A New Model to Improve Financial Outcomes for Facilities

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By Scott McCall and Michael J. Kessler

You are familiar with the concept of coordinated care for better patient health outcomes.  What you might not be familiar with, but what this article will describe, is a new approach to help healthcare facilities achieve better financial outcomes.  For simplicity, we’ll refer to this model as Coordinated Consulting.  The underlying concept for Coordinated Consulting is similar to coordinated care:  take a holistic approach to improving the condition of your facility by coordinating the business consultants working with the facility to improve operations.  The goal of coordinated consulting is improved outcomes and results.

The Primary Challenge:  Reimbursements

In recent years most facilities have seen their incomes decline as a result of Medicare and Medicaid reductions.  The first major reduction came in the fourth quarter of 2011, with Medicare reimbursements reduced by 11.1%.  Federal and State reimbursement modules for skilled and long-term care nursing services have not only become more complex in recent years, they have not kept up with inflation. And although Medicaid reimbursement methodologies vary from state to state, the clear trend nationally is budgeted increases that don’t outpace inflation, or rate freezes altogether.

These reimbursement reductions have also contributed to staffing challenges just when Nursing Homes are working to fill nursing full time equivalents.  And although there is no single answer, there are ways facilities can navigate this complex landscape.   The first step is to evaluate your current operations for opportunities to implement process improvements for increased efficiencies.

Is the therapy department capturing all the Medicare Part B revenue that is currently possible?  If you have a large long-term care population, there is possibly additional Medicare Part B therapy revenue that can be captured.

Have the proper procedures been worked out to make sure prescription drugs are covered by the Medicare Part D formulary?  This issue alone could add up to tens of thousands of dollars or even hundreds of thousands of dollars for larger facilities.

Are Medicare bad debt logs properly completed for uncollectible Medicare Part A Co-Insurance?  

Are non-dual eligible residents reported on the bad debt logs for reimbursement?  

The next step, from a clinical standpoint, is determining if the right policies and procedures are in place for proper and accurate MDS documentation.  Case-Mix Index (CMI) drives reimbursement in certain reimbursement modules, so this is extremely important.   Documentation also drives Medicare RUG scores, so facilities should benchmark their Medicare RUG scores to comparable facilities, to identify revenue enhancement opportunities.

The New Challenge:  Healthcare Reform

After several years of debate and legal challenges, it would appear that healthcare reform is here to stay.  This new set of rules creates a new set of challenges for healthcare facilities that manage large staffs comprised of full-time, full-time equivalent, part-time and variable hour workers.  These designations are important and must be managed under new rules that outline a timely and complex process for establishing, managing and reporting employment status and measurement periods.    HR departments are charged with more complex compliance and reporting responsibilities under the Affordable Care Act (ACA), but in most cases will not be given additional resources to keep pace with these new administrative obligations.

A timely example of new administrative responsibilities is the Exchange Notice that must be given to all Employees by October 1, 2013 – as well as all employees hired after this date, within 14 days of their start date.  If a facility offers similar coverage to all employees, the distribution of this notice is the same across all employees with one Exchange Notice.  However, if the facility has several classes of employees for whom coverage and cost varies, different versions of the Notice, specific to those classes, must be prepared and distributed according to those classes.  Preparing this notice and responding to the questions it will prompt is just a small example of how new compliance and reporting responsibilities can strain limited administrative resources.

When you add to the administrative burdens the new taxes and costs of traditional, fully-funded, defined benefit group health plans under ACA, it is easy to understand why facilities are facing tough decisions about how to manage the costs of their group health insurance plans while offering employees meaningful benefits.  To offset these new costs and administrative responsibilities, facilities must begin to consider new options for how they administer, fund and define group health plans to remain competitive and to maximize their insurance cost investment.

Coordinated Consulting for Improved Outcomes

With new and changing challenges across a variety of fronts, facilities are looking for affordable ways to improve operational efficiencies, patient outcomes and financial performance.  These fronts are inter-connected and changes to one area impact other areas, either positively or negatively.  Unfortunately, with reimbursement cuts and added compliance responsibilities, most facilities have had to cut back on the consulting services that they once employed to help them overcome complex, cross-departmental challenges.

Fortunately, a new business model is emerging to help facilities access and pay for valuable consulting services.  Not only does this new model provide financial advantages, it delivers operational advantages because it offers a team of experts working in a coordinated fashion to help the facility implement targeted and priority action items to improve its performance.

The HDH Group is taking the lead to create this new model, helping facilities overcome complex business challenges by creating teams of industry experts to help improve processes across the organization, including: billings; reimbursements; compliance; employee benefits and administration; safety; workers’ compensation; risk management; loss prevention; and training.

Serving as the business team leader, HDH Group is implementing this new business solutions model to extend a facility’s typical insurance investment to go beyond insurance and include priority process-improvement initiatives.   The result for facilities is a more affordable and connected strategy for improving and protecting operations, while creating a safer environment for residents and employees.

Conclusion

Skilled and long-term care facilities are looking for better ways to improve how they manage their operations to overcome reimbursement and compliance challenges.  The HDH Group is working with industry experts like Carbis Walker and others to deliver advanced business solutions that meet facilities’ operational and financial needs.

The HDH Group’s innovative Coordinated Consulting solutions model is designed to extend a facilities’ insurance investment to deliver more than insurance by including targeted business process improvements.  This cross-functional model is focused on reducing risks, improving efficiencies and safety, lowering costs and claims, and maximizing investments in human capital management in order to attract and retain productive staff, which together work to improve the overall operations of the facility and its financial outcomes.

Scott McCall is Vice President, Healthcare of HDH Group. Michael J. Kessler, CPA, is Manager, Healthcare Services of Carbis Walker, LLP. For more information, contact Scott McCall of HDH Group at 800-434-7760 or scott@hdhgroup.com.