The health system is under investigation for allegations it was canceling appointments and "cutting off" patients with medical debt. What went wrong?
Revenue cycle leaders are under pressure to collect on their patient’s bills in order to help pad an organization’s bottom line, but a new investigation is pointing out that some organizations are going too far.
Allina Health, one of the largest non-profit health systems in Minnesota, was recently called out in a New York Times report alleging that it was canceling appointments and “cutting off” patients with medical debt.
The Times’ report has now prompted a formal investigation, announced last week, by Minnesota Attorney General Keith Ellison.
According to the Times, Allina Health allegedly refused to provide certain types of care for patients with, in some instances, only $1,500 in medical debt. Although Allina would provide emergency care, it had a written policy to deny other services until that debt was paid off, the Times said.
At the time of the Times' article publication, Allina Health CEO Lisa Shannon said it “will take a thoughtful pause on any new interruptions to non-emergent, outpatient clinic scheduling while we re-examine our policy.”
“Reducing barriers to care is central to our mission as a steward of community health, and we will carefully study additional ways to educate our teams about the extensive financial services available to patients experiencing financial barriers to care,” Shannon’s statement said.
Even though Allina’s policy was paused, Attorney General Ellison is not letting the health system off the hook.
“Allina is bound under the Hospital Agreement to refrain from oppressive billing practices and provide charity care when patients need and qualify for it, as all Minnesota hospitals are. Denying patients needed care on the basis of medical debt harms every Minnesotan, whether or not they are Allina patients,” Attorney General Ellison said in a statement this week.
“My office has heard from a good number of Allina patients who have shared their own upsetting stories of being denied care for this reason,” Attorney General Ellison said.
As hospitals and health systems battle to increase margins and improve efficiency to remain financially healthy, what can revenue cycle leaders do to stay afloat? Denying care is not it.
Revenue cycle leaders have been working for years to minimize the same patient payment challenges as Allina Health, albeit with better strategies.
One strategy we see time and time again? Placing more of a focus on the front end, usually through technology, to reduce the cost to collect on the back end.
In fact, this is a strategy that Augusta University Medical Center follows. The health system realized it was missing opportunities by not prioritizing pre-service and point-of-service payments, which led to a negative patient financial experience, collecting pennies on the dollar, and writing off bad debt.
“Patients are providers’ second largest payers, so collecting payment prior to or at the time of service is critical to the overall financial health of the organization and our ability to serve the community with quality care,” Sherri Creech, AVP of patient access services at Augusta University Medical Center, told HealthLeaders.
After implementing technology and establishing new staff trainings and protocols for payment collection, the system increased its point-of-service collections by 150%--thus reducing its patients’ amount owed after care.
“The team couldn’t believe how small changes every day, like collecting a copay, can add up over time and help that bottom line,” Creech said.
Editor's note: Followingthis article's publication, Allina Health sent an email to HealthLeaders stating the following: "We have determined there are opportunities to engage our clinical teams and technology differently to provide financial assistance resources for patients who need [financial] support. We will formally transition away from our policy that interrupted the scheduling of non-emergency, outpatient clinic care." -Allina Health PR.
To ensure financial success, hospital leaders need to expand their outpatient footprint.
As the financial boost during the pandemic from federal relief funds has officially dried up, rural health and critical access hospitals are fighting to keep their doors open.
Losses on patient services, low financial reserves, rising labor costs, and increasing inflation are all contributing factors to the financial challenges facing these providers.
These challenges are leaving the CFOs of these smaller organizations to dig deep to find ways to ensure financial stability. One way to address this new normal? Leaders need to develop and implement a strategy to expand their outpatient footprint. Stacy Taylor, CFO at Nemaha County Hospital, a top 100 a critical access hospital located in Nebraska, has done just that.
The hospital, which sits in the south-east corner of Nebraska, is a small critical access hospital that sees about 2,000 ER patients a year. On top of this, roughly 25,000 outpatients come through the facility in a year.
If you’re a smaller, critical access hospital, you need to capitalize on those outpatient services, Taylor said.
“As a critical access hospital, one thing that we have done to maintain financial stability is to make ourselves true to the critical access model of reimbursement. We've stayed true to that outpatient business,” Taylor said.
This is why roughly 80% if Nemaha’s business is through outpatient services, Taylor says.
“We try to stay in the market by bringing in as many outpatient doctors that we can from the bigger cities so that they can see patients here. This way, patients are not driving an hour to get to the city, and we can see them here at the hospital in a rural setting,” Taylor said.
While shifting its focus to outpatient services has helped maintain Nemaha’s financial stability, it’s not without its challenges.
“As for other challenges, labor shortage has been the biggest challenge we've had. In the last couple of years, we've tried really hard to stay true to that core and work with hiring staff locally, but we did make the decision to start working with some contract agencies as far as getting some nursing staff coverage,” she says.
Keeping pace with the changing healthcare financial landscape is also key, Taylor says.
“We need to be able to adapt to changes that are coming to us,” Taylor said.
In order to save more money and streamline efficiency, Taylor made the decision to merge its medical records and business office into one space.
“When it comes to working with one another, we've got coders sitting right next to the billers so that way we can get our claims out the door a little more quickly,” she said.
“We've cross trained a lot of people within the business office. With having them cross trained, everyone knows how to answer the phone. Everyone knows how to cover our front desk. Everyone knows how to set up a patient and complete an admission for them. That way, we can help each other out when we were short staffed,” Taylor said.
CMS fined three hospitals for alleged price transparency violations.
Most hospitals and health systems have not had an easy ride when it comes to price transparency adherence—from overly burdened staff to costly operational changes—revenue cycle leaders have felt the pressure to adapt and thrive.
Doubling down on the pressure is CMS. The agency is continuing to fine hospitals for not adhering to price transparency requirements, and there are three new providers on the chopping block.
CMS announced it has fined Community First Medical Center $847,740, Falls Community Hospital and Clinic $70,560, and Fulton County Hospital $63,900, all in July. The hospitals have 30 days from the issuance date to appeal the fines, CMS says.
This brings the total number of hospitals fined for price transparency violations to seven. HealthLeaders reported in May that Kell West Medical Center was fined for noncompliance and the hospital is now appealing that punishment. CMS says it is reviewing Kell West’s appeal as it is “under review.”
While most organizations should have systems in place to help them adhere to the new rules, opportunities still exist to revisit outdated revenue cycle processes to better comply with these regulations.
There are three areas revenue cycle leaders must have shored up to ensure financial and operational effectiveness.
Revenue cycle leaders will continue to fight against poor operating margins, reduced reimbursement, and inflated expenses well into 2024. And at a time when a poor financial experience can negate a five-star clinical experience for patients, revenue cycle leaders are under more pressure than ever to streamline processes.
Financially successful hospitals and health systems have fully optimized three key areas of the revenue cycle, so other revenue cycle leaders need to make sure they are keeping pace.
Streamlined patient financial experience
If your patients aren’t happy with their billing experience, you’re in trouble.
How patients are billed plays a large role in their overall financial experience and satisfaction with your healthcare organization. Revenue cycle leaders need to help patients navigate the billing process easily if they are going to create a positive patient financial experience.
Paper statements work, but digitization has pushed organizations into offering a modern billing experience. Patients expect digital and automated options when it comes time to pay their bill—and more importantly, the information presented needs to be precise.
"There are quite a few challenges in the market today when it comes to a patient's billing experience," Chris Johnson, vice president of revenue cycle at Atrium Health, said.
For example, when it comes to a patient's bill, it's common for consumers to find the amount of information presented overwhelming.
"Healthcare billing continues to be a complex process especially since you have the provider, patient, and payer all involved," said Johnson. "Quite frankly, when some patients see an insurer's use of CPT and ICD-10-CM codes, it can be like a foreign language, and it can cause confusion."
How can revenue cycle leaders do this?
Cleaning up these bills by omitting unnecessary information and making payments as easy as possible—either via text or patient portal—is a must. Missing the mark on a patients’ financial journey is a make or break for leaders.
Foolproof leadership development
Maintaining the revenue cycle operations of an organization comes with a unique set of challenges. Labor shortages have been plaguing the healthcare industry for years, forcing revenue cycle leaders to reevaluate the way they remedy staff burnout and responsibility. Part of dealing with labor shortages is having a solid staff development and succession plan.
How do you bring on star revenue cycle staff? More importantly, how do you keep and grow them?
“You have to make recruiting part of your job as a revenue cycle leader. You can't just rely on HR or talent teams,” Bill Arneson, director of revenue cycle process and system support at Moffitt Cancer Center, said.
“Also, you have to assess where your budget is at. If you can’t afford to hire the star IT people, then you have to commit to developing them. Ask yourself, are you the New York Yankees with unlimited money? Or are you the Tampa Bay Rays who have to work the farm system and develop players?” Arneson asked.
“I've had people from both: I've brought in people from Epic, Cerner, and Siemens, as well as home-grown people. I just find the best talent I can—you know, the emotionally intelligent good team members, and then tweak along the way until they find their groove,” he said.
Staff development is never a “set it and forget it,” Arneson said.
“Once you hire someone, you have to constantly be thinking [about] how you can bring them in and find new skill sets. People's interests change over time as well, so be prepared to constantly be growing the team members that you already have. That will help you retain and grow your staff so you’re not always recruiting.”
The revenue cycle workforce will continue to evolve, so recruiting and retaining star revenue cycle staff must be a priority.
Refined multi-department collaboration
Although the revenue cycle encompasses a large portion of a health systems' workforce, leaders must remember that everyone at the organization plays a role in revenue cycle. Revenue cycle operations are the ultimate team sport and requires physician champions, IT support, compliance, and even legal teams to back everything revenue cycle does.
How are revenue cycle leaders working with all entities across the organization to improve optimization?
Successful leaders have already started bringing in their IT teams to help streamline revenue cycle, said Christy Pehanich, AVP of revenue cycle management at Geisinger Health System.
However, Pehanich said the challenge of this is that leaders must merge revenue cycle domain expertise with IT expertise.
“We have a lot of smart IT engineers and application developers, but they do not have any revenue cycle domain expertise, and we need to merge those skill sets in order to optimize automation in the revenue cycle,” Pehanich said.
“We need to create more opportunities for IT professionals and for revenue cycle experts to merge those skills through education. Just understanding the languages in each department in and of itself can be a challenge,” she said. “There are so many acronyms … when you start talking about automation and revenue cycle, so both teams need to know what the other is saying.”
Once that merger of expertise has happened, the future is limitless, Pehanich said.
Leaders need to make sure their revenue cycle teams have a sequence of importance for SDOH codes to uphold the organization's overall goal.
CMS recently released the fiscal year 2024 inpatient prospective payment system final rule, and within it, CMS finalized a higher severity level designation for three different social determinants of health (SDOH) codes describing homelessness.
As revenue cycle leaders continue placing a heavier focus on capturing SDOH codes, having CMS continue to increase severity level designations will continue to promote their use.
While SDOH data collection is top of mind, what revenue cycle leaders might not realize is that only a certain number of SDOH codes will fit on a Medicare claim—meaning revenue cycle leaders need to make sure their middle revenue cycle has a sequence of importance for SDOH codes in order to uphold the organization’s overall impact goal.
While the bill goes to the insurance company, only the top 25 diagnostic codes are billed for the inpatient side and it’s even fewer for the outpatient side, Kimberly Cunningham, instructor for the certified coder boot camp programs at HCPro, explained in a recent webinar.
“So, now there’s a potential conflict—should coders report SDOH codes within that top 25 and leave out some other codes that may be impactful for patients that have more than 25 codes on an inpatient claim or 12 on an outpatient claim?” Cunningham asked.
CMS’ decision to finalize the severity level designation change for homelessness codes has likely pushed those SDOH codes to the forefront of the coders’ and billers’ attention.
However, Cunningham says that for the remainder of the SDOH codes, individual organizations need to determine the sequence of importance for SDOH codes for themselves. For example:
What are the outcomes that the organization is hoping to have?
How is the organization hoping to impact patients?
By answering these questions, leaders can determine what they view to be of the utmost importance when capturing data. From there, they can make sure teams are reporting the associated diagnosis codes according to their levels of importance. This, in turn, will aid programs that the organization seeks to implement, Cunningham says.
“Outreach programs, insurance companies, and programs rely on this data being reported. Organizations may need to focus on specific SDOH codes and determine what they want to report,” she says.
Hospitals will be seeing a payment bump for cases that report homelessness.
CMS recently released the fiscal year (FY) 2024 Inpatient Prospective Payment System (IPPS) final rule. Along with its yearly payment rate changes, the final rule placed a focus on promoting high-quality care and rewarding hospitals that deliver such care to underserved populations.
Notably, CMS finalized a higher severity level designation for three different social determinants of health (SDOH) codes describing homelessness.
More than 80% of hospitals are collecting data on SDOH—many right through their EHR platform and health information exchanges—yet only half of those hospitals are collecting data regularly. As revenue cycle leaders continue placing a heavier focus on capturing SDOH codes, having CMS continue to increase reimbursement rates will continue to promote their use.
CMS has changed the following codes from the severity designation of "non-complication or comorbidity" to "complication or comorbidity," thus increasing their reimbursement rate:
Z59.00, Homelessness unspecified
Z59.01, Sheltered homelessness
Z59.02, Unsheltered homelessness
According to CMS, after a data analysis of claims data tracking the impact on resource use generated for hospitals, CMS finalized the changes based on the higher average resource costs of cases with those ICD-10-CM diagnosis codes in comparison to similar cases without these codes.
In a news release, CMS stated, “This action is consistent with the Administration’s goal of advancing health equity for all, including members of historically underserved and under-resourced communities … As SDOH diagnosis codes are increasingly added to billed claims, CMS plans to continue to analyze the effects of SDOH on severity of illness, complexity of services, and consumption of resources.”
CMS also finalized changes to The Hospital IQR program, with an increase in operating payment rates of 3.1%. “As part of CMS’ health equity goals, we are rewarding hospitals that deliver high-quality care to underserved populations and, for the first time, also recognizing the higher costs that hospitals incur when treating people experiencing homelessness,” said CMS Administrator Chiquita Brooks-LaSure in the release.
“With these changes, CMS is laying the foundation for a health system that delivers higher quality, more equitable, and safer care for everyone,” Brooks-LaSure said.
Hospitals will be seeing a payment bump, but will it be enough to ward off rising inflation and labor costs?
CMS recently released the fiscal year (FY) 2024 Inpatient Prospective Payment System (IPPS) final rule increasing payment rates by a net 3.1% for FY 2024 for hospitals that are meaningful users of electronic health records and submit quality measure data.
This 3.1% payment update reflects a hospital market basket increase of 3.3% as well as a productivity cut of 0.2%. Overall, the agency will increase hospital payments by $2.2 billion compared to FY 2023, which also includes a $957 million decrease in disproportionate share hospital payments and a $364 million decrease in new medical technology payments, according to the IPPS final rule.
While a $2.2 billion increase seems significant, hospitals are facing historic financial challenges. In fact, hospital margins for the year rose in June, but the divide between the haves and have-nots widened as expenses and economic pressures remained high according to a recent Kaufman Hall analysis.
Most hospitals underperformed in June, even as the median year-to-date operating margin index increased to 1.4%, compared to 0.7% in May.
These challenges highlight the fact that leaders need to stop relying on payment rate increases to keep them afloat.
"This 'new normal' is an incredibly challenging environment for hospitals," Erik Swanson, senior vice president of Data and Analytics with Kaufman Hall, said in a press release regarding it's market analysis.
"It's time for hospital and health system leaders to begin developing and implementing a strategy for long-term sustainability, including expanding their outpatient footprint and re-evaluating where finite resources are being utilized," Swanson said.
The AHA doubled down on the “woefully inadequate” payment rate increase for FY 2024.
In a statement shared with the media, Ashley Thompson, AHA’s senior vice president for public policy analysis and development, said, “The AHA is deeply concerned with CMS’ woefully inadequate inpatient and long-term care hospital payment updates. The agency continues to finalize rate increases that are not commensurate with the near decades-high inflation and increased costs for labor, equipment, drugs and supplies that hospitals across the country are experiencing.”
From analyzing marketplace dynamics to remedying ongoing workforce struggles, stakes are high for CFOs in 2023.
CFOs are not seeing any relief in 2023—between declining operating revenue for health systems and a fundamental shift in the workforce—this year continues to be financially complex, to say the least.
This is why CFOs need to get creative when it comes to retaining talent, succession planning, and maintaining the overall financial health of their organizations.
From August 9-11, the members of the HealthLeaders CFO Exchange will be meeting in Napa Valley, California, to talk strategy and find workarounds and solutions to the following four trends in hopes of alleviating the headaches.
Current Financial Stress
Does the age old adage "grow or die" apply to healthcare organizations? Many think so. But then how can CFOs ensure their organizations grow while keeping expenses low? There needs to be the perfect set of processes put in place, but what are they?
When considering investments, it’s critical to have strong discipline and balance appropriate risk-taking, and with a changing market CFOs need to be thinking differently about investment portfolios. How can CFOs utilize industry connections to identify new ideas and opportunities to improve?
Supply chain optimization and shortage considerations aren’t only for the clinicians. CFOs need to create a plan for increasing costs of supplies, services, and technology—costs that likely won’t see any relief.
Workforce
Labor shortages, diminished margins, accelerating expenses, and leadership vacancies: A perfect storm of factors is pressing financial leaders to employ meticulous strategies to rein in costs while creatively thinking about building a sustainable workforce.
Turnover within leadership across the industry has been pervasive, so CFOs are doubling down on succession planning to discourage talented staff from jumping to new opportunities outside the organization. How can CFOs improve physician partnerships, retention, and the encroaching union activity?
On top of this, how are CFOs improving nursing pipelines and filling needs for other key positions across the entire organization—everyone from therapists to tech?
CFO Exchange attendees gather to talk financial and operational strategy during a previous event.
Marketplace Dynamics
When it comes to smart growth strategies, CFOs have some major decisions to make. Is it best for their organization to build, buy, partner, or merge? There are also major disruptors to worry about. How does a CFO decide to compete or partner? Or better yet, how do you go about competing or partnering?
Acquisitions and mergers are still top of mind as well. How should a CFO respond to practice acquisition by investor-owned entities?
Innovation and Technology
CFOs know that a one-star financial experience can negate a five-star clinical experience, so how can CFOs create a better customer experience and think more like a disruptor? Many CFOs know that implementing AI is the key to a streamlined patient experience, but how do you manage it in the right way and at the right pace?
While AI and technology is essential for the patient experience, digital solutions maximize workflow and increase the business footprint, so how do CFOs decided where to start when expanding into hospital at home, RPM, telehealth, and more?
Stay tuned for more coverage of these topics once the event is in full swing.
The HealthLeaders Exchange is an executive community for sharing ideas, solutions, and insights. Please join the community at our LinkedIn page.
CEOs have been pushing CFOs to lower labor costs, and it seems to be working for HCA Healthcare.
Coupled with an increase in patient volume, lower labor costs helped HCA Healthcare see higher profits in the second quarter of 2023.
HCA recently reported its second-quarter net income of $1.193 billion, compared to $1.155 billion at this time last year. Results included a $32 million loss due to facility sales and a $78 million charge related to debt retirement, according to its report shared with HealthLeaders.
While the systems' quarterly revenue rose 7% to $15.86 billion, its total expenses climbed 7.6% to $14.05 billion, including a 7.1% jump for salaries and benefits and a 7.7% increase for supplies.
On the positive, same facility admissions increased 2.2% and same facility equivalent admissions increased 3.7% in the second quarter of 2023, compared to the prior year period. Same facility emergency room visits also increased 3.7% in the second quarter of 2023.
On top of its increase in patient volume, HCA reduced its contract labor costs by 20% year over year, bolstering its revenue.
This increase in patient volume comes on the heels of a huge data breach that made vulnerable the personal information of nearly 11 million patients at scores of care venues in 20 states.
In a media release at the time, the Nashville-based for-profit health system said the information was "made available by an unknown and unauthorized party on an online forum." The exposed data included patients’ names addresses, emails, phone numbers, dates of birth, gender, service dates, locations, and appointment dates.
More than half of CFOs say their CEOs are asking them to focus on cost reduction, according to a new report.
A new report from Deloitte says that CEOs are putting the pressure on CFOs to reduce costs, focus on working capital efficiency, and risk management—all seemingly a no brainer for healthcare CFOs.
According to the report, 54% of CFOs indicated that their CEOs are asking them to focus on cost reduction while 40% said their CEOs want them focused on strategy/transformation.
More than one-third of CFOs said their CEOs want them focused on strategy, performance management, revenue growth, investment, and capital/financing, according to the report.
"External challenges like inflation and high interest rates and geopolitical uncertainties seem to be impacting CFOs' assessments of macroeconomic conditions. We saw optimism tick upward last quarter, but presently, CFOs are expressing more caution and have a weaker appetite for taking greater risks.” Steve Gallucci, national managing partner of the U.S. CFO Program at Deloitte said in the report.
While this survey gathers data from across all business sectors, the results align with expectations, and are not at all surprising, for healthcare CFOs.
So how can healthcare CFOs work to meet their CEOs' continued expectations in 2023 and beyond?
Developing strong relationships across the c-suite, management, clinical leadership, and finance teams will ensure CFOs can support operational and clinical priorities, which in turn will support strategic growth priorities.
“It is important to develop a culture in which leaders seek continuous improvement, while also measuring the appropriate risks and benchmarking yourself in key areas against best-in-class organizations,” Jim Molloy, executive vice president, CFO, and treasurer, at Ochsner Health recently told HealthLeaders.
And, while its important to always keep your focus on reducing expenses, the true key to success for any organization is disciplined growth, Molloy said.
When it comes to risk-taking, in healthcare balance is key. The key for a healthcare CFO is strong discipline and appropriate risk-taking, Molloy says. Molloy adds that he utilizes his industry connections to identify new ideas and investment opportunities to ensure financial stability and help meet c-suite expectations.
The Deloitte CFO Signals survey for the second quarter of 2023 was conducted between May 1 and 15, 2023. A total of 122 CFOs participated in this survey and gathered responses from CFOs where the vast majority are from companies with more than $1 billion in annual revenue.
CFO Exchange attendees gather to talk financial and operational strategy during a previous event.
