Deadliest Finance Issues for 2010

HealthLeaders Media Staff, June 22, 2009

With travel budgets slashed, some of you probably didn't make it to this year's HFMA conference in Seattle. While traveling to a conference across the country may be a pain, I find that once I'm there I'm energized by the crowd's enthusiasm and this year was no different, especially given all of the new pressures hospitals are facing.

One of my colleagues said he had heard that attendance was down and people seemed depressed—a logical conclusion given the economy. However, as I noted in my post last week, the exhibit floor was the perfect setting for an antidepressant commercial, while the session hall was upbeat. This year's conference was especially important because many of the sessions were covering issues that hospitals are trying to understand better, such as RACs, patient collections, and tax-exempt status.

Here's a wrap up of some of the more interesting topics and conversations that made it to the top of my list.

Estimate your tax bill now!
There are still more questions than answers when it comes to knowing how to prepare your finances in the event of a loss of tax-exempt status. Provena Health's Gary Gasbarra, system vice president, chief accounting officer, and corporate controller, along with other panelists, discussed Provena Covenant Medical Center's loss of tax-exempt status and challenges that other hospitals face. Of chief concern is that all nonprofit hospitals' tax-exempt status may go away if Sen. Grassley (R-IA) and other legislators have their way once healthcare reform passes.

While some hospitals are taking a wait-and-see attitude, panelists urged hospitals to be proactive and at least take the steps to estimate their property tax bill should their tax-exempt status be revoked. Along these lines, panelists talked about roadblocks associated with finding someone who can help you assess the value of your real estate. Another issue, says Gasbarra, is tax authorities' lack of understanding in whether they should be measuring gross or net revenues. Some states, he says, are measuring net.

Getting RAC ready
"You are going to get a RAC audit and it will be a three year look-back. You need systems in place today," said Elizabeth Lamkin, CEO of 93-bed Hilton Head Regional Hospital, in her opening remarks to an audience that was eager to learn about her experiences as a RAC audit survivor. As noted in our earlier coverage last week, Lamkin said in preparing for an audit, organizations must first have the right physician advisor in place to handle medical necessity cases and this person must have a strong relationship with case managers. Panelist, Rudy Braccili, senior director, national Medicare center for Conifer Health Solutions, also noted that appeals cost an average $3,000 to $7,000 to file, which is not reimbursed if you win. There are five opportunities to appeal and it takes five years to exhaust all levels of appeals, he said.

"Be sure to only appeal cases in which you have sound reason to appeal because you have to pay interest on payments." The highest dollar take-back is from medical necessity cases, he said.

What happens after reform?
While the healthcare reform debate came up often during the conference, Brenda Snow, executive vice president of strategic planning and analysis at MedAssist, a revenue cycle services company, is proposing that the conversation start to move past "will there be healthcare reform?" and begin to focus on "the order of magnitude" reform will have on healthcare. Healthcare organizations need to be thinking about what will hit them first, she says.

"Do we identify first and second phase activities and if so when do we raise issues like tax exempt [status] and how do we respond to that as industry?" asks Snow, formerly with Geisinger Health System. If near universal coverage happens and if tax exempt status reform happens, it may take providers at 3% margins down to zero, she says. "A lot of small community hospitals are not only the primary provider of services but they are also a primary employer. Are providers thinking in those terms?"

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