CMS is proposing to use two sets of weights to calculate future rate setting for organizations: one including COVID-19 claims and one excluding COVID-19 claims.
Although CMS is proposing to use FY 2021 data for FY 2023 Medicare Severity Diagnosis-Related Groups (MS-DRG) rate setting, the agency wants a modified methodology to account for the historical and potential future impact of COVID-19.
The agency expects a decline in the number of Medicare beneficiaries hospitalized with COVID-19 but believes it’s reasonable to expect that some beneficiaries will continue to be hospitalized due to COVID-19.
With these considerations in mind, CMS is proposing a unique method for calculating MS-DRG weights. CMS is proposing to use two sets of weights to calculate MS-DRGs, one including COVID-19 claims and one excluding COVID-19 claims. Then, CMS is proposing to average the two sets of weights and using that to determine the FY 2023 relative weights.
CMS is also proposing to use charge inflation factors and cost-charge-ratio adjustment factors to modify FY 2021 data used to determine the FY 2023 outlier fixed-loss amount. The agency believes this would create a more reasonable approximation of actual cost increases as it does not expect that the charge inflation that occurred during the public health emergency will continue.
Alternatively, CMS is seeking feedback on the use of FY 2021 without any of the proposed modifications.
Revenue cycle leaders should review the proposed rule, paying particular attention to sections and proposals that affect their organization. Consider submitting comments to CMS to explain why a particular proposal will be beneficial or detrimental and to offer feedback where the agency is explicitly soliciting comments.
For more information on the proposed rule, see the Federal Register. Comments are due to CMS no later than June 17.
At the same time, CMS also introduced a minimal amount of new ICD-10-PCS procedure codes, including codes for reporting knee joint replacements.
Once finalized, these ICD-10-CM/PCS code changes will be used by the revenue cycle's coding team starting October 1.
CMS' proposed code changes also include a reissue the COVID-19 vaccine status-related ICD-10-CM codes and the COVID-19 vaccine administration ICD-10-PCS codes that were previously implemented on April 1.
In the proposed rule, CMS is also soliciting public comment on how the reporting of social determinants of health (SDOH) diagnosis codes may improve the ability to capture severity of illness, complexity of service, and/or utilization of hospital resources.
CMS says it is also interested in receiving feedback on how it might otherwise foster the documentation and reporting of the diagnosis codes describing SDOH to reflect each healthcare encounter and improve the reliability and validity of the coded data.
Applying data governance strategies can help healthcare organizations capture and use SDOH data, and a key part of that process has long been tied to appropriate coding.
"When it comes to revenue cycle, I think what it comes down to is quality," Julie A. Pursley, MSHI, RHIA, CHDA, FAHIMA, AHIMA's director of health information thought leadership, previously told HealthLeadersregarding SDOH reporting. "We still want to focus on quality documentation, and quality documentation leads to better coding and just better data overall."
Lastly, CMS is not proposing any new Medicare Severity Diagnosis-Related Groups (MS-DRG) for FY 2023, which means the number of MS-DRGs would be maintained at 767 for FY 2023. But CMS says it has a number of proposals for technical refinements to MS-DRG assignments and it is requesting comment on issues relating to the classification of rare diseases or conditions that are represented by low volumes in claims data within the MS-DRG structure.
For more information on the proposed rule, see the Federal Register. Comments are due to CMS no later than June 17.
CMS is proposing a 3.2% payment rate update for hospitals as well as a new, publicly-reported hospital designation for maternity care.
CMS released the fiscal year (FY) 2023 inpatient prospective payment system (IPPS) proposed rule with proposals for the annual ICD-10 code update, new programs for quality reporting, and increases to hospital payment rates to which providers are already reacting negatively.
For FY 2023, CMS proposed 1,495 changes to the ICD-10-CM diagnosis code set. Diagnosis code changes should be finalized in June and would take effect October 1 this year.
According to the proposed rule, CMS is increasing operating payment rates by a net 3.2% for FY 2023 for hospitals that are meaningful users of electronic health records and submit quality measure data.
This reflects a FY 2023 projected hospital market basket update of 3.1% reduced by a projected 0.4 percentage point productivity adjustment and increased by a 0.5 percentage point adjustment required by statute, according to CMS.
The proposed increase in operating and capital IPPS payment rates, partially offset by decreases in outlier payments for extraordinarily costly cases, will generally increase hospital payments in FY 2023 by $1.6 billion, CMS said.
According to the proposed rule, CMS is also suggesting to permanently apply a 5% cap on any decrease to a hospital’s wage index from the prior fiscal year as well as continue the low wage index hospital policy for FY 2023.
As it relates to revenue cycle, CMS is not proposing any new Medicare Severity Diagnosis-Related Groups (MS-DRG) for FY 2023, which means the number of MS-DRGs would be maintained at 767 for FY 2023. But, CMS says, it is discussing a request to reclassify laser interstitial thermal therapy (LITT) procedures under the MS-DRGs in connection with a proposal to create new procedure codes to describe LITT.
Regarding COVID-19, CMS is proposing a return to applying the most recent data available for rate setting, but with several modifications to account for the COVID-19 pandemic. CMS is also proposing to revise the COVID-19 hospital data reporting condition of participation adopted in 2020 so that hospital reporting would continue after the current public health emergency through April 30, 2024.
According to the proposed rule, CMS also wishes to establish new policies for future public health emergencies involving an infectious disease that would require hospitals and critical access hospitals to report certain data to the Centers for Disease Control and Prevention.
CMS is also proposing an ample number of changes to its quality reporting and value programs. For FY 2023, CMS proposes to overturn most of the measures in its Hospital Value-based Purchasing Program, and all of the measures in its Hospital-Acquired Condition Reduction Program. According to the proposed rule, this means hospitals would not experience FY 2023 payment adjustments under either program.
CMS is also proposing 10 new measures for the Inpatient Quality Reporting (IQR) program, including two perinatal electronic clinical quality measures.
According to the rule, under this proposal, CMS would award this designation to hospitals that report "yes" to both questions in the Maternal Morbidity Structural Measure, previously finalized for adoption in the Hospital IQR Program.
CMS invites the public to comment on all proposals. For more information on the rule, see the Federal Register. Comments are due to CMS no later than June 17.
The growing number of hospitalists that are billing Medicare for higher-severity encounters may be an important driver of rising hospital costs.
Hospitalists are more likely to bill at the highest level of clinical severity possible for their medical encounters for hospitalized Medicare patients compared with non-hospitalist who see similarly complex patients, according to a study published by the Journal of the American Medical Association.
In addition, this gap has been growing over time from the study's earliest samples from 2009 to the latest in 2018, the study said.
The study looked at more than four million Medicare fee-for-service Part A and Part B medical claims between the years of 2009 and 2018 and compared the high-severity billing between hospitalists versus non-hospitalists across initial, subsequent, and discharge encounters.
Hospitalists were found to have more of these medical encounters in the hospital, reaching roughly 775 of all encounters by 2018. According to the study, "high-severity billing increased over time for hospital encounters at higher rates for hospitalists than non-hospitalists," noting the differences "do not appear to be explained by patient complexity."
Additionally, "the increase in the number of hospitalists over time may be contributing to rising national costs related to hospital care," the study said.
When automating areas within the revenue cycle, the coding department is a common place to start. Bridgett Feagin shares insight on the medical center's automation preparation.
Automating areas of the revenue cycle is becoming more common place for many organizations and it's not unusual for automation to begin within the coding department. In fact, over the past two decades, medical coding automation has steadily increased across the healthcare industry as a means of coping with complex and increasing coding systems.
Connecticut Children's Medical Center, which has locations all across Connecticut ranging in more than 30 different specialties, is also working on automating its revenue cycle. The healthcare system is preparing to automate a part of its medical coding department to help enable precise and rapid medical billing and improve payment cycles.
Healthleader's recently got the chance to hear from Bridgett Feagin, Executive Vice President and CFO at Connecticut Children's, about its upcoming automation implementation and tips for other organizations looking to follow suit.
HealthLeaders: What created the need for this automation within your revenue cycle?
Bridgett Feagin: At Connecticut Children’s, we are always looking to improve our revenue cycle operations and one way is by identifying automation opportunities. We are working with the company Nym, which brings coding software that will decrease our lag times and improve time to bill with emergency department encounters. The software is able to complete a significant number of the encounters, thus allowing for our coders to focus on the complex cases that require human review and intervention.
HL: How exactly will you be using the software to streamline coding and billing, and how long will it take to implement such a large change?
BF: We are currently working with the company to design and build the system to capture our coding. This includes utilizing our facility-based, emergency-department point system to determine resource use and commonly captured procedures. The software is able to capture charges for the professional and facility, emergency-department level as well as any procedures performed and ensure all charges are accounted for.
We are anticipating a go-live later this summer, and once we go live, the automation will allow for less manual labor thus reducing the time for the bill to go out the door. Quicker billing typically accelerates the flow of cash-in.
HL: Which revenue cycle roles are responsible for overseeing this new process and what are their responsibilities?
BF: Our health information hospital coding and billingdepartments, along with the Nym team, are responsible for overseeing the process. Responsibilities include monitoring the anticipated impacts which include, but are not limited to, decreasing coding lag days across the organizationachieved by decreased emergency department coding volume, decreased hold days for billing, and improved overall accuracy rate.
HL: What does the future for your revenue cycle hold? Are you looking to automate other areas of the revenue cycle?
BF: The future of Connecticut Children’s revenue cycle holds increased payer partnerships, standardization, and automation. Over the past several years we have expanded simple visit coding to capture over 70% of outpatient encounters thus reducing the unnecessary review from a coder. This has allowed us to shift coders to meet the organization’s needs without having to increase staffing requirements. In addition, we are looking to further expand the Children’s Health Consortium to build synergies and create efficiencies with other independent children’s hospitals.
HL: What tips do you have for other organizations looking to automate certain departments within their revenue cycle?
BF: Always question the way things are being done.As technology changes, we must also change and adapt to remain relevant in today’s competitive healthcare industry. Accepting norms and not questioning them would cause us to remain stagnant and miss key opportunities to improve the services that we provide for our patients and families.
An organization's denial rate is a good barometer of its overall financial health and the soundness of its revenue cycle. A recent survey details how organizations stack up.
Although most organizations do a good job of tracking denials by reason, payer, and volume, they miss the mark when communicating information about appeals, appeal success rates, and how—or even if—denials and appeals data is passed on to payer contracting staff, according to the results of HCPro’s HIM Briefings’2022 Denials Management Survey.
The battle against denials gained new urgency due to the financial fallout of the COVID-19 pandemic. Revenue shortfalls, combined with staff and budget cuts, meant it was crucial for revenue cycle leaders to make the best use of available resources, make strategic decisions, and protect appropriate revenue.
The majority (77%) of respondents in the HCPro survey indicated their organization dedicates certain revenue cycle staff and resources to denials management: 36% have a denials management team, 28% have a denials management department, and 12% have a denials management program.
Although a formal denials management department might be out of reach for a smaller organization, a dedicated team or program will still produce good results and can make strategic use of resources.
Denials management is a truly interdisciplinary task, and a robust denials management program draws in experts from a variety of departments of the revenue cycle.
To learn more, the survey asked respondents to indicate what departments are responsible for denials management by selecting all that apply from a list.
HIM was the most common answer, with 43% of respondents reporting that department is responsible for denials management. Other common contributors to denials management include patient financial services (PFS)/billing (39%), revenue integrity (36%), and denials management (34%).
Some (21%) respondents selected “other” and shared additional departments and professionals their organization draws into denials management, such as utilization management/utilization review, CDI, and case management.
Denial rates and types
Organizations need to know what claims are being denied and how many denials they receive. This data is the foundation of a denials management strategy, answering the who, what, when, where, and why of denials.
Most (70%) respondents indicated they track denials by reason/type. To gain insight into that process, respondents were asked to indicate what departments are responsible for this task by selecting all that apply from a list. The top three responses were as follows:
·Denials management (44%)
·HIM (32%)
·PFS/billing (32%)
Thirteen percent selected “other” and noted additional departments involved in tracking denials, including CDI and case management.
However, some organizations are still struggling to collect data. “We do not have a good tracking system,” one respondent said.
So, what are some of the common denial reasons/types organizations are seeing? To find out, respondents were asked to rank denial types by whether they see a high, medium, or low volume of them.
Unsurprisingly, medical necessity led the pack with 20% of respondents reporting a high volume of this denial type. Missing authorizations are also a pain point, with 12% of respondents indicating they receive a high volume of these denials.
What’s the lowest volume of denials? Charge entry/CDM error: 45% of respondents ranked this denial type as low.
Overall, although most organizations are tracking their denials, they may not be communicating the full picture. More than half (67%) of respondents said they don’t know what their organization’s average denial rate is.
The AHA and AMA are pushing a court to put an end to the government's 'illegal interpretation' of a piece of the bill as soon as possible.
The American Hospital Association (AHA) and the American Medical Association (AMA) urged the D.C. District Court to act as quickly as possible to vacate certain provisions they are challenging in the government’s interim final rule on surprise medical billing.
For background, organizations have filed several lawsuits challenging how the HHS created an arbitration process for hospitals, doctors, and insurers to settle disputes over out-of-network medical bills under the No Surprises Act, which took effect January 1.
In February, a federal court in Texas ruled in favor of the Texas Medical Association and decided it was mistaken in its decision to instruct mediators to give past contracted rates between insurers and providers extra weight compared to other factors during the independent dispute resolution process.
"This decision is a major victory for patients and physicians. It is also a reminder that federal agencies must adopt regulations in accordance with the law," Diana Fite, MD, immediate past President of the Texas Medical Association said in a statement at the time.
The AHA and AMA are looking for more, though, as the groups have stressed that the court should not wait for HHS to issue a final rule before vacating these provisions.
HHS “have neither acquiesced to the decision of the Eastern District of Texas vacating portions of the September rule, nor suggested any intent to abandon their interpretation of the No Surprises Act in any final rule,” AHA and AMA said in a brief filed with the court.
“A decision from this court can put an end to the government’s illegal interpretation once and for all. As such, Plaintiffs respectfully ask the court to act as soon as practicable,” the AHA and AMA said.
Stemming from litigation, HHS says it has reduced a significant portion of its backlog of Medicare appeals.
In response to a 2018 federal court ruling in favor of hospital plaintiffs, by the end of the first quarter of 2022 HHS has reduced almost 88% of its backlog of Medicare appeals at the Administrative Law Judge (ALJ) level, according to a status report the agency provided to a federal court.
Still, 52,641 appeals remain pending at HHS' Office of Medicare Hearings and Appeals (OMHA), which is a reduction from 426,594—the total number of appeals identified in the original court order.
According to the ruling, HHS has until the end of fiscal year (FY) 2022 to eliminate the appeals in the Medicare appeals backlog. The court order gave HHS a series of goals to meet since the initial ruling, all of which have been met by the agency.
For years prior to the 2018 court ruling, HHS' OMHA was unable to keep up with the number of cases it received, leading to a mountainous backlog of pending appeals.
Thanks to a boost in appropriations from Congress, OMHA hired about 80 more ALJ staff, hoping to enable the office to catch up by the end of this year.
Although HHS is on schedule to meet its FY 2022 deadline, the court originally ordered HHS to eliminate the backlog by December 31, 2020. At the time, the American Hospital Association (AHA) accused HHS of dragging its feet. The AHA said the backlog hindered the ability of healthcare companies to do their work.
"Ending the backlog several years hence does not allow hospitals to upgrade equipment, repair aging facilities, or improve patient care now," AHA wrote in a 2018 federal court filing.
CMS has multiple, clearly defined levels of audits and appeals, and provider organizations can typically take an appeal to progressively higher levels—all the way up to the ALJ level.
The American Medical Association (AMA) is 'deeply concerned' by MedPAC's recent report recommendation and says it would 'imperil' patient access and quality care.
Following the release of MedPAC's March report to Congress, the AMA urged Congress to revise the Medicare Physician Fee Schedule (MPFS) to include stable, annual payment updates that keep up with inflation and practice costs.
In a letter to congressional leaders, the AMA stated that it is "deeply concerned" by MedPAC's recommendation to continue the freeze in Medicare physician payments in 2023 despite rising inflation in medical practices, statutory payment cuts to physicians, and fiscal uncertainties related to the COVID-19 pandemic.
Overall payment to Medicare physicians has decreased 20% from 2001–2021, when rates are adjusted for inflation, according to data from the advisory committee.
The AMA says this will influence provider organizations' patient experience, as the costs to practice medicine would "imperil patient access to high-quality care."
The medical association also cited a 2021 JAMA study, which says it costs an organization an estimated $12,811 and more than 200 hours per physician per year to comply with CMS' Medicare Merit-Based Incentive Payment system. "Most physicians still have not had opportunities to transition to value-based Medicare Advanced Alternative Payment Models (AAPM), as Congress intended, and have not been eligible for the annual incentive payments for AAPM participants," the AMA said.
The AMA also claims that the payment freeze is impossible to justify when viewed against a projected 8% payment increase for Medicare Advantage plans in 2023.
Related: CMS Cuts Medicare Payments to Docs, Extends Telehealth Payments
Leaders at Hutchinson Clinic share their experiences on outsourcing revenue cycle management processes to ensure the success of the organization.
Running an effective revenue cycle is no easy feat. That is why leaders at Hutchinson Clinic in Hutchinson, Kansas, knew they had to outsource some of its revenue cycle processes to ensure the success of their organization.
There are many areas within the revenue cycle that benefit from being streamlined, from better patient access to less coding denials, but one area of focus that is becoming more common is the need to reduce accounts receivable days in the billing department. Outstanding accounts receivable in healthcare are one of the most critical issues for an organization as they affect a hospital's bottom line.
Common benchmarks for accounts receivable days in healthcare include:
High performing: 30 days or less
Average performing: 40 to 50 days
Below average: 60 days or more
As the accounts receivable days for Hutchinson Clinic were hovering around average, Mike Heck, CEO, and Dashun Monk, CFO, knew the organization needed to reduce these days and rework the management of denied claims, among other inefficiencies, in order to prosper.
After brainstorming, their team realized that having an experienced, outsourced group of professionals working behind-the-scenes to handle the complexities of revenue cycle management was the missing piece that Hutchinson Clinic needed.
Heck and Monk recently spoke about their journey as leaders at the largest multispecialty clinic in Kansas and the three lessons they learned in enlisting a third party to help with its revenue cycle management.
Lesson 1: Realize the need for revenue cycle management expertise
Hutchinson Clinic is home to 535 employees, 63 physicians, 95 providers, and over 30 outpatient specialties. These include specialty ancillary services such as an ambulatory surgery center, physical therapy, radiology/diagnostic imaging, endoscopy center, and dietitian services.
Despite a culture at Hutchinson Clinic known for its convenience and patient satisfaction, there remained one lingering problem: a lack of an experienced revenue cycle management team that could ensure that basic financial responsibilities were being met efficiently and correctly.
In 2018, after a year of research and extensive interviews with third-party vendors, Heck and Hutchinson Clinic's board of directors brought on CareCloud (the parent company of Meridian Medical Management) to help with a variety of deliverables, including:
Accounts receivable follow-up
Charge entry
Claims coding
Denial feedback on coding
Patient posting
Physician education
"To me, it came down to leadership," Heck said. "We needed the right level and technical ability of leaders in the revenue cycle management arena. We couldn't establish consistency before they came on board."
Once Hutchinson Clinic's new revenue cycle management team ramped up, the positive results were seen fairly quickly across the board.
"Aside from the fact that we have drastically improved the financial stability of accounts receivable, the biggest benefit that I didn't foresee has been the ability to apply a larger trained workforce to certain projects," Heck said.
In addition to outsourcing an experienced and robust staff, Hutchinson Clinic introduced a healthcare analytics and business intelligence platform. The technology is used to manage data across the organization, which in turn, closes care gaps, increases revenue, and improves overall workflow within the organization.
Lesson 2: Keep patient experience in the forefront
While having an experienced partner was one piece of the puzzle, equally important to the Hutchinson Clinic team was the ability to find which methods worked the best for the organization internally, while still working to improve the patient experience.
The clinic has a team of roughly 60 in-house revenue cycle management employees who needed onboarding and training before all processes could be improved. At the same time, Heck was adamant that this process didn't disrupt continuity of care for the patients stretched across Hutchinson's large geographic footprint.
"The beauty of working with a partner like this is that they're handing all of the heavy lifting behind the scenes, enabling us to focus on patient engagement, provider recruitment, and retention," Heck said. "We've recently seen a positive response from the community as a result."
Being that Hutchinson Clinic is the primary source of care for those in Reno County, it's imperative that patient engagement is at the head.
"We see quality care and patient satisfaction as our number one responsibility," Heck said. "Having a stable revenue cycle management ensures that bills are getting out the door and payments are being made, which frees our team up to focus on other areas."
Echoed Monk, "I have peace of mind knowing that our revenue cycle, specifically the coding, accounts receivable, and posting components are happening correctly and in an efficient manner."
Lesson 3: Listen to staff and community stakeholders
Making an important change in revenue cycle management has a large effect on everyone involved with an organization, and one thing Hutchinson Clinic says it has gained through this experience is the importance of knowing their audience. In the case of its current partnership, the audience is twofold: the staff and the patients in the community.
Letting staff and patients know that you are listening to their questions and concerns when implementing a large change such as outsourcing is any easy way to help aid in a positive transition.
"We didn't want to sacrifice what was important to us and our community," Heck said. "When we're talking to our physicians about their pain points, such as coding or compensation, it's important for them to know we're listening. Same goes for the patients—we need to be making their lives easier, not harder."
Seeing results
While bringing in a third-party vendor isn't viable for every organization, Heck and Monk say there are takeaways that can be applied from their experience to help other health system executives accomplish their goals. These include:
Identify gaps. Every organization has areas they want to improve (e.g., reducing number of accounts receivable days, increasing cash flow).
Ask for help. "Find a subject matter expert on revenue cycle management and don't be afraid to ask tough questions," Monk said.
Change takes time. "It took us a year to identify a solution for outsourcing our revenue cycle management needs. It also takes time for a new partner to learn your language. Don't rush the process," Heck said.
Since outsourcing its revenue cycle management processes, Hutchinson Clinic has seen a reduction in accounts receivable days from 38 days to 33 days, thus shortening the time it receives payments from the insurance carriers. This five-day improvement of accounts receivable days is a 15% improvement for the organization. On top of this, the aged accounts receivable days of greater than 120 days has been reduced by 3% at Hutchinson Clinic.
"The processes put in place before outsourcing weren't moving us in the right direction," said Monk. "Today, we're meeting industry standards in terms of reducing accounts receivable days, ensuring doctor's compensation, and the efficient reworking of denied claims."
