appropriate health services to the poor and underserved? How should services be organized to optimize efficiency and long-term cost containment? Transition from volume to value. The results of the plethora of demonstrations and pilot efforts authorized in the ACA including episode-based payments, avoidable readmissions, medical homes, accountable care, and value-based purchasing will be analyzed, and those most effective in bending the cost curve without compromising safety and quality will be institutionalized that s the intent. In many ways, Phase Three is the lab for hospitals, physicians, and commercial plans wherein new ways to organize and pay for health services will be tested against prior experience and strong sector resistance to change. It s the analog to the bench-to-bedside pathway in clinical research that investigators follow in pursuit of therapeutic solutions. The transition from volume to value transcends every generation and health status cohort from cradle to grave and requires fresh thinking and a willingness to learn from mistakes. Key questions: as incentives change from traditional fee-for-service and volume to value and performance-based results, what gets lost in the transition? What are the unintended consequences? What is the optimal way to define value? How should the path from bench-tobedside be paved to protect elements of the system that work well and eliminate (or replace) those that are not optimally aligned? October 2012 Page 4

5 My Take continued By Paul Keckley, Executive Director, Deloitte Center for Health Solutions President Obama, Congress, and governors share enormous responsibility for the results of health reform in Phase Three. And with the fiscal cliff pending and an electorate seeking more solutions and less acrimony, the timing could not be more pressing. The candidates in last night s elections deserve our gratitude for running for public office; I ask myself frequently why anyone would want to serve given the scrutiny and lack of privacy that go with their jobs. Those who won deserve a moment to relish their successes. The hard work in Phase Three of health reform requires our collective best efforts to fix the system industry and government working together. PS In nine days, states will submit initial plans for their HIXs. Next month, the physician pay formula and sequester cuts will get attention in the 21 day lame duck session. And the 113th Congress will face implementation of the ACA against a backdrop of the fiscal cliff and global economic uncertainty. Subscribe to the Health Care Reform Memo Health Care Reform Memo The weekly Health Care Reform Memo is available for subscription. Please visit Deloitte contacts Paul H. Keckley, Ph.D., Executive Director, Deloitte Center for Health Solutions (pkeckley@deloitte.com) Jessica Blume, U.S. Public Sector National Industry Leader, Deloitte LLP (jblume@deloitte.com) Bill Copeland, U.S. Life Sciences and Health Care National Industry Leader, Deloitte LLP (bcopeland@deloitte.com) Jason Girzadas, National Managing Director, Life Sciences & Health Care, Deloitte Consulting LLP (jgirzadas@deloitte.com) Harry Greenspun, M.D., Senior Advisor, Health Care Transformation and Technology, Deloitte Center for Health Solutions (hgreenspun@deloitte.com) Mitch Morris, M.D., National Leader, Health Information Technology, Deloitte Consulting LLP (mitchmorris@deloitte.com) George Serafin, Managing Director, Health Sciences Governance Regulatory & Risk Strategies, Deloitte & Touche LLP (gserafin@deloitte.com) October 2012 Page 5

6 My Take continued By Paul Keckley, Executive Director, Deloitte Center for Health Solutions Rick Wald, Director, Human Capital, Deloitte Consulting LLP To receive alerts when new research is published by the Deloitte Center for Health Solutions, please register at To access Center research online, please visit To arrange a briefing for your team, contact Jennifer Bohn (jebohn@deloitte.com). 30 Rockefeller Plaza New York, NY United States About Deloitte Deloitte.com Security Legal Privacy Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Please see for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. Disclaimer This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication. Copyright 2012 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited October 2012 Page 6

7 ARE YOUR MEDICARE COST REPORT APPEALS BEING AFFECTED BY CMS RULING 1498-R? Kristin L. DeGroat, Esq.* On April 28, 2010, the Centers for Medicare and Medicaid Services (CMS) issued Ruling 1498-R. This Ruling has a significant impact on Medicare Disproportionate Share Hospital (DSH) appeals currently before the Provider Reimbursement Review Board (Board). DSH is an add-on payment that hospitals can qualify for when their Medicaid utilization and Supplemental Security Income (SSI) percentage added together meet a 15 percent threshold. Many hospitals have repeatedly filed appeals before the Board to increase the amount of Medicaid Eligible Days and/or their SSI percentage. Hospitals have benefited immensely from these DSH appeals, but it has been at the expense of CMS. As a result, CMS issued Ruling 1498-R to divest the Board of jurisdiction over the following issues: SSI, non-covered inpatient hospital days and labor and delivery room days. Ruling 1498-R is intended to limit the number of Board appeals, to eliminate the use of the reopening process for these issues and to reduce the amount of reimbursement that hospitals would recover. This Ruling also changes the way a hospital s SSI percentage is determined. CMS Ruling 1498-R requires the Board to remand all appeals that involve SSI to include corrections that resulted from the ruling in Baystate Medical Center v. Leavitt, 545 F. Supp. 2d 20 (D.C.C. 2008). Upon remand, the Fiscal Intermediary or Medicare Administrative Contractor (collectively, MAC) is to revise the SSI percentage to include these corrections, Total days and non-covered inpatient hospital days, i.e. Medicare secondary payer (MSP) days or exhausted benefit (EB) days. In addition, CMS notes in Ruling 1498-R that Medicare Advantage, Managed Care, Medicare + Choice or Part C days (Part C days), although not actually addressed by the Ruling, should be treated similarly to MSP or EB days. Numerous hospitals have appeals outstanding for all of the issues addressed by the Ruling. Some hospitals are challenging the SSI and MSP or EB days issues as well as the Ruling itself, and have done so by having Hearings before the Board and appealing to Federal District Court or requesting Expedited Judicial Review (EJR) and then proceeding to Court. Hospitals also appealed the Part C days issue and the Court of Appeals for the District of Columbia for all cost reporting periods prior to 10/1/2004 decided that it would be retroactive rule making for CMS or the MACs to include these days in the Medicare ratio. As a result, the days are to be included in the Medicaid ratio. See Northeast Hospital Corporation v. Sebelius (D.C. Cir. September 13, 2011) (Northeast). Hospitals are hopeful that the decision in Northeast will have a positive impact on the cases currently pending in the Court of Appeals for the District of Columbia for the MSP and EB days issues, and that the Court will issue a similar decision that these days should also be included in the Medicaid ratio. See Catholic Health Initiatives - Iowa Corp. d/b/a/ Mercy Medical Center - Des Moines v. Sebelius (Case No. 1:10-cv (RCL)). Although CMS Ruling 1498-R seems to have a negative effect on reimbursement when SSI is appealed and remanded, most hospitals benefit when labor and delivery room days are appealed as they are now to be included in either the Medicaid ratio or the Medicare ratio, i.e. SSI percentage, depending on whether the patient was Medicaid eligible. As a result, hospitals and the Board have actively sought to remand this issue. As DSH can have a major impact on how much additional reimbursement a hospital can receive, hospitals need to be aware of how CMS Ruling 1498-R is affecting their Medicare DSH appeals. This can assist them in determining whether they should request a remand, have a hearing, request EJR or take a wait and see approach. Ms. DeGroat is an Associate with Quality Reimbursement Services, Inc. and can be contacted at (626) , Ext or Kristin@qualityreimbursementservices.com should you have any questions on this article. October 2012 Page 7

8 HHS Adopts a HIPAA Standard for a Unique Health Plan Identifier By Amber Vanderwal HHS ADOPTS A HIPAA STANDARD FOR A UNIQUE HEALTH PLAN IDENTIFIER AND AN ADDITION TO THE NATIONAL PROVIDER IDENTIFIER REQUIREMENTS HHS adopts a standard for a HPID (Health Plan Identifier), a data element that will serve as an OEID (Other Entity Identifiers), and an addition to the NPI requirements. HHS also adopts a delay by one year, from Oct. 1, 2013 to Oct 1, 2014, the date by which covered entities must comply with International Classification of Diseases, 10th Edition diagnosis and procedure codes (ICD-10). HP ID s, OE ID s: New Regulations but no date set In simpler words: The standard is addressing two different ID s that will be implemented at the same time and will essentially accomplish for the payer community what the NPI did for the provider community. The first is the national unique health plan identifier (HPID). This is a standard ID that will be assigned to each Health Plan and must be used by all parties trading transactions. The second is the Other Entity Identifier (OEID). This is an ID that will be assigned to an entity that is not a health plan but performs certain health plan functions, such as repricing or third party administration, as these entities do not qualify for an HPID. This ID must be passed on a claim as it is the equivalent to an organization, repricer, or a TPA as an NPI is to a provider. These two ID s will be used the same way in the same transactions to identify where a transaction (837, 270, ect.) will be sent. They will simply have different qualifiers depending on which type of ID the entity that the transaction is being sent to qualifies for. It also appears that all Payer ID s may change. Why is this important to the HFMA group? Because we are all about revenue and this could potentially have an impact on our revenue if it is pushed through as it was originally intended by the AMA. Take Wellmark for example. They have a very large number of different health plans that they market to the consumer. The Cooperative Exchange, which is an organization of National Clearinghouses, is meeting with CMS and OESS (Office of ehealth Standards and Services) to help identify potential issues that having an HPID for each plan within a payer will have. This may not be something to worry about at this point because it does not go into effect for a few years, but we need to be informed and have the correct people in our organizations watching this ruling and helping to identify potential issues. Now is when we have a voice and thankfully the Cooperative Exchange is getting involved because this group of Clearinghouses processes over 80% of all claims in the US today. If you have questions, contact the HIOS Helpdesk at: or insuranceoversight@hhs.gov. For questions about the HPID rule, contact Kari Gaare at kari.gaare@cms.hhs.gov. For more information see, Ms. Vanderwal,CPAT/CCAT is an associate of eprovider Solutions see, October 2012 Page 8

9 340B Expansion and Compliance Impact By Keith Chop The 340B Drug Discount Program, a section of the Veterans Health Care Act of 1992, provides benefits to covered entities that meet specific regulatory requirements for participation. The benefits that providers receive from the program include reduced drug costs and additional revenue streams generated through covered drug prescriptions through contract pharmacy arrangements. In March of 2010, the establishment of the Affordable Care Act expanded participation to additional hospital types that did not previously meet requirements for participation and also added guidelines for program expansion through multiple contract pharmacies. Furthermore, with the additional covered entity types and the multiple contract pharmacies, there has been increasing number of 340B registrations for covered entity status. As a result, the program has come under increased scrutiny from Congress and drug manufacturers, and the Office of Pharmacy Affairs has taken additional steps to ensure the program integrity through auditing procedures, oversight, and more stringent registration procedures. The Affordable Care Act s impact on the 340B program resulted in the addition of other covered entity types not previously allowed to participate. These covered entity types include Free Standing Cancer Hospitals, Sole Community Hospitals, Rural Referral Centers, and Critical Access Hospitals. These hospital types are required to meet many of the same criteria as typical Disproportionate Share Hospitals, but also have different requirements for participation in the 340B Program. Some of the requirements that differ for these hospital types are the disproportionate share threshold required for participation, adherence to the non -participation in a GPO for covered outpatient drugs, and exclusion of orphan drugs for purchase at 340B pricing for Affordable Care Act entities. The ability to contract with multiple contract pharmacies expands the use for many covered entities participating in the 340B program. Previously, covered entities were only allowed to set up one contract pharmacy relationship. In March of 2010, the use of contracted pharmacies was expanded to allow covered entities set up multiple contract pharmacy relationships. The impact results in increased revenue streams for the covered entities which are directly related to the increase in prescription volumes and capture previously unrealized through single-contract or no contract pharmacy relationships. October 2012 Page 9

10 340B Expansion and Compliance Impact By Keith Chop The expansion of the 340B program has also generated increased scrutiny and additional questions related to program oversight from Congress and drug manufacturers. Senator Charles Grassley from Iowa has been critical of program oversight and has recently drafted letters to hospitals in North Carolina that addresses the use of the 340B program related savings for indigent care populations. The OPA and HRSA have also increased auditing efforts for 340B covered entities, and have initiated auditing procedures at current 340B covered entities this year. The audits are targeted at covered entities with the intent of completing audits at all registered covered entities by the end of The program oversight has resulted in the OPA developing more rigorous review of application procedures, development of recertificationand auditing procedures. Covered entities participating in the 340B program need to take the necessary steps to adhere to the 340B program regulations and develop comprehensive compliance programs for 340B oversight. Compliance is a critical factor for participation and will play a major role in program optimization for covered entities in the future with the emphasis on audits and compliance. The 340B program should not be viewed as a pharmacy program, rather a program that encompasses communication and internal reviews between multiple departments such as internal audit, hospital compliance, and administration. The 340B program s original intent was to ensure that there were benefits to covered entities to care for the most vulnerable patient populations. Expansion of the 340B program has provided additional benefits to new and current 340B covered entities, but compliance should also be considered as key for implementation and program maintenance for continued participation. Keith Chop is a Director in the Navigant Healthcare practice and team leader for pharmacy services for healthcare providers, he can be contacted at keith.chop@navigant.com October 2012 Page 10

11 SDHFMA Pictures Rita Blasius is presented the Muncie Gold Merit Award by Geoff Knobloch at SDAHO. Jamie Schaefer is presented the Follmer Bronze Merit Award by Geoff Knobloch at SDAHO. Renae Tisdall at the 2012 Fall Presidents Meeting October 2012 Page 11

12 Platinum Sponsor Spotlight DT-Trak Consulting, Inc. has been providing nationwide professional medical claims management, revenue enhancement, training, and on-site consulting services since Our corporate mission is to provide the highest quality medical records and revenue management services at a competitive price through a supportive partnership with each customer that we serve. This mission is representative of our company s core beliefs and values, and governs the actions of company management and staff members in the performance of their duties, as we clearly understand that successes cannot be achieved without the support of our clients. In providing services to our customers, we have pioneered new processes, techniques, and methodologies that have proven to be highly efficient in minimizing turn-around times and highly effective in maximizing revenue recovery. DT-Trak Consulting has been certified by the General Services Administration (GSA) to provide services to United States government agencies. Natalie Bertsch, Vice President 210 N Broadway Miller, SD October 2012 Page 12

13 Platinum Sponsor Spotlight Small Business. Big Ideas. eprovider Solutions was founded in 2005 with the goal of making advanced technology accessible to healthcare providers. Our products are affordable and effectively meet practice management needs. eprovider Solutions has quickly grown into a national service provider while maintaining the benefits of a small, dedicated business. eprovider Solutions is a unique team that has banded together to battle some of the problems in the healthcare software industry today. Using our combined experiences from many areas of the medical management industry we are dedicated to helping our clients achieve their business goals. BJ Dvorak, President 5024 Bur Oak Place Suite 215 Sioux Falls, SD October 2012 Page 13

14 Thank You 2012 Sponsors Platinum Avera McKennan Hospital Casey Peterson & Assoc Credit Collections Bureau DT-Trak Consulting, Inc. Deloitte Eide Bailly, L.L.P. eprovider Solutions McGladrey NXC Imaging Quality Reimbursement Services Regional Health Rycan Sanford Health Gold Silver Bronze Advanced Asset Alliance 1st National Bank Sioux Falls Dakotacare Accounts Management, Inc Kaufman Hall Avadyne Health The Midland Group Avera Queen of Peace Sanford Health Plan Avera Sacred Heart Hospital Wellmark BCBS Commerce Bank Howalt McDowell Insurance Qualified Presort Service LLC Avera St. Luke's Rocky Mountain Health Network Great Western Bank US Bank Hauge Associates, Inc. Page 14 October Page 14

15 Mark Your Calendar Upcoming Events January 24-25, 2013 Winter Meeting Cedar Shores Resort Mitchell, SD March 20 22, 2013 Spring Meeting Sioux Falls, SD The Quill Exchange Published by the South Dakota Chapter Healthcare Financial Management Association 3708 Brook Place, Suite 1 Sioux Falls, South Dakota Newsletter Chairman: Mike Miller Co Chairman BJ Dvorak October 2012 Page 15