The spreading contagion in the nation's credit markets has infected healthcare finance in Wisconsin, sending interest rates on some hospital bonds as high as 18 percent. Milwaukee-based Ministry Health Care Inc., for example, will have to come up with an extra $700,000 a month to pay interest on bonds used, among other things, to build a new hospital in Weston.
It will cost Hackensack (NJ) Medical Center more than $16 million to escape the collapsing auction-rate securities market, a tab that offers a preview of the expenses scores of other hospitals snagged in the market turmoil can expect to face. Hackensack won approval for a plan to refinance $147 million in auction-rate bonds that have seen interest rates double this month. Records show the refinancing will cost Hackensack about $7.1 million in professional fees and another $9 million for fees to unwind a related interest-rate hedging deal.
Some say the recent defeat of two MRSA bills in Maryland leaves thousands of hospital and nursing home patients more vulnerable to the deadly pathogen. Michael Bennett, director of the Coalition for Patients Rights said he was "shocked, befuddled and dismayed at the duplicity of the healthcare leadership and how they're responding to this crisis." According to the Maryland Hospital Association, however, the legislation was flawed.
The Medical Society of Milwaukee County is developing a database that will allow doctors to check whether their patients have gotten prescriptions for potentially addictive painkillers from anyone else. In time, the medical society wants to bring pharmacies on board to flag doctors who prescribe large amounts of the drugs.
Richard Miller, the president and CEO of Virtua Health and the newly installed chairman of the New Jersey Hospital Association, has attacked Gov. Jon Corzine's proposed budget, labeling it a "divisive document" that will end up pitting "one worthy institution against another." Miller predicted the more than $100 million in cuts would lead to "a rash of unplanned hospital closures" and create a "healthcare access crisis" affecting New Jersey residents.
After heart patients leave intensive care, about 25 percent of those patients will become unstable again in the step-down unit--putting pressure on the nurses there to keep them from deteriorating. But new technology may tell nurses which patients are vulnerable to reversals much earlier than in the past. The system, made by Indiana-based OBS Medical, automatically monitors vital signs and issues an alert when a patient's heart rate or breathing starts to get out of control.
USMD Hospital at Fort Worth (TX) has officially opened for business. The facility is doctor-owned, and will cater to adults and children. USMD will focus largely on outpatient procedures at first, but overnight patients are expected to get treatment there within the first few months of operation.
Editor's note: This is a primer on maintaining compliance and ensuring accurate reimbursement in 2008. This is the first of two parts.
Emergency department revenue cycle management has never been more critical than in 2008. With the advent of evaluation and management visit guidelines in the 2008 OPPS final rule, composite APCs for observation services, new HCPCS and revenue codes for trauma activation, and CMS' recent clarification of critical care services, coding, billing, and coverage requirements continue to escalate. The skills of physicians, nurses, case managers, HIM, chargemaster staff members, and compliance staff members come into play for optimal revenue cycle management in the ED.
Revenue cycle managers in 2008 should focus on several critical areas in the ED, as well as observation patients and ED patients admitted to the hospital. Key concerns for each section are:
ED Incident-to coverage Every revenue cycle manager needs to understand that coverage comes first, and the ED is no exception. "Incident-to" requirements apply to hospital outpatient services. You can find these requirements in 42 CFR 410.27 and in Chapter 6, Section 20.4.1, of the Medicare Benefit Policy Manual.
Any service provided in the ED must meet the following four salient requirements for coverage under the Medicare program:
The service must be furnished by a hospital
Services must be furnished "on a physician's order"
Services must be furnished under the supervision of a physician
There must be ongoing physician involvement in the care of the patient
These requirements are often confused during ED visits. In short, the patient must receive face-to-face physician care in order for the service to be covered.
There has been significant discussion regarding how or whether a hospital can bill for the expenditure of facility resources when a patient leaves the emergency service area without seeing a physician. Arguably, these visits do not meet Medicare incident-to coverage guidelines and therefore are noncovered services. Examples of these types of visits are triage-only and patients who leave prior to treatment.
Coding and charging for ED visits In 2007, CMS divided ED visits into two types: Type A and Type B. Medicare defines a Type A ED as one that is available to provide services 24 hours per day, seven days per week (this requirement is also listed in the CPT Manual), and which also meets one or both of the following requirements related to the Emergency Medical Treatment and Active Labor Act definition of a dedicated ED:
It is licensed by the state in which it is located under the applicable state law as an ER or ED
It is held out to the public as a place that provides care for emergency medical conditions on an urgent basis without requiring a previously scheduled appointment
A Type B ED is identical to a Type A in that it also must meet the EMTALA requirements and DED definitions. The difference is that a Type B ED is not open 24 hours per day, seven days per week. Therefore, the key determinant is the time at which the facility department is scheduled to be open.
You can find further information about the definitions of Type A vs. Type B EDs in the 2007 OPPS final rule (Federal Register, Vol. 71, No. 226, pp. 68127-68145). You can also find additional clarification in the FAQ section of the CMS Web site.
CMS created five new HCPCS codes to bill Type B ED visits: G0380-G0384 (G0380 is a level one visit, and G0384 is a level five visit). Type A ED visits continue to be represented by CPT codes 99281-99285.
Under the OPPS, CMS has directed facilities since 2000 to develop and consistently apply an E/M methodology that accurately reflects the resources expended by the facility. During that time, several organizations, such as the American College of Emergency Physicians, the American Health Information Management Association, and the American Hospital Association, have created templates and guidelines to move forward in the creation of a national-level determination methodology.
However, CMS in the 2008 OPPS final rule stated that it does not believe that a single, national E/M model is appropriate at this time. CMS did say it feels that hospitals have achieved this requirement with their own internally developed systems. CMS continues to explore the potential for national guidelines; in the meantime, it listed 11 E/M criteria that hospitals should follow. The coding guidelines should:
Follow the intent of the CPT code descriptor in that the guidelines should be designed to reasonably relate the intensity of hospital resources to the different levels of effort represented by the code
Be based on hospital facility resources and not on physician resources
Be clear to facilitate accurate payments and be usable for compliance purposes and audits
Meet the Health Insurance Portability and Accountability Act requirements
Only require documentation that is clinically necessary for patient care
Not facilitate upcoding or gaming
Be written or recorded, well-documented, and provide the basis for selection of a specific code
Be applied consistently across patients in the clinic or ED to which they apply
Not change with great frequency
Be readily available for financial intermediary (or, if applicable, Medicare administrator contractor) review
Result in coding decisions that could be verified by other hospital staff, as well as outside sources
The tone of this message clearly indicates the potential for future E/M audits by FIs or Medicare administrator contractors. Additionally, the message gives guidance that the facility should audit the coding assignment of the level of care (e.g., CPT codes 99281-99285). It further states that the coding guidelines should not require additional effort in regard to documentation but should be consistently applied and not facilitate gaming or upcoding.
Many facilities still lack well-written guidelines. The result is that frequently within the same department, personnel do not consistently apply the guidelines. This results in inaccurate code assignments. Revenue cycle management committees should review these 11 points to ensure that their ED level assignments comply with these guidelines.
William Malm is practice director of revenue cycle management at HCPro, Inc. the parent company of HealthLeaders Media, in Marblehead, MA. He may be reached at revenuecyclemanagement@hcpro.com.
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Got any auction-rate securities in your hospital's debt portfolio? If you do, you're probably not getting a whole lot of sleep these days. Who thought the financial dominoes that kicked off with the subprime housing crisis would fall this far? As the credit markets have seized up one by one, many plain vanilla debtors like hospitals and municipalities whose debt ratings haven't changed and who pay their bills on time are facing huge--though hopefully temporary--unexpected increases in debt service costs through no fault of their own. Specifically, they're facing these problems because investors, investment banks and bond insurers failed to appropriately account for risk in other areas of the debt markets.
"It's a problem," says one hospital system chief financial officer I spoke to recently who has about $400 million in debt though auction rate securities backed by Financial Guaranty Insurance Company--a bond insurer whose paper no one wants to buy. "Our interest rates have skyrocketed," he says. "We're all spending a lot more in interest right now, and we're all trying to get to market as fast as possible to refinance everything."
A key characteristic of auction-rate debt instruments is that they must periodically be re-sold in a Dutch auction. When the market is working right, institutional investors bid on debt issued by cities and hospitals based on credit ratings and--sometimes--enhanced credit ratings provided by bond insurers that stand behind those debt issuers. The investor that's willing to take the lowest interest rate wins the auction. This is an active auction market. The bonds are re-bid, typically, every seven, 28 and 45 days. The problem is, no one trusts that so-called bond insurers are able to make them whole in the unlikely event of a default, therefore no one is bidding. That means the borrower has to pay the default rate that's listed in the bond contract with the investment bank, which is extremely high--in some cases, up to 17 percent. Those kinds of rates haven't been seen in more than a quarter century.
Many hospitals and municipalities used auction rate debt until very recently to diversify their debt portfolio and manage their interest rate risk--or so they thought. For the most part, hospitals and municipalities are extremely safe bets. But because they relied on rating agencies and bond insurers to guarantee repayment, they're paying the price for those entities' mistakes outside the municipal debt markets. No one believes they can actually "insure" in case of default. Truth is, because of mistakes they made with risk assessment in a totally unrelated market--home mortgages--they can't.
In some cases, hospitals that have stellar repayment histories and credit ratings are paying as much as 15 percent interest on bonds that were generating perhaps 5 percent before the credit crisis hit. No one--not the bankers, not the borrowers, not the investors--thought this risk would ever come to pass. It's a doomsday scenario, but it's one that's going to cost hospitals big-time, at least in the short term.
"I am sure it feels like hitting an iceberg," says Arlan Dohrmann, an investment banker with Stern Bros. & Co., whose firm doesn't deal in these securities. "It's a risk that was there but not totally visible."
"I'm surprised I'm not reading more about it," the CFO I interviewed says about hospital debt, "because it's taken over all the time of accountants, investment bankers and CFOs."
Give it time. Just give it time.
Editor's note: Does your hospital or health system have any auction-rate debt? If so, I'd love to hear from you about how you're navigating this storm. Please e-mail me at the address below.
After eight years of unregulated insurance company control over health insurance cost increases, the Washington state Legislature has returned control of healthcare premium increases to the state insurance commissioner. A bill has granted the insurance commissioner oversight of rates in the individual policyholder market, which has been hit the hardest by insurance rate increases.
