Session 6 PD, Mitigating the Cost Impact of Trends in Hospital Billing Practices. Moderator/Presenter: Sabrina H.

Transcription

1 Session 6 PD, Mitigating the Cost Impact of Trends in Hospital Billing Practices Moderator/Presenter: Sabrina H. Gibson, FSA, MAAA Presenters: Dawna Nibert Lawrence R. Smart, FSA, MAAA

2 Society of Actuaries Health Meeting June 2016

3 Moderator: Sabrina Gibson, FSA, MAAA Speakers: Larry Smart, FSA, MAAA Dawna Nibert, MS

4 Larry Smart is a Vice President and the Chief Actuary for WellCare Health Plans located in Tampa, Florida. He is a Fellow of the Society of Actuaries and a Member of the American Academy of Actuaries and has worked as a health care actuary for almost 20 years and in Medicaid and Medicare for 10 years. He has led teams for reserving, medical economics, PDP program design and rate development as well as his current Chief Actuary role. Larry is a graduate of George Mason University with a major in Mathematics.

5 Dawna is a Senior Director of Medical Economics for WellCare Health Plans based in Tampa Florida. She brings over 20 years of extensive knowledge around all facets of health care analytics including health plan provider contracting analytics, value based and alternative payment models, actuarial rate setting and modeling, health plan financial and operational management, health care information systems, and predictive modeling and outcomes. Her health plan and consulting experience span both government sponsored and commercial health plans, but she has primarily worked with Managed Medicaid and Medicare Advantage plans over the last 10 years. Dawn received her graduate degree in Information Systems from Marshall University in WV. Her undergraduate degrees in Computer Science and Mathematics are from the West Virginia Institute of Technology.

6 Hospital cost control is the number one goal of every health plan. Hospital billing practices have become more complex. The health plan s job of controlling these costs becomes more difficult.

7 This session will discuss some of the most common ways hospitals increase revenue through billing practices and how the health plan can implement strategies to manage these practices. What are the practices. How to identify them in the claim data. How to address the practice to reduce the cost impact

8 Managing Inpatient Authorizations

9 Hospital will request an inpatient authorization for a service that should be classified as observation stay (generally<48 hours Two-Midnight rule) Example of the difference in cost for a 2 day inpatient versus an observation. Program IP Cost Observation Cost Medicaid $5,000 $800 Medicare $8,000 $1,100 Commercial $12,000 $1,700

10 What to look for when reviewing IP authorizations data: Average requested lengths of stay and admits per 1000 How do they compare to benchmarks? Focus on short stays two days or less Has there been recent decreases in the average length of stay? Recent changes in the authorization process? Recent staffing changes? Recent regulatory changes?

11 What to look for when reviewing IP authorizations data: Percentage of authorizations reviewed by a Medical Director (MD) Nurses review authorizations and can approve them, but an MD is the only one that can deny for an IP stay (would be billed at OP rate) Get external benchmarks for appropriate levels of MD review Percentage of authorizations auto-approved Required turnaround times Staffing levels will impact What evidence based medical criteria is being used Is it being applied consistently?

12 Create a operational chart to monitor

13 Action plan Staff appropriately to reduce auto approvals Under staffing causes increases in auto approvals Clearly define medical evidence based criteria Make sure staff is trained appropriately Use external vendor to help set internal benchmarks Periodic audits of nurses and medical directors

14 Action plan Use early indicators to identify process gaps Identify changes in top IP diagnosis Headaches Respiratory Abdominal Pain Chest pain Etc. Monitor unexplained changes in: Auto approvals Medical director review Does not meet criteria percentage Staff properly for increased appeals

15 Hospital Billing and Pricing Practices

16 What is Upcoding? Generally upcoding refers to a situation when the level of service billed is higher than the intensity of service rendered or required at the time of service The National Uniform Billing Committee has established objective standards/thresholds for the billing codes that are used to bill daily room and board charges. Level of care standards are outlined for ICU, CCU, Nursery, and Sub Acute For example, Revenue Code 174 (the highest acuity revenue code for Neonatal Intensive Care) is defined as being appropriate for newborns who need constant nursing and continuous cardiopulmonary and other support [over 12 hours per day] for severely ill infants (considered to be intensive care).

17 Potential upcoding situations include: Billing a high acuity room on the date the patient was discharged to a home setting. Facilities will bill Revenue Code 174 (frequently at over $7,000 per day) on the date of service prior to discharge to a home care environment. How can a patient require constant nursing and continuous cardiopulmonary and other support on a Thursday, but be stable enough to not require any nursing care on a Friday? Continuing to bill a high acuity Revenue Code after resource consumption falls below that Revenue Code s thresholds. Similarly, although Revenue Code 174 is only appropriate for patients that require continuous cardiopulmonary support, facilities will continue to bill Revenue Code 174 after all forms of respiratory therapy have been discontinued and the patient no longer requires any cardiopulmonary support. Overlap of levels/services on transition days involving a step down Moving from ventilator to CPAP machine 24 hrs of both billed on transition day

18 Hospital per diem contracts need to be monitored to ensure proper level gets reimbursed Per Diem contracts require complex concurrent review monitoring Authorization systems have limitations; often authorize length of stay and not levels Even if the authorization is captured at the level of care claims systems can t match the claim to the authorization day by day Hospital contracts paying on DRG can also be impacted by the upcoding issue Increased billed charges associated with the higher room and board levels will pay out more in outlier costs

19 Strategies to mitigate the impact of room and board upcoding Identification and retro-review to identify outliers for recovery Analyze claims by looking at DRGs and progression of level of R&B billed through discharge Review itemized bills to find overlap of services billed for transitions Contractual approaches Build per diem levels based on DRG groupings not individual Room and Board codes MS DRG 795 Level 1 per diem MS DRGs 789, 792, Level 2 per diem MS DRGs 791, 793 Level 3 per diem MS DRG 790 Level 4 per diem

20 What is Unbundling? Unbundling refers to a billing practice where services that should be packaged together are broken out and billed separately. CMS payment guidelines state that daily room and board charges includes basic nursing services and minor medical supplies and it is inappropriate for facilities to unbundle these charges from the underlying room and board charge. It is appropriate for a facility to bill these services/supplies in an outpatient setting and/or in other settings where such services/supplies are not already elements of the underlying standard of care. Since the UB claim form used to bill payers rolls routine and nonroutine service supply charges into the same revenue codes, it s very difficult to identify instances of potential unbundling without obtaining and reviewing the itemized bill that lists each charge billed by the facility.

21 Separately billed regular nursing services include: routine venipunctures (frequently billed at over $100 per blood draw) bedside glucose testing (performed with the same reusable glucometer used by diabetics and frequently billed at over $50 per test) medication administration (frequently billed at over $50 per medication) Separately billed minor medical/surgical supplies include such basic supplies as: 4 x4 gauze (frequently billed at over $20 each) sponges, (frequently billed at over $30 each) and sterile water for irrigation (frequently billed at over $100 per 100ml)

22 Hospital costs for contracts paying on both DRG and per diem can be impacted by unbundling Additional services billed will accumulate more charges toward triggering DRG outlier payments and stop loss outlier thresholds Strategies to mitigate the impact of unbundling Reviewing itemized billed charges to determine payments excluding any items not allowable. Such reviews routinely disclose that many facilities inpatient claims continue to include separate charges for the very regular nursing services and minor supply items that were already included in the underlying daily room charges, resulting in double billing. Potential Savings of 10% - 20% of large claims

23 Hospital Chargemaster - a comprehensive list of every itemized price for every service, procedure, and supply item that can be billed by a hospital. Chargemasters are proprietary to every hospital and can contain anywhere from thousands to tens of thousands of codes. Hospitals update chargemasters at least yearly and often more frequently; CMS regulation states that hospitals can only have one chargemaster across all payers. As payer payment has become more complex hospitals tend to push up charges overall to ensure they are covering costs across all payers.

24 Hospital costs for contracts paying on both DRG and per diem can be impacted by chargemaster increases Increased chargemasters accumulate more charges toward triggering DRG outlier payments and stop loss outlier thresholds Strategies to mitigate the impact of chargemaster increases Contract language that allows for offset of chargemaster increases to contracted rates. However, limitations for vertical increases can lead to horizontal increases (such as upcoding and unbundling) Hospitals often report chargemaster increases aggregated across all payers but methodology can be developed to measure chargemaster impact based on the health plan s experience with the hospital

25 Methodology to measure Chargemaster Increase specific to health plan Period 1 Period 2 Normalized Charges using Period 1 units Charge Master change Normalized Charges using Period 2 units Revenue Code Revenue Code Description Units Charges Unit Charge Units Charges Unit Charge Period 1 Charges Period 2 Charges Period 1 Charges Period 2 Charges 0110 Room & Board (Private) 42 77,154 1, ,975 1,932 77,154 81,136 5% 189, ,975 5% 0113 Pediatric 22 40,414 1, ,941 1,929 40,414 42,438 5% 53,273 55,941 5% 0114 Psychiatric 31 56,947 1, ,432 1,929 56,947 59,799 5% 14,696 15,432 5% 0120 Room & Board (Semi-Private 2 beds) 565 1,037,905 1,837 1,134 2,190,654 1,932 1,037,905 1,091,461 5% 2,083,158 2,190,650 5% 0121 Medical/Surgical/Gyn 3 5,511 1, ,858 1,929 5,511 5,787 5% 3,674 3,858 5% 0123 Pediatric 47 86,339 1, ,604 1,929 86,339 90,663 5% 139, ,604 5% 0124 Psychiatric 39 71,643 1, ,373 1,929 71,643 75,231 5% 67,969 71,373 5% 0128 Rehab 20 36,740 1, ,296 1,929 36,740 38,580 5% 44,088 46,296 5% 0130 Room&Board (Semi private 3-4 beds) ,625 1, ,439 1, , ,125 5% 350, ,439 5% 0170 Nursery 18 28,387 1, ,612 1,307 28,387 23,534-17% 23,656 19,612-17% 0172 Newborn-Level II ,330 3, ,403 3, , ,329 3% 436, ,403 3% 0173 Newborn-Level III 397 1,344,432 3, ,696 3,703 1,344,433 1,469,960 9% 629, ,697 9% 0174 Newborn-Level IV ,625 3, ,442 3, , ,485 2% 318, ,442 2% 0200 Intensive care ,849 4, ,177 4, , ,695 5% 230, ,177 5% 0202 Medical 1 4,043 4, ,847 4,254 4,043 4,254 5% 92,989 97,847 5% 0203 Pediatric 28 82,162 2, ,404 3,791 82, ,162 29% 205, ,404 29% 0206 Intermediate ICU 22 54,626 2, ,054 2,607 54,626 57,354 5% 302, ,054 5% Plan Derived Increase 4,570,733 4,843, % 5,187,244 5,505, % Adult R&B 1,757,228 1,846, % 3,330,430 3,500, % Nursery/NICU/Pediatric 2,695,937 2,873, % 1,614,330 1,749, % Charge Master change

26 CMS regulation also states that charges need to reasonably and consistently relate back to underlying cost of a service Certain higher cost services should be reviewed High cost drugs can be compared to Medicare AWP ( Implants can be compared to the amount that facilities have reported to a central database as their cost for these supplies. Since this database is used by facilities to create a level playing field when contracting with implant suppliers, it provides an accurate benchmark for facilities presumptive costs for these supplies.

27 Scenario #1: Hospital cherry picked the higher of their contracted rate or the old physician rate when billing Hospital contract was silent on acquired groups Solution: Add specific language in the hospital contracts around acquired physician groups: acquired physician groups will be reimbursed at 100% of the Medicaid fee schedule until such time as the parties have negotiated a mutually agreed upon rate OR all physicians will be paid at the prevailing contract fee

28 Scenario #2: Physicians brought on as staff physicians of hospital, so bills using outpatient place of service Also leads to physicians billing lab, diagnostics, etc as outpatient such as ultrasounds if it is OB/GYN Solution: Add very specific language in the hospital contracts around the definition of staff physician or add language specifying how physician groups can bill.

29 Scenario #3: Group begins billing injectables through outpatient instead of at the historic AWP they used when billing as a physician office Solution: Add specific language in the hospital contracts around acquired injectables supplied by physician groups:

30 One goal of the Affordable Care Act (ACA) is to reduce costs to hospitals for unwanted outcomes and to provide quality care more efficiently. The following provisions from the ACA directly impact the reimbursements to hospitals: Hospital Acquired Conditions, Never Events, and other Provider-Preventable Conditions (PPCs) Day Hospital Readmission Rates for select conditions 2015 Hospital Acquired Infections top quartile Health Plan s Provider Manual should indicate that CMS guidelines are followed for claims payment procedure Follow CMS s lead and draft specific policy and procedures for your Health Plan

31 Section 3025 of the Affordable Care Act added section 1886(q) to the Social Security Act establishing the Hospital Readmissions Reduction Program. CMS defines readmission as an admission to a subsection hospital within 30 days of a discharge from the same or another subsection hospital; Medicare allows for a 30 day lookback with any similar diagnosis Exclusions for certain facilities, major diagnostic categories, patient status, interim bills Pre pay edit looks for two categories of potential readmission Category 1 Same DRG and similar primary diagnosis Category 2 Same DRG and any similar diagnosis Retrospective review also done for Category 1 and 2 Hospital can appeal and submit medical records

32 California Hospital Chargemasters aspx High cost drugs can be compared to Medicare AWP at CMS Provider Reimbursement Manuals Guidance/Guidance/Manuals/Paper-Based- Manuals-Items/CMS html

33 Questions