HIM in critical spot for outpatient contracting
Your data and contracting roles become key
The growing use of the APG system and the general movement toward outpatient care will require new contracting insights that need the stamp of health information managers.
If your hospital does business with private insurance carriers that are implementing an APG system, be prepared for a drop in revenue, says Jeff Feasel, director of patient accounts for the Medical College of Ohio in Toledo. When Blue Cross/Blue Shield of Ohio instituted an APG system, his system experienced a 10% drop in reimbursements, he says.
The Health Care Financing Administration originally designed the APG system as a cost- savings move, and that’s the same reasoning some insurance companies are adopting it, including Blue Cross/Blue Shield of Ohio.
"Blue Cross didn’t adopt APGs so they could pay us more," Feasel says wryly. The truth of this is shown in the impact on the hospital’s reimbursement, revealed by its spreadsheet analysis.
To compensate for this potential revenue loss, Feasel recommends hospitals lobby for what Iowa did when it adopted an APG system for its Medicaid program. Legislators there included a "hold harmless" provision that protected hospitals for two years from losing more than 5% of their reimbursements under Medicaid APGs. However, in Ohio it has been up to each hospital to negotiate a similar "risk corridor" with Blue Cross. Feasel recommends that hospitals make sure to include strong provisions like this in their contracts with payers.
Hospitals also should recognize that as they expand their outpatient clinics into new geographic areas they may be dealing with an unfamiliar population. That’s why health information managers, the keepers of hospital data, need to help their hospitals analyze these new demographics, cautions Sarah O’Gara, MPA, RRA. O’Gara is corporate data manager with Healthcare COMPARE, a managed care organization (MCO) in Downer’s Grove, IL.
The problem hospitals face in dealing with an MCO is that they often know less about the population they serve than the MCO, and they blindly enter into contracts without a true understanding of the cost of inpatient or outpatient care, O’Gara says.
"Contracts have some very specific language about which services they will and won’t pay for. The contract is negotiated in English, for example, for a bone marrow transplant. But then the MCO translates it into CPT codes and ICD-9 codes, which are very specific. If the contract is negotiated by hospital lawyers or executives who don’t understand these codes, they don’t have a clue what they are committing to," O’Gara says.
Providers generally assume the risk in managed care contracts agreeing to provide care to an enrollee for a fixed number of dollars per month in capitated arrangements, regardless of how much care is involved. So it is crucial that they understand the true cost of care. For example, outpatient treatment may necessitate several visits to a clinic, for diagnosis, checkup, and follow-up if there are complications. The hospital’s clinical coding database can provide insight into the true cost of care.
"The health information manager should be participating in and reviewing contracts with MCOs," O’Gara stresses. "They need to take the language of the contract and translate it into ICD-9 and CPT codes, then give some recommendations to the hospital committee about whether the hospital will make money under the arrangement. If people don’t look at the data in that way, they will start to lose money and go out of business."
The requirements of managed care plans also affect what goes into outpatient records, notes Jeanne Kistner, RRA, director of health information services at Oregon Health Sciences University in Portland.
"Managed care payers come in and audit cases, looking for specific criteria in the record. So physician practices are having to be much more careful to document every detail of what is being done in order to be reimbursed," she points out.
"A lot of facilities are being chosen or not chosen by managed care plans based on how successful they are at health maintenance and prevention activities, like mammograms for women over age 50 and other types of screening. An ambulatory care facility needs to show that it’s doing a good job and have the backup documentation in the record."
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