Prepare your revenue cycle teams for several hundred new fiscal year 2024 ICD-10-CM codes now finalized to take effect October 1.
CMS recently announced the addition of 395 new diagnosis codes, 25 deletions to the diagnosis code set, and 13 revisions. An ample amount of these changes pertains to reporting certain diseases, accidents and injuries, and social determinants of health (SDOH). As mentioned, these code updates will take effect on October 1.
The new diagnosis codes are spread throughout the code set, with several dozen pertaining to osteoporosis with fractures, retinopathy and muscle entrapment in the eye, and disease of the nervous system—including Parkinson’s disease and epilepsy.
For example, the final update confirms the introduction of five new codes for Parkinson’s disease:
G20.A1, Parkinson’s disease without dyskinesia, without mention of fluctuations
G20.A2, Parkinson’s disease without dyskinesia, with fluctuations
G20.B1, Parkinson’s disease with dyskinesia, without mention of fluctuations
G20.B2, Parkinson’s disease with dyskinesia, with fluctuations
G20.C, Parkinsonism, unspecified
Of the 395 new codes, 123 of them reside in the external causes of morbidity chapter of the ICD-10-CM manual, specifically new codes to capture accidents and injuries.
When it comes to SDOH, there are 30 new diagnosis codes for factors influencing health status and contact with health services. There are also a host of new guidelines for reporting these codes.
For example, there is a new code for reporting an encounter for HIV pre-exposure prophylaxis. A “code also” note instructs coders to report risk factors for HIV, when applicable.
An extensive “code also” update for “other specified problems related to upbringing” says codes for the following diagnoses should also be reported when applicable:
Absence of a family member
Disappearance and death of family member
Disruption of family by separation and divorce
Other specified problems related to primary support group
Other stressful life events affecting family and household
This 2024 diagnosis code update comes at a time when hospitals and health systems are working more diligently than ever to address their patients’ social needs and the broader SDOH in the communities they serve.
Robust data related to patients’ social needs is critical to hospitals’ efforts to improve the health of their patients and communities. One way to capture data on the social needs of patient populations is through proper documentation and keeping revenue cycle staff up to date on code changes, which will help to better identify non-medical factors that may influence a patient’s health status.
CMS recently launched a new consumer webpage for the No Surprises Act.
CMS launched a webpage for consumers detailing patient protections from unexpected out-of-network medical bills under the No Surprises Act.
The website also addresses the dispute resolution process for uninsured and self-pay patients interested in disputing their bill based on a provider’s good faith estimate.
Surprises bills continue to be sprung on patients, even with a federal ban in place, with one in five adults receiving an unexpected medical charge this year, according to a survey by Morning Consult.
As revenue cycle leaders know, the No Surprises Act is meant to protect patients from receiving unforeseen bills for out-of-network and emergency services after receiving treatment, yet 20% of respondents in the survey say they or their family have been charged unexpectedly, with another one in five billed after being treated by an out-of-network provider at an in-network facility.
The bills have been especially costly in some cases, as 22% of respondents say their charges were over $1,000.
Creating more resources for patients, such as CMS’ webpage, could help patients better understand the law and what to expect when receiving care.
A bipartisan group of over 30 senators penned a letter to CMS asking the agency to reevaluate the 2024 inpatient payment rate.
The recent letter sent to CMS, led by Sens. Robert Menendez (D-N.J.) and Kevin Cramer (R-N.D.), informs the agency of concerns that the payment rate increase put forward in the fiscal year (FY) 2024 inpatient prospective payment system (IPPS) proposed rule will actually result in an overall payment reduction for hospitals.
According to the letter, in the FY 2024 IPPS proposed rule CMS relies heavily on data that does not account for the impact of the current elevated costs and expenses in providing healthcare. The senators also pointed out that the productivity update in this proposed rule assumes that healthcare facilities can replicate the general economy’s productivity gains.
“However, the critical financial pressures that hospitals and health systems continue to face have resulted in productivity declines, not gains,” according to the letter.
Each year, CMS is required to update payment rates for IPPS hospitals using the hospital market basket index to account for price changes in goods and services. To ensure Medicare payments more accurately reflect the cost of providing healthcare today, the senators asked CMS to use its special exceptions and adjustments authority to make a retrospective adjustment to the FY 2022 market basket update.
Unsurprisingly, the American Health Association (AHA) is backing the Senators’ letter.
“The AHA thanks Senators Menendez and Cramer for leading this important bipartisan effort urging CMS to ensure hospitals and health systems have the resources they need to continue delivering high-quality care to their patients and communities,” Lisa Kidder Hrobsky, AHA’s senior vice president for advocacy and political affairs said in a statement.
“This support is more needed than ever as the hospital field continues to confront rising inflation, workforce shortages and surging costs for supplies and drugs,” Kidder Hrobsky said.
Earlier this year, the AHA penned its own statement to CMS saying the association was “deeply concerned with CMS’ woefully inadequate proposed inpatient hospital payment update.”
According to CMS, under the FY 2024 IPPS proposed rule, acute care hospitals that report quality data and are meaningful users of EHRs will see a net 2.8% increase in payments in FY 2024 (compared to 2023). However, disproportionate share hospitals could be facing a payment cut of $115 million.
The national healthcare expenditure topped $4.4 trillion in 2022.
Now may be the time to assess your organization’s financial future as healthcare spending is growing, so much so that the United States spent $4.4 trillion on healthcare in 2022, a growth rate of about 4.3%, according to a federal estimate released today.
That rate of growth is projected to average 5.4% annually through 2031, according to Centers for Medicare and Medicaid Services’ (CMS) estimates put forward in a new study published in Health Affairs.
Despite that robust rate of growth, healthcare spending in 2022 is not expected to keep pace with overall economic growth in the United States, and healthcare’s share of the gross domestic product in 2022 is expected to fall from 18.3% to 17.4%, CMS says.
However, that trend is not expected to last. GDP growth through 2031 is projected to average 4.6% annually—0.8% lower than the average growth in national health expenditures—which means that health spending will hit 19.6% of GDP by 2031, CMS says.
“Altogether, and consistent with its past trend, health spending for the next ten years is expected to grow more rapidly, on average, than the overall economy,” says Sean Keehan, an economist in the Office of the Actuary at CMS, and the Health Affairs study’s first author.
The projections could spell trouble for providers.
As we know, when national health spending growth increases, reimbursement rates may not keep up, which means hospital leaders may have increased expenses while receiving less revenue. Now is the time to consider strategic decisions regarding the allocation of resources, managing expenses, and revenue growth.
CMS also says Medicare spending growth is projected to accelerate from 4.8% in 2022 to 8% in 2023, with expenditures expected to exceed $1 trillion, despite the end of the public health emergency in 2023 and the associated expirations of the skilled nursing facility 3-day rule waiver and the 20% payment increase for inpatient COVID-19 admissions.
Payers will be feeling the squeeze as well. Among the major payers, Medicare spending is expected to grow the fastest over the course of 2022-201 as the last of the baby boomers enroll in the program through 2029, the report says.
Private health insurance spending is expected to grow 5.4% annually, whereas Medicaid’s average rate of spending growth is projected to be 5.0% during the same period.
Hospital spending is expected to grow more quickly on average (5.8%) than average spending growth for physician and clinical services (5.3%), and prescription drugs (4.6%) during this timeframe.
Similarly, the report says the average price growth for hospitals (3.2%) is projected to be greater than that of prescription drugs (2.2%) and physician and clinical services (2.0%).
According to the report, businesses, households, and other private revenues are expected to pay the same proportion of total health spending in 2031 as they did in 2021 (51%). Government spending is projected to account for the remaining 49% (also the same as 2021). Before the pandemic, in 2019, those shares were 54% and 46%, respectively.
Quality reporting is an essential revenue cycle task tied closely to reimbursement, but it can cost providers big time, a new study says.
CMS says it collects quality data from hospitals paid under the IPPS with the goal of driving quality improvement through measurement and transparency to help consumers make more informed decisions, however gathering this information for CMS is proving time consuming and expensive for hospitals.
The new study published in JAMA set out to evaluate externally reported inpatient quality metrics for adult patients and estimate the cost of data collection and reporting, independent of quality-improvement efforts, and the conclusion was staggering.
The retrospective study at Johns Hopkins Hospital found that in 2018, quality reporting for 162 metrics cost the system over $5 million and took 108,478 personnel hours to complete.
In fact, according to JAMA, the hospital spent an estimated $5,038,218.28 in personnel costs plus an additional $602,730.66 in vendor fees that year.
Of the quality metrics studied, a total of 162 unique metrics were identified, of which 96 (59.3%) were claims-based, 107 (66.0%) were outcome metrics, and 101 (62.3%) were related to patient safety, according to the study.
The study also found that claims-based (96 metrics; $37,553.58 per metric per year) and chart-abstracted (26 metrics; $33, 871.30 per metric per year) metrics used the most resources per metric, while electronic metrics consumed far less (4 metrics; $1,901.58 per metric per year).
Johns Hopkins is a large system and the $5 million spent on quality reporting was a small portion of the hospital’s $2 billion in annual expenses that year, but that is not to say these metrics are not costly and time consuming overall.
The authors go on to explain that significant resources are expended exclusively for quality reporting, and some methods of quality assessment are obviously far more expensive than others.
“Claims-based metrics were unexpectedly found to be the most resource intensive of all metric types. Policy makers should consider reducing the number of metrics and shifting to electronic metrics, when possible, to optimize resources spent in the overall pursuit of higher quality,” the study said.
One expert shares five ways CFOs at prominent organizations across the country are maintaining financial stability in 2023.
CEOs say that 2023 is all about embracing the current reality and deciding maybe it’s not as bad as it could be. But now is not the time to ease up on strategy.
While this could be seen as good news, CFOs know they need to stay ahead of the curve and keep preparing for the next big financial hurdle.
“There is no single strategy [to maintaining financial stability]. It is highly multifaceted, and all levers must be pulled,” Swanson said. But there are five trends that Swanson says CFOs are deploying to ensure they remain financially stable:
Workforce optimization
When we talk about labor expenses and managing the workforce, a lot of organizations are looking at how they can think about workforce optimization by employing data and analytics in a more useful way to understand the appropriate complement of staff and workforce that they’d need to deliver care in the appropriate ways and in the most economical fashion.
Reducing the reliance on contract labor is another lever to pull. Some organizations are re-examining their float pool size or perhaps even creating their own internal staffing agency for some of those large systems. Some are considering recruitment retainment and those pipelines for ensuring that talent is coming in.
Some organizations are partnering closely with local nursing schools, in some cases offering tuition assistance or even full tuition assistance to build a pool of candidates to address some of the labor shortages. That strategy will take a few years, but it’s useful. It's also critical to create an environment where everyone works to the top of their license and top of their ability across the organization.
Supply chain management
What we’re seeing on the non-labor side is around more effective supply chain management by building scale and leveraging that to get preferred rates with vendors and in many cases, reducing the amount of variation in suppliers.
Payer negotiations
On the revenue side, negotiating with payers as those opportunities arise and negotiating in a way such that those dollars are focused on where the patient populations will be, versus where they have historically been, is important.
Value-based care models
Some organizations are exploring where to move on as they move more towards a value-based care model. Organizations that had greater value-based care models tended to outperform those that did not during the pandemic.
Reexamining the future of care delivery
Leaders also need to think strategically about what care looks like. What does care delivery in the future look like? And making sure that they are positioning themselves for the future, while managing their day-to-day, but not losing sight of what that future may hold.
The VP of finance and revenue cycle at PMHA outlines eight keys to success when implementing technology.
When budgets are tight, leaders need to be strategic when investing in technology. Because cost efficiency is so important, revenue cycle leaders need to make sure there is a substantial ROI when considering technology.
Nicole Clawson, VP of finance and revenue cycle at Pennsylvania Mountains Healthcare Alliance (PMHA), feels these same pressures at her health system. And, as a collaborative network of independent community hospitals located primarily in Western and Central Pennsylvania, the system needs to be cognizant of costs while improving operations.
To help ensure financial stability, Clawson says PMHA is in the process of implementing a combination of technology and operational expertise to monitor revenue cycle data flow from beginning to end with four of its member hospitals.
As Clawson and her teams are currently in the throes of technology implementation, she has eight keys to success for other finance and revenue cycle leaders looking to make the most of new technology while keeping costs low.
Nonprofit hospitals are seeing substantial growth in operating profits and cash reserves but at the cost of charity care, a new study says.
It seems not all finance leaders are fighting against poor operating profits.
In fact, according to a new study published by Health Affairs, the mean operating profits for nonprofit hospitals grew from $43 million in 2012 to $58.6 million by 2019, while mean cash reserve balances increased from $133.3 million to $224.3 million.
As developing and executing a strategic path to a financially sustainable future is essential for these leaders, it looks like it’s at the expense of charity care, the study says.
While profits grew from 2012 to 2019, the increase was not associated with the provision of more charity care by nonprofit hospitals. In fact, spending on charity care actually dropped during that time period: from $6.7 million in 2012 to $6.4 million.
The IRS has not stated specific quantitative requirements for the community benefits that nonprofit hospitals must provide, the study said. But, “Our results suggest that linking minimum contributions to charity care with profit increases may be helpful,” the study authors wrote.
With operating profits for nonprofit hospitals growing, the share of community health benefits they provide should also be growing to justify their favorable tax treatment, the study said.
The new study published in Health Affairs is not the first to take aim at nonprofit charity care spending as they are required to provide charity care and other community benefits in exchange for their tax-exempt status.
A Lown Institute hospitals index report said nonprofit hospitals collectively failed to invest nearly $17 billion in their communities in 2021, which included charity care spending.
At the time, the hospital index highlighted Vanderbilt University Medical Center and several other nonprofit, blue-chip providers for enjoying large tax breaks while falling short in making appropriate community health investments.
Vanderbilt University Medical Center responded with the following statement defending its charity care spending:
[For fiscal year 2021], Vanderbilt University Medical Center [VUMC] provided more than $829 million in charity care and other community benefits in service to the citizens of Tennessee. These funds support direct patient care and a range of initiatives that positively impact Tennesseans in other ways through improvements in community health.
The analysis by this organization allows only certain financial measures to be counted while intentionally excluding other beneficial activities traditionally supported by academic medical centers like VUMC that require considerable financial commitment.
In addition to the Lown Institute, a report from the state treasurer's office published last year took aim at North Carolina’s nonprofit hospitals. It found that although the nonprofit hospitals in the state received tax exemptions to provide charity care that were valued at more than $1.8 billion in 2020, most didn't provide enough charity care to equal the amount of those tax breaks.
Instead, "North Carolina's nonprofit hospitals billed the poor at an average rate up to almost three times the national average," the report said.
"Nonprofit hospitals are often more profitable than for-profits in North Carolina," the report said. "All the top 10 most profitable hospitals were nonprofits in fiscal year 2019."
Mergers and acquisitions are on the mind of every CEO and CFO as leaders need to develop a strategic path to a financially sustainable future.
As CFOs and CEOs fight against poor operating margins, reduced reimbursement, and inflated expenses, developing and executing a strategic path to a financially sustainable future is essential. For some, this can mean an acquisition or merger.
Hospitals and health systems of every type are feeling the financial pressure—even nonprofits will continue to grapple with existential questions about their strategy and structure moving forward.
Realizing the fundamental differences between for-profit and nonprofit hospitals will play a large part in a leader’s decision making.
For-profit and nonprofit hospitals are fundamentally similar organizations with subtly different cultural approaches to managing the economics of healthcare. All acute care hospitals serve patients, employ physicians and nurses as their primary personnel, and operate in the same regulatory framework for delivery of clinical services.
There are, however, a few primary differences between for-profit and nonprofit hospitals, which could potentially impact ROI. Read on about these differences, updated from our previous coverage.
Tax Status
The most obvious difference between nonprofit and for-profit hospitals is tax status, and it has a major impact financially on hospitals and the communities they serve.
Hospital payment of local and state taxes is a significant benefit for municipal and state governments, said Gary D. Willis, a former for-profit health system CFO said. The taxes that for-profit hospitals pay support "local schools, development of roads, recruitment of business and industry, and other needed services," he said.
The financial burden of paying taxes influences corporate culture—emphasizing cost consciousness and operational discipline. For example, for-profit hospitals generally have to be more cost-efficient because of the financial hurdles they have to clear.
Operational Discipline
With positive financial performance among the primary goals of shareholders and the top executive leadership, operational discipline is one of the distinguishing characteristics of for-profit hospitals, said Neville Zar, the former senior vice president of revenue operations at Steward Health Care System, a for-profit that includes 3,500 physicians and 18 hospital campuses in four states.
When Zar was at the system, a revenue-cycle dashboard report was circulated at Steward every Monday morning at 7 a.m., including point-of-service cash collections, patient coverage eligibility for government programs such as Medicaid, and productivity metrics.
A high level of accountability fuels operational discipline at for-profits, Zar said.
Financial pressure
Accountability for financial performance flows from the top of for-profit health systems and hospitals, said Dick Escue, senior vice president and CIO at the Hawaii Medical Service Association in Honolulu.
Escue worked for many years at a rehabilitation services organization that for-profit Kindred Healthcare of Louisville, Kentucky, acquired in 2011. "We were a publicly traded company. At a high level, quarterly, our CEO and CFO were going to New York to report to analysts. You never want to go there and disappoint. … You're not going to keep your job as the CEO or CFO of a publicly traded company if you produce results that disappoint."
Finance team members at for-profits must be willing to push themselves to meet performance goals, Zar said.
For-profit hospitals also routinely utilize monetary incentives in the compensation packages of the C-Suite leadership, said Brian B. Sanderson, managing principal of healthcare services at Crowe.
"The compensation structures in the for-profits tend to be much more incentive-based than compensation at not-for-profits," he said. "Senior executive compensation is tied to similar elements as found in other for-profit environments, including stock price and margin on operations."
In contrast to offering generous incentives that reward robust financial performance, for-profits do not hesitate to cut costs in lean times, Escue says.
"The rigor around spending, whether it's capital spending, operating spending, or payroll, is more intense at for-profits. The things that got cut when I worked in the back office of a for-profit were overhead. There was constant pressure to reduce overhead," he says. "Contractors and consultants are let go, at least temporarily. Hiring is frozen, with budgeted openings going unfilled. Any other budgeted, but not committed, spending is frozen."
Scale
The for-profit hospital sector is highly concentrated. For 2023, there are 5,157 community hospitals in the country, according to the American Hospital Association. Nongovernmental not-for-profit hospitals account for the largest number of facilities at 2,978. There are 1,235 for-profit hospitals, and 944 state and local government hospitals.
On the other hand, the country's for-profit hospital trade association, the Federation of American Hospitals, represents 1,000 tax-paying community hospitals and health systems throughout the U.S., accounting for nearly 20% of U.S. hospitals.
Scale generates several operational benefits at for-profit hospitals.
"Scale is critically important," said Julie Soekoro, former CFO of a Community Health Systems (CHS)-owned hospital. And one benefit of being CHS-owned? The access to resources and expertise, Soekoro said at the time.
Best practices are shared and standardized across all CHS hospitals. "Best practices can have a direct impact on value," Soekoro says. "The infrastructure is there. For-profits are well-positioned for the consolidated healthcare market of the future… You can add a lot of individual hospitals without having to add expertise at the corporate office."
The High Reliability and Safety program at CHS is an example of how standardizing best practices across the health system's hospitals has generated significant performance gains, she says.
Scale also plays a crucial role in one of the most significant advantages of for-profit hospitals relative to their nonprofit counterparts: access to capital.
Ready access to capital gives for-profits the ability to move faster than their nonprofit counterparts, Sanderson says. "They're finding that their access to capital is a linchpin for them. … When a for-profit has better access to capital, it can make decisions rapidly and make investments rapidly. Many not-for-profits don't have that luxury."
Competitive edge
There are valuable lessons for nonprofits to draw from the for-profit business model as the healthcare industry shifts from volume to value.
When healthcare providers negotiate managed care contracts, for-profits have a bargaining advantage over nonprofits, Doran says. "In managed care contracts, for profits look for leverage and nonprofits look for partnership opportunities. The appetite for aggressive negotiations is much more palatable among for-profits."
UHC is pulling back on its controversial prior authorization mandate.
UHC was set to require added prior authorizations for nearly half (47%) of gastrointestinal endoscopies starting June 1, saying more prior authorizations were needed to curb costs related to alleged overuse of some of these procedures by physicians.
After intense pushback from large medical associations, UHC is pulling back.
“Physicians are overwhelmed with prior authorization requirements. The process of prior authorization is not transparent and denials and appeals for medically necessary services oftentimes result in patient harm,” Hennessy said.
Further, UHC was not transparent with evidence of over-utilization or geographic variation for the endoscopy services for which prior authorization would have been required, he said.
The day before the mandate was set to go live, UHC announced a refocused policy that relies on additional provider education rather than prior authorizations to address the insurer’s concerns about possible overutilization.
The refocused policy avoids potential care denials for patients, particularly vulnerable patients, and will not impact the coverage and payment of claims for these services, UHC said.
According to the payer, it will instead implement a pilot program to collect data that substitutes notification and submission of standard clinical data when services are delivered for prior authorization, removing the risk of potential care delays and claim denials.
The American Hospital Association (AHA), who was also strongly opposed to the mandate, said this refocused policy is a better approach and encourages UHC to implement the program in the most efficient way possible to avoid any duplication in the clinical information requested.
“We appreciate UHC refocusing its policy on provider education to address member concerns about potential care denials and additional preauthorization requirements,” said Rick Pollack, AHA’s president and CEO in a release. “We plan to collaborate with UHC to help ensure it meets its goal of providing meaningful education for providers while proactively addressing these concerns.”
This win for providers is similar to a recent change in policy we saw with Cigna.
Just days before it was to take effect, Cigna announced it would delay implementation of a strict new policy requiring submission of office notes with all claims including certain codes billed in conjunction with modifier -25.
The addition of new, burdensome mandates by payers is not new, but it has certainly been further straining the payer/provider relationship. Luckily, it seems that with some pushback from providers, concerns are being heard and changes are being implemented.
