302: Achieving Cost Management in Home Health

Transcription

1 Introductory announcements: This provider-directed continuing nursing education activity was approved by the Maryland Nurses Association (MNA) to award contact hours. The MNA is accredited as an approver of continuing nursing education by the American Nurses Credentialing Center (ANCC) Commission on Accreditation and refers only to continuing education activities, and does not imply endorsement of any product, service, or company referred to in this activity. Attendance for the full session is required to receive continuing education credits Please complete an online evaluation for each session you attend CE certificates will be available through within a few days Please silence your phone 302: Achieving Cost Management in Home Health Robert Simione, CPA, Senior Manager, Simione Healthcare Consultants Michelle Stone-Smith, MBA, Senior Manager, McBee Associates 1

2 Objectives Identify key management reports that affect decision making, including financial statements. Perform benchmarking and cost analysis. Describe cost optimizing strategies that meet operational and patients needs. Home Care & Hospice Landscape 4 2

3 Current Home Health Landscape Increase in Regulation Pre Claim Review F2F Requirement State and Federal Audits ICD 10 Current Home Health Landscape Value to Hospitals & Payers Provide Quality Care in a low cost setting Prevent avoidable rehospitalizations Population Health Management 6 3

4 Strategic Initiatives Reduce Costs & Improve Quality Best Practices Benchmarking Compliance Demonstrate Value Program Development Care Transition Programs Wellness Clinics Telemedicine Market Alignment Hospital Systems Physician Groups Payers Mergers/Affiliations Diversification Home Health Palliative Care Hospice Private Duty Risk Based Contracting Overview Major Focus Moving Care from FFS to Value Pay for Performance Initiative Alternative Models Lower Risk Higher Risk FFS Episodic Performance Based Bundled Shared Savings/Shared Risk Capitation 4

5 Risk Based Contracting Overview Primary Goal Triple AIM» Improving the patient s experience of care» Improving the health of the population» Reducing the per capita cost of care for the population 9 Risk Based Contracting Overview Overall Goals Payments tied to Quality or Value through alternative payment models 30% by end of % by end of 2018 Overall Goal 85% Source: HHS Secretary Sylvia M. Burwell 10 5

6 Data, Data, Data! Quality data must be collected for an agency to understand what needs to be done strategically to meet its revenue goals. Financial data must be collected to better understand how to cost an episode of care for a patient to meet the profitability goals. Set your agency up for success! Where do I start? The movement into new payment models means clinical and financial data must be available. Financial Data should be easily accessible and broken out. General Ledger Payroll Software Direct Cost by Discipline should be broken out Direct Cost by Type (Salary, Benefits, Contract, Mileage) Identify Critical Financial KPI Indicators Keep it Simple Focus on Revenue & Cost Drivers Automate your reports Compare to Benchmark Data 6

7 What are Financial Dashboard Reports? Focused and specific Include the Revenue and Cost Metrics with Goals and/or Benchmarks Consolidated Include revenue and cost drivers to meet the goals and benchmarks Quick to interpret performance Regular and frequent Early alert system Monitor progress 13 Financial Presentation What information is included? What will inform the conversation? What noise can and should be eliminated? What is the appropriate frame of reference? How is it presented? Quick interpretation vs. thorough numbers Tips: Graphical where appropriate Management by exception Integrated information 14 7

8 Know Thy Audience!!! 15 What are Benchmarks? Comparisons: performance into perspective External or internal, based on purpose/need Examples of external include national, state, median, top performers Examples of internal include past performance, desired targets, subsets within your organization (by location, payer, team, diagnostic group, referral, as a few options) Most appropriate for the purpose? 16 8

9 What are Benchmarks? Benchmarks are often the average or median Are you happy being in the middle? Goal should be top 25% And/or situationally appropriate 17 Overall Gross Margin Overall Gross Margin 38% Direct Payer Revenue minus Direct Service Cost Everyone Drives Gross Margin Clinical Revenue and Cost Finance Cost Containment Operation Cost Efficiencies Marketing/Intake Revenue Billing - Collection Data Source: Simione Financial Monitor March

10 HH Gross Margin by Payer 50% 40% 30% 20% 10% 0% 47% Gross Margin by Financial Class 36% 30% 14% Data Source: Simione Financial Monitor March KPI: Revenue Drivers Revenue: Payer Mix Admission Capture Rate Case Weight Mix Contract Rates Value Based Metrics Coding Collections Operational Workflow 20 10

11 KPI: Cost Drivers Direct: Staffing Model Productivity Visit Utilization Patient Acuity Benefits Vendor Staff Expenses Mileage/Geography Supplies Management 21 KPI: Cost Drivers Salary Staff Advantages: More control over staff s performance and schedule. Staff is held accountable to the agency. Easier to manage utilization and quality. Disadvantages No incentive for the staff to do more visits and meet productivity goals. Per Visit Staff Advantages: Incentive staff to make productivity goals. Cost savings (only paying for visit and productive time, less benefits) Disadvantages: Quantity over Quality Increase in visit utilization, less margin per episode/case May have other jobs/responsibilities 22 11

12 KPI: Cost Drivers Vendor Staff Advantage: Paid on a per visit basis Ability to accept overflow patients from referral sources No benefit costs Disadvantage: Staff may have other jobs/priorities Quantity over Quality Less control over education and training 23 KPI: Cost Drivers Best Practice Staffing Model 70/30 Salary/Per Diem Provides controllable salary staff and allows for flexibility for patient overflow. Ability to train and educate staff to meet quality based payment model. Manage productivity and visit utilization. Provide incentive to salary staff for extra visit. Salary staff meets productivity goals in the budget. Must be monitored to ensure that quality care is provided and visit utilization goals are met

13 Home Health Direct Costs Discipline Direct Cost Per Visit Skilled Nurse $96 Physical Therapy $95 Occupational Therapy $99 Speech Therapy $114 Medical Social Worker $162 Home Health Aide $42 25 Home Health Direct Cost Distribution Discipline Salaries Taxes & Benefits Contract Transportation Services SN 70% 19% 4% 7% PT 68% 15% 13% 4% OT 70% 17% 10% 3% ST 67% 16% 12% 5% MSW 74% 19% 1% 6% HHA 61% 13% 16% 10% 13

14 Direct Cost Shortage of Nurse and Therapist Most of us face the reality that we cannot lower the salary and benefit costs for our direct staff without sacrificing quality of patient care. The challenge is how do we lower our cost per visit/day? 27 Productivity 28 14

15 Productivity Salary Staff Productivity Salary Staff What does it cost? 15

16 Productivity Salary Staff What does it cost? Productivity How can Finance help? Technology/IT issues Supply ordering Training/Team Meetings Scheduling Mileage/Transportation What is the cost of not meeting the target Understand the visit and the challenges

17 Productivity Provide realistic goals based on Type of visits SOC vs Routine Geography/Mileage Patient Diagnosis Staffing Financial Success Keep field staff updated on financial success! 33 Productivity What are the pitfalls of increasing productivity? Incentives which reward the number of visits without considering outcomes Cutting corners on patient care Increased need for care Readmissions to home care Re-hospitalizations Emergency room visits Impact on patient or consumer satisfaction 17

18 Home Health Productivity Discipline Productivity Visits Per Day Skilled Nurse 4.3 Physical Therapy 4.8 Occupational Therapy 4.8 Speech Therapy 4.3 Medical Social Worker 1.8 Home Health Aide Home Health Visit Utilization Reimbursement based on: Quality/Value/Outcome Diagnosis/Patient Condition Bundled Payment Must measure visit utilization to meet the reimbursement goals while managing the margin of the case. Managing the transition of the patient from inpatient setting to the home. Front loading visits to improve the outcome of the patient. Developing best practice care plans to improve outcome. Care Teams with multiple disciplines. Monitoring visit and scheduling. Identifying potential LUPA Episodes

19 Home Health Visit Utilization Finance must provide data: How many visits can be done to maintain a margin? What type of payer mix do we need to achieve our financial goal? What patient diagnosis and conditions require more visits? What diagnosis mix of patients do we need to achieve our financial goals? What are the service cost required in a bundled and how much do we need to be reimbursed to achieve our margin goals? Communication to clinical staff, payers, and other healthcare partners on requirements to maintain an overall operating margin. 37 Home Health Visit Utilization Medicare Visits Per Episode Nursing 6.9 Therapy Social Worker Home Health Aide 1.3 Total = 15 visits Data Source: Simione Financial Monitor March

20 Home Health Visit Utilization Visit per Patient by Financial Class Discipline Medicare Medicare Advantag e Medicaid Other Nursing Therapy Medical Social Worker Home Health Aide Data Source: Simione Financial Monitor March Other Direct Costs Mileage Costs Scheduling Care Teams Tracking Software Fleet service 40 20

21 Other Direct Costs Supply Billable Supplies - $2.24 per visit Nonbillable Supplies - $1.07 per visit Total - $3.31 Review of Formulary Dropship supplies Supply Management Inventory Monitoring billable/non billable supply charges Send RFP 2-3 years 41 Indirect Costs Who make up indirect costs for home health? Marketing Intake/Verification/Authorization Scheduling Support Staff (medical records, supply clerks) Leadership Quality/Compliance/OASIS/Coders Billing/Finance/HR Information Systems/Technology 21

22 Indirect Benchmark Marketing - Staffing Cost vs. Benefit 30 admissions per month = $80,000 estimated Revenue per episode (60 days). 60 admissions per month = $160,000 estimated Revenue per episode (60 days) Targeted Best Practice. Cost for Marketing Rep: Salary average: $36,000 - $70,000 Bonus / Commission average: $500 - $15,000 (15%-25% of salary) Wage Range: $36,000 $72,000 median $53,200 National Ave % Revenue = 2.75% Top Performers = 3.83% 22

23 Marketing Objectives Know your Conversion Ratio Aim for 80% or higher Understand your NTUC (Not Taken Under Care) Obtain Market Saturation Information Available from State Associations, Client Relationship Management Software, etc. Know Agency Quality Metrics Re-hospitalization rates, 5-Star, HHCAHPS Arm your marketing team with information Marketing Objectives Understand Profitability by Referral Source Measure case mix weight by referral source Determine payor mix Review diagnosis related profitability Consider costs of referral source s average patient Evaluate the cost to work with referral source Number of on-site visits Hand delivery of orders/485 vs electronic Loss due to failure to sign documents % of re-admissions 23

24 Marketing Other Costs Search Engine Optimization Website design/hosting Print material Education/Lectures Promotional Items Conference/Trade Show Advertisements Mileage/Travel Contracted PR services CRM Associations Photography/Video Mailing/Freight Internet Boosted Posts Intake/Verification/Authorization Image source

25 Intake Staffing 2.72% of Revenue Clinical Intake Coordinator Administrative Intake Specialist Insurance Verification Insurance Authorization Productivity is role specific and tasks are assigned based upon agency size and software capabilities. Intake Objectives Automate as much of intake functions as possible. Referral data imports from hospitals/physician offices Auto verify payor information E-signature capabilities Electronic Intake forms/templates Use a Clinical Intake Coordinator to triage patient prior to coming under care. Review appropriateness Review medication listing Take orders over phone 25

26 Intake Objectives Measure Productivity by payor Accuracy Time between referral and Intake completion NTUC Write-offs/RTP related to intake errors Image source Cost of Poor Intake Added staff re-work time Inaccurate or missing information Decreased patient/referral/staff satisfaction Reduced or loss of referrals Delayed admission Increased potential re-admission Write-offs 26

27 Scheduling Position provides logistical and productivity oversite to IDG Depending upon size of agency/region served will depend upon need for Scheduling Coordinator/Team Assistants. One Scheduler for between patients Allows agency to meet productivity goals and reschedules staff when there are cancelled visits and staffing voids Helps to coordinate staff to meet established plan of care Cost of Poor Scheduling Increased mileage and staff administrative time Potential compliance to POC issues Decreased patient satisfaction Low staff satisfaction due to additional administrative time Missed visits Reduced clinical productivity Higher patient direct costs 27

28 Support Staff Medical Records Dept Costs 0.37% of Revenue Medical Records with EMR compliance checks, automated orders submissions, and various technology advances this roles productivity has increased significantly. However, the management of documents is still needed. Assess the productivity of staff and look for ways to supplement technology for laborious tasks Minimum output 120 document touches per day Supply Clerks this role is diminishing due to technology and lower dependency upon supply closets. Leadership Clinical oversight 8% Creating an Accountable Organization Average Clinical Manager to Case Manager = 8 Hold leadership accountable to meeting metrics Base incentive programs off of quality measures and outcomes Medicare 5 Star Rating, Re-Admission Rate Reductions, HHCAHPS, Staff Productivity, and attainable benchmark goals. Charge leadership with cost containment and savings. Reduce # meetings to ones which have actionable items and goals. Don t meet to meet. 28

29 Quality/Compliance/Education Average Salaries for Quality Manager $70,000 Average is between 1-3% of Revenue based upon percentage of Quality Review Do NOT cut corners in this area as deficiencies can be costly. Some pitfalls include: Documentation not supporting care Poor patient outcomes Higher turnover due to staff frustrations Increased survey risk Increased audit risk Medicare ADR, Pre Claim Review, ZPIC Paybacks, Fines, Medicare Suspension, Criminal Coding Average salaries $65,000 Productivity best practice ranges between coding reviews per average workday. Limit other duties for coder this will improve productivity and quality. Quality should audit Coding as part of their reviews Consider cost to outsource coding versus keeping it in house If Coder is also doing OASIS reviews productivity would be cut in half. 29

30 Billing/Collections Average salary of Biller $45,000 National Benchmark for Billing Department cost is 1.16% of Revenue Base productivity on payor grouping model (Medicare, Medicaid, Commercial, Self Pay) Medicare productivity is higher (60 AR claims touches per day) Non-Medicare productivity is between (35 45 AR claim touches per day depending upon the complexity of payor grouping) Self-Pay productivity is lowest as most work is manual and requires patient follow up calls (20 patients per day) Days in AR Average combined is 63 days Medicare 35 Best practice is 40 or less combined Billing/Collections Days to RAP Best Practice < 7 days Days to Final < 15 days after discharge/episode If RAP days are higher than 7 look at Coding, timing of therapy assessment, Assessment Review, and OASIS completion issues. Have OASIS review split between clinical only, and therapy so you don t hold up submissions. 30

31 Billing/Collections Write-offs vs Contractual Adjustments Use Standard Claim Adjustment Reason Codes when posting Remittance advices: Resource Use software to take contractual adjustments at time the claim posts rather than at payment for known variances between Fee Schedule & Agency Rate. Use separate GL accounts for Contractual and Write-offs. Write-Offs Best practice is 1% Billing/Collections Automate as much as possible Use Clearinghouses for electronic claim submission, claim scrubbing, payment posting and tracking. Load standard Claim Adjustment Reason Codes Optimize software based upon issues faced at billing & payment posting. Think of this as a symptom and find the root cause. Addressing the root cause will improve productivity and cash flow. Evaluate current workarounds before you increase staffing. Software updates may address workarounds put in place months ago Be Active with software vendor in improving functionality. User groups, list serves, etc. are great places to gain insight and be heard. 31

32 Information Services/Technology National Average is 1.44% of revenue Technology is only as good as the people who use it. Agency goal is to provide education and support which will not impede the user in completion of their tasks timely. If it takes too long, evaluate why. Information Services/Technology Additional Tools/Expenses & Benefits Mileage Trackers (cost saver) Billing/HR/Accounting Software Telehealth (help in reducing re-admissions) Cell phones CRM (track marketing efforts compare to results) Personal Emergency Response Services (PERS)- added offering 32

33 Information Services/Technology What influences my costs? Web hosting vs local host Cloud Licensing Data Warehousing Customization vs. Off the shelf Staff needed to support users * Create a ROI type of policy for enhancements & technology requests and have a group evaluate, approve and prioritize. Insurance Health, Worker s Compensation, and General/Professional Liability. Health Weigh the cost/benefit of self funding, high deductible, traditional, ACA, etc. Worker s Comp & Liability Work with brokers who can go to market. Cheaper plans tend to have hidden costs. 33

34 QUESTIONS 67 Contact Information Michelle Stone-Smith, MBA Senior Manager McBee Associates (610) ext 4402 Robert Simione, CPA Senior Manager Simione Healthcare Consultants (203)