Category: Academy

From Startups to Shocking Bills: The Realities of Navigating Healthcare and Value-Based Care

In the latest episode of the VBCA Podcast, we explore the complexities, frustrations, and sometimes absurd realities of today’s healthcare landscape. This episode isn’t just about theory; it’s a hard-hitting look at the challenges faced by healthcare startups, providers, and even patients themselves—all in the quest for a healthcare system that truly serves people. If you’ve ever questioned the current system or wondered why value-based care (VBC) is so difficult to implement, this episode is a must-listen.

Why Starting a Healthcare Startup is Harder Than It Seems

Starting a healthcare company sounds like a noble mission, especially when focused on value-based care. After all, who wouldn’t want a model that emphasizes quality over quantity? But the reality isn’t as rosy as it sounds. Many startups rush into VBC with dreams of transforming care, only to find themselves facing an uphill battle. The biggest misconception? Thinking that patients will flock to them purely based on reputation or technology.

To succeed, startups need more than just a slick business model—they need real patient engagement. Building connections within communities, establishing referral networks, and fostering partnerships are essential. Without a solid patient base, even the best VBC models fail to achieve the steady patient volume needed for success.

Balancing Volume with Quality in Value-Based Care

For those who do manage to attract a patient base, a new challenge emerges: maintaining high-quality care as patient numbers grow. Healthcare isn’t just about volume; it’s about balancing that volume with consistent quality. If patient care starts slipping, the very foundation of VBC is compromised. Achieving this balance requires disciplined management and a commitment to quality, both of which are essential for healthcare startups looking to stand out in the competitive VBC arena.

Tough Calls in Healthcare Negotiations: Lessons for Providers

The episode also dives into real-world payer negotiations and the tough decisions healthcare leaders face. From the CFO of a mid-sized hospital wrestling with low reimbursement rates to a rural hospital negotiating pay-for-performance contracts, the insights shared shed light on the gritty details of healthcare finance. Here’s a breakdown of key strategies discussed:

  1. Highlighting Value Beyond Quality – When negotiating, healthcare leaders are encouraged to bring in cost efficiency data alongside quality metrics. Sometimes, emphasizing both quality and affordability can be the leverage needed to secure better contracts.
  2. Navigating Unilateral Amendment Clauses – Contracts with clauses that allow payers to unilaterally change terms with short notice can lead to unpredictable financial swings. Leaders are advised to push back, negotiate for mutual amendment clauses, and, if possible, extend the notice period to at least 90 days.
  3. Making Pay-for-Performance Realistic for Rural Providers – For hospitals in resource-limited areas, pay-for-performance models should reflect realistic goals. Negotiating for adjusted quality metrics, phased implementation, and financial support can help rural providers meet targets without compromising care.

Should This Really Be Happening? Healthcare Stories That Make You Question the System

The podcast’s new segment, “Should This Really Be Happening?” delves into outrageous and, frankly, unbelievable healthcare experiences. These stories highlight how far our healthcare system has to go in terms of fairness and functionality. Here are some of the most eye-opening moments:

  • The $18,000 Baby Nap – After a minor scare, a family’s ER visit for their baby turned into an $18,836 bill for a “trauma response fee”—despite no trauma occurring. The fee was eventually waived, but not without a fight. This case underscores the seemingly arbitrary nature of hospital billing, especially in emergency situations.
  • Denied Emergency Treatment for a Non-Emergency – A woman experiencing severe pain, worried it could be appendicitis, ended up with a $12,000 bill when her insurer denied coverage, claiming the situation wasn’t an emergency. This story raises serious concerns about how “emergency” care is determined and how patients are penalized for erring on the side of caution.
  • Life-Saving Treatment Denied as “Unnecessary” – In a shocking denial, a family’s insurance refused to cover emergency epinephrine and steroids for a child’s life-threatening allergic reaction, claiming it wasn’t “medically necessary.” This story exemplifies how flawed insurance decisions can be, even in cases where lives are at stake.
  • Algorithms that Deny Care – Finally, an investigation into Cigna’s automated system reveals that some insurers are using software to deny claims at unprecedented speeds. In this case, an automated system processed and denied 50 claims in just 10 seconds, affecting patients needing essential medications for conditions like asthma and heart disease. This automated denial system raises major ethical questions and illustrates the dangers of letting algorithms override physician input.

Why This Matters

Episodes like this one underscore the urgent need for transparency, reform, and accountability in healthcare. From startup challenges to unfair billing practices and questionable insurer algorithms, it’s clear that significant work is needed to ensure that the healthcare system serves patients first.

The stories shared are a call to action for anyone involved in healthcare, whether as providers, patients, or innovators. They remind us that while value-based care holds promise, the journey is fraught with obstacles. However, by tackling these issues head-on and advocating for fairer practices, we can work toward a system that truly values quality, accessibility, and patient outcomes.

Listen Now: Ready to hear the full stories and gain insights into making healthcare better? Don’t miss this powerful episode of the VBCA podcast.

Transforming Healthcare Negotiation: The ‘Getting to Yes’ Approach

Introduction

In the intricate dance of healthcare negotiations, achieving a win-win outcome can seem like a daunting task. Whether it’s negotiating agreements between health plans and providers, determining reimbursement rates, or collaborating on value-based care initiatives, the principles of effective negotiation remain crucial. One seminal work that sheds light on this process is “Getting to Yes: Negotiating Agreement Without Giving In” by Roger Fisher, William Ury, and Bruce Patton. This book offers timeless strategies that can transform the negotiation landscape, particularly in the healthcare business context.

Negotiation is a Fact of Life

Negotiation is ubiquitous in healthcare. Providers and payers constantly negotiate to align their interests, share risks, and enhance patient care. However, the stakes are high, and the outcomes directly impact patient access to care, provider satisfaction, and financial sustainability.

The Problem: Don’t Bargain Over Positions

Fisher, Ury, and Patton argue against bargaining over positions, which often leads to unwise agreements and strained relationships. In healthcare, this can translate into protracted disputes over contract terms, pricing, and service levels. For instance, a health plan insisting on deep discounts while a provider demands high reimbursement rates can lead to a stalemate, ultimately affecting patient care delivery.

Principled Negotiation: A Better Way

The authors propose principled negotiation, a method that focuses on merits rather than positions. This approach is particularly relevant in healthcare negotiations, where the goal is to achieve sustainable agreements that benefit all parties involved, including patients. The four key principles are:

  1. Separate the People from the Problem
  2. Focus on Interests, Not Positions
  3. Invent Options for Mutual Gain
  4. Insist on Using Objective Criteria

Separate the People from the Problem

In healthcare negotiations, emotions can run high, especially when discussing sensitive issues like reimbursement rates or care quality standards. By separating the people from the problem, negotiators can address the substantive issues without damaging professional relationships. This approach helps maintain a collaborative atmosphere, which is crucial for ongoing partnerships between health plans and providers.

Focus on Interests, Not Positions

Positions are what parties say they want; interests are why they want them. In healthcare, a provider’s position might be high reimbursement rates, but their underlying interest could be financial stability to invest in quality care. By understanding and addressing these interests, negotiators can find solutions that meet the needs of both parties. For example, a health plan might agree to higher rates if the provider implements cost-saving measures or quality improvements.

Invent Options for Mutual Gain

Healthcare negotiations often present multiple potential solutions. By brainstorming various options, negotiators can find innovative ways to meet mutual interests. For example, a health plan and provider might collaborate on a shared savings program, where both benefit from cost reductions achieved through improved care coordination.

Insist on Using Objective Criteria

Relying on objective criteria helps ensure fair and transparent negotiations. In healthcare, this could involve using benchmarks like Medicare rates, industry standards, or independent cost analyses to guide discussions. Objective criteria reduce bias and build trust, making it easier to reach a mutually acceptable agreement.

Practical Application in Healthcare

Applying these principles can lead to more effective healthcare negotiations. Here are some practical tips:

  • Build Relationships: Establishing trust and rapport with counterparts before negotiations begin can create a more positive negotiating environment.
  • Understand Interests: Invest time in understanding the underlying interests of both parties, which can lead to more creative and acceptable solutions.
  • Explore Multiple Options: Don’t settle for the first solution that comes to mind. Explore various possibilities that can address the interests of both parties.
  • Use Data and Standards: Leverage data and industry standards to support your positions and make your case more compelling.

Conclusion

Effective negotiation is essential for navigating the complexities of the healthcare business. By embracing the principles outlined in “Getting to Yes,” health plans and providers can achieve agreements that are not only efficient and fair but also conducive to long-term collaboration and improved patient outcomes. In an industry where the stakes are high, mastering the art of negotiation can make all the difference.

Unlock Financial Success with CalAIM: Budget Estimator Tool for CBOs

The CalAIM Budget Estimator Tool helps CBOs navigate the financial complexities of contracting under CalAIM. It offers an Excel-based template with built-in assumptions, cost input fields, revenue customization, and a summary tab. The tool supports informed decision-making, negotiation power, and sustainability, empowering organizations to enhance care and expand services.

Introduction

Navigating the financial complexities of contracting under the California Advancing and Innovating Medi-Cal (CalAIM) initiative can be challenging for community-based organizations (CBOs). With new Medi-Cal benefits such as Enhanced Care Management and Community Supports, understanding potential revenue and expenses is crucial. This is where the CalAIM Budget Estimator Tool comes in, offering a robust template to help CBOs project financial viability and ensure their mission’s sustainability.

Understanding the CalAIM Budget Estimator Tool

CalAIM Budget Estimator Tool: The CalAIM Budget Estimator Tool is an Excel-based template designed to help organizations estimate costs and potential revenue from providing Medi-Cal Enhanced Care Management and selected Community Support Services. These services include housing-related services and medically tailored meals.

Key Features

  • Built-in Assumptions: The tool incorporates assumptions about payment structures for these services, as outlined in the California Department of Health Care Services CALAIM Enhanced Care Management Policy Guide and Community Supports Policy Guide.
  • Cost Input: Users can enter organization-specific expenses such as staffing costs and other direct and indirect costs.
  • Revenue Customization: It includes generic rate ranges and areas for customizing expected revenue sources to calculate the program margin (ratio of revenue to expenses).
  • Summary Tab: A summary tab displays the projected margin by program year, helping users understand if their assumptions lead to a fiscally viable program.

The Importance of Financial Viability for CBOs

For CBOs, financial viability is paramount. The adage “No margin, no mission” rings true as these organizations aim to enhance services for individuals with complex health and social needs. The CalAIM Budget Estimator Tool enables organizations to model various scenarios for their programs, supporting meaningful feasibility discussions with financial officers and other decision-makers.

How the CalAIM Budget Estimator Tool Supports CBOs

The CalAIM Budget Estimator Tool is designed to facilitate informed discussions about future programming and the financial feasibility of providing new Medi-Cal services. Here’s how it supports CBOs:

  • Modeling Various Scenarios: The tool allows organizations to create multiple financial scenarios, enabling a comprehensive understanding of different potential outcomes.
  • Justifying Rate Requests: By organizing and highlighting critical financial information, the tool helps CBOs justify rate requests to MCOs during contract negotiations.
  • Enhancing Financial Confidence: With detailed projections, CBOs can confidently navigate the financial aspects of contracting with MCOs.

Step-by-Step Guide to Using the CalAIM Budget Estimator Tool

Step 1: Download the Tool

Step 2: Enter Costs

  • Input your organization-specific expenses, including staffing costs and other direct and indirect costs.

Step 3: Customize Revenue Sources

  • Use the tool to enter expected revenue sources. Customize the rates to reflect realistic projections for your organization.

Step 4: Review Summary Tab

  • Examine the summary tab to view the projected margin by program year. This will help you understand the financial viability of your program.

Benefits of Using the CalAIM Budget Estimator Tool

Informed Decision-Making: The tool provides comprehensive data to support strategic financial decisions. Enhanced Negotiation Power: With detailed financial projections, CBOs can negotiate better rates with MCOs. Sustainability: Ensuring financial viability helps CBOs sustain their mission and expand services under CalAIM.

Frequently Asked Questions

What is the CalAIM Budget Estimator Tool? The CalAIM Budget Estimator Tool is an Excel-based template designed to help organizations estimate costs and potential revenue from providing Medi-Cal Enhanced Care Management and selected Community Support Services.

How does the tool support CBOs in contracting with MCOs? The tool enables CBOs to model various financial scenarios, justify rate requests during negotiations, and make informed decisions about program viability.

What are the key features of the CalAIM Budget Estimator Tool? Key features include built-in assumptions, cost input fields, revenue customization, and a summary tab displaying projected margins.

Can the tool be customized for specific organizational needs? Yes, users can customize expense inputs and revenue projections to reflect their specific organizational needs.

How do I get started with the CalAIM Budget Estimator Tool? Download the tool, enter your organization-specific costs, customize revenue sources, and review the summary tab to understand financial projections.

Why is financial viability important for CBOs? Financial viability ensures that CBOs can sustain their mission and expand services, ultimately enhancing care for individuals with complex health and social needs.

Conclusion

The CalAIM Budget Estimator Tool is an invaluable resource for CBOs looking to contract with managed care organizations under CalAIM. By providing detailed financial projections, the tool empowers organizations to make informed decisions, justify rate requests, and ensure the sustainability of their mission. Download the tool today and take the first step towards financial success and enhanced service offerings.

Toolkit Managed Care Resource

The Managed Care Legal Database is a resource identifying how state and federal statutes and regulations address many issues that may occur between private payers and physicians, such as prior authorization, credentialing, network adequacy, out-of-network payment, and contract termination. The Database also contains relevant AMA policy, issue briefs, advocacy resources, model legislation, and a State Laws Map.

2023 Managed Care Resource Kit

The Managed Care Legal Database is a resource identifying how state and federal statutes and regulations address many issues that may occur between private payers and physicians, such as prior authorization, credentialing, network adequacy, out-of-network payment, and contract termination. The Database also contains relevant AMA policy, issue briefs, advocacy resources, model legislation, and a State Laws Map.

Payment Issues

Network Issues

Contract Changes / Disputes

Coverage / Utilization Review

Claims Processing

Managed Care Contracts and Health System Operational Alignment

CASE EXAMPLE of how we breakdown contracts and tie the terms to operational alignment

Because the business of healthcare is to deliver the highest quality care to patients, improving clinical performance is the driving focus. However, understanding and responding to financial pressures through increased efficiency and enhanced revenue capture is what makes high-quality clinical delivery possible and sustainable.

Reimbursement StructureActivity triggering a more robust financial return
Reimbursed primarily on a fee-for-service basis, generate more revenue by using your care team as a provider–extender, enabling more patients to see the provider for a billable visit each day
The organization accepts full risk for patient costs, Ensuring patients are taught how best to manage their illness and avoid specialist or emergency room visits. 
Capitated fee for primary care services, experimenting with alternative visit types may maximize your ability to care for more patients
Nonphysician payment for CCMPractices that rely on nonphysician team members to deliver CCM services will probably experience substantial net revenue gains but must enroll a sufficient number of eligible patients to recoup costs.
“If nonphysician staff were to deliver CCM services, net revenue to practices would increase despite opportunity and staffing costs. Practices could expect approximately $332 per enrolled patient per year (95% CI, $234 to $429) if CCM services were delivered by registered nurses (RNs), approximately $372 (CI, $276 to $468) if services were delivered by licensed practical nurses, and approximately $385 (CI, $286 to $485) if services were delivered by medical assistants. For a typical practice, this equates to more than $75 ,00 of net annual revenue per FTE physician and 12 hours of nursing service time per week if 50% of eligible patients enroll. At a minimum, 131 Medicare patients (CI, 115 to 140 patients) must enroll for practices to recoup the salary and overhead costs of hiring a full-time RN to provide CCM services.”
Non-visit-based payment for chronic care management (CCM)Measuring Net revenue per full-time equivalent (FTE) physician; time spent delivering CCM services.

Learn to speak the Managed Care Language (101)

Healthcare flow of funds explained. Managed Care 101 for healthcare entrepreneurs seeking to do business in the California market. Session led by Alex Yarijanian, CEO Carenodes. The aim: providing healthcare entrepreneurs with a framework within which they will find their place in the business value chain.

Everyone should be able to walk out of this session feeling empowered by having learned the basic flow of funds (starting at the payer).

About this Event

Healthcare flow of funds explained. Managed Care 101 for healthcare entrepreneurs seeking to do business in the California market. Session led by Alex Yarijanian, CEO Carenodes. The aim: providing healthcare entrepreneurs with a framework within which they will find their place in the business value chain.

Topics covered in this session are as follows:

1. Managed Care Mind

  • Managed care: ‘utilization management’
  • Payment: Volume shift to value
  • Quality (‘value’) measured
  • Patient experience
  • Clinical outcomes

2. Lines of Business aka ‘LOB’ (funding source)

  • Medicare (Traditional Medicare and Medicare Advantage, Parts ABCD)
  • Medicaid (managed Medicaid, state / federal, Medi-Cal)
  • Duals (Medicare and Medicaid beneficiaries)
  • Commercial (on exchange, off exchange)

3. Products (benefit designs)

  • The spectrum of products: HMO, PPO, POS, EPO, FFS
  • Business ramifications

4. Difference between ‘LOB’ vs ‘product’

  • Difference between ‘LOB‘ (Medicare, commercial, etc) vs ‘product‘ (HMO, PPO, etc.)

The video and article link below is of an expanded version of this training https://www.carenodes.com/healthcare-flow-of-funds-explained-healthcare-entrepreneur-bootcamp/

Expert Seminar on Parity Laws and Reimbursement

Learn to speak the Managed Care Language (101)

Getting Paid (more) for Telehealth by Leveraging Mental Health Parity

About this Event

This is an advanced session for healthcare lawyers, general counsel, contracting VPs, C-suite, consultants.

Healthcare providers and technology companies looking to launch a new telemedicine or mHealth program may find an unexpected ally in commercial health plans. Healthcare providers looking to launch a new telemedicine or mHealth program may find an unexpected ally in commercial health plans. But they need to understand how and what mechanisms to trigger. For example, in mental health, most fail since they are unaware of mental health parity leverage points.

A Carenodes Network provider noted that one private payer in Mississippi won’t cover telehealth even though it’s mandated by the state, and another one of our providers said health plans in New York have found a way to reimburse for telehealth at only half the rate of in-person coverage.

We will discuss these cases, outcomes, and how we managed to obtain better reimbursement terms and partnerships — substantially improving client position and patient access.

This method has demonstrated an average of 46% increase in topline payer reimbursement for healthcare providers.

RELATED FREE CONTENT (ON DEMAND)

For those seeking to learn more about practical tools from payer executives, see Mental Health Parity: Provider Guidance Session and Q/A with Payer Executive https://www.youtube.com/watch?v=E5pG319Wd7o&t=323s

Chris Esguerra, MD and Alex Yarijanian address mental health parity and what providers can do to hold health plans accountable. These two executives provide tools/tips/resources behavioral healthcare providers and startups can use to hold payers accountable to equitable access to mental healthcare.

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Online Events,Online Seminars,Online Health Seminars, mentalhealth, #mental_health_training, #healthcare_lawyers, #carenodes

Provider – Contracting: KPIs

KPI / MetricFormula or DefinitionTargetBusiness Purpose
Gross RevenueGross Revenue or “Top Line Revenue” is synonymous with gross charges associated with the provision of servicesThis is Facility Specific. GR is budgeted at the Financial Class Level based upon historical payer mixes, demographic studies, material managed care contracting changes and other forecasting methods.From a revenue cycle management perspective, the objective is rapid, compliant conversion of Gross Revenue into Cash (and legitimate associated contractual adjustments) Therefore, GR is a significant input in a number of relevant KPI’s.
Net RevenueThe term Net Revenue has diverse definitions within the industry but is best defined as: The value of the hospitals dollar, less contractuals, less bad debt.Different methods are used to determine both the value of the Active AR and related %’s that are applied to Gross Revenue to determine its Net Revenue.This is Facility Specific. The NR target is based upon reducing Gross Revenue by anticipated contractual allowances and a Bad Debt Expense target.The contractual allowances and BD%’s are applied by a combination of a calculated model and/or history.A primary objective of the Revenue Cycle Team is to increase Net Revenue through denial prevention and recovery as the reduction of the Bad Debt Expense through improved Self Pay receivable management strategies.
Net Patient Revenue(Before Bad Debt)Net Patient Revenue is Net Revenue prior to making deductions for Bad debt Expense and could be defined as “Maximum Net Collectible Value”Same approach as Net Revenue.Measure Cash as a % of Net Patient Revenue instead of Cash as a % Net Revenue. This approach is not as common as Net Revenue.
Lag Revenue(Rolling 2,4,6 months)Most Gross Revenue is converted into cash and associated contractual adjustments with in 45-60 days. As a result, cash targets are based upon a prior month’s revenue or a rolling average of a prior periods revenue. This is referred to as Lag Revenue. Some targets are based upon a 2 month average with a one month lag.N/ALag Revenue is constantly studied, normalized and modeled to help the hospital become increasingly scientific in setting cash and contractual allowance targets.
Modeled Net Revenue (%)(Expected Reimbursement)Net Revenue Modeling is the practice of converting contract terms(and for Government Payers; DRG and APC Driven reimbursement) into an Expected Reimbursement calculation at the account level. From there, projections can be made based upon “perfection” (not considering denials and underpayments, etc.) from a Reimbursement standpoint. Modeled Net Revenue is usually expressed as a %.This is Facility and contract specific.This works if you Net most of the Receivables at the time of Final Billing. Many facilities utilize historical experience for Net Revenue and related contractuals
Experiential Net Revenue % (ENR) Zero Balance accounts for 12-18 monthsExperiential Net Revenue (ENR) is best described as Collections against the dollar on a large sample of zero balance accounts.The Formula is Receipts/Charges 12-18 months of zero balance charges. Often expressed as a %ENR should be as close the the MNR as possible. The Delta between ENR and MNR is the economic opportunity.ENR% is used to calculate cash target, average daily net revenue and is an input for a host of other critical Key Performance Indicators
Average Daily Gross Revenue6 months gross revenue/ total number of days in the calculation period. Expressed as a $ amount.There may be seasonality to consider so 6 months may be a better standard to determine average daily gross revenue. (Industry standards are 3 months)ADGR is the divisor for a number of other KPI’s. It is conversational language for “how much Business” is being generated on a daily basis.
Average Daily Net Revenue6 Months net revenue / total number of days in the calculation period. Expressed as a $ amount.There may be seasonality to consider so 6 months may be a better standard to determine average daily net revenue. (Industry standards are 3 months)ADNR is the divisor for a number of other KPI’s. It is conversational language for “how much Business” is being generated on a daily basis.
Cash as % of Net RevenueCash/Lag net Revenue (Or Net patient Revenue). Expressed as a %100% or GreaterThis is the most important of all KPI’s and measures cash performance against opportunity for cash performance. This KPI increases in value when calculated at the Financial Class Level and allows for team by team organizational goal alignment.
Bad Debt as % of Gross Revenue(Bad Debt Transfers – Bad Debt Recoveries) / Gross Revenue. Expressed as a % and $ amount.This is NOT the finance view of Bad Debt Expense (which is out of scope for this document but includes looking at actual BD write offs Less recoveries against the budgeted BD allowance against the value of the Self Pay Receivable)From the Revenue Cycle Perspective, this calculation should be managed daily and if at 3.1% or less, will equate to successful migration of Bad Debt Risk. (% is client specific)Used to measure the effectiveness of both Front End Financial Securement and Self Pay follow up.It is critical that only qualifying accounts be referred to BD and that the provider continuously look to reallocate High Risk Self Pay to Federal, State, Private and Local or other funding sources.
Charity Care as a % of Gross RevenueCharity Care Write offs/Gross Revenue. Expressed as a % and $ amounts.Finance, using primarily volumes and experience, prepares a charity budget.From a Revenue cycle Perspective, charity care write-offs are targeted at 1.9% of Gross Revenue. (% is client specific)Charity Care is described as the inability to pay for services rendered (whereas Bad Debt is based upon unwillingness to pay)Non Profits maintain their standing through the provision of Community Benefits visa vie Charity Care.Therefore, it is imperative that qualifying Charity Care accounts not be wrongly classified or through fractured process flow to bad debt.
DNFB – Discharged Not Final BilledDNFB is a term used to define unbilled accounts where the patient has been discharged (for outpatient services the admit and discharge date is one and the same) and the account is either not coded, or pending charges, service documentation or claim holds to be released into the final billed receivable.The Formula for calculating the DNFB target is:ADGR x 4 (4 is an example) … Expressed as $DNFB Targets are financial class and patient type specific.Example: if your suspense days is 4 for Non Government payers then: 4 X ADGR would be your calculation…If you have a 5 day suspense for Government payers then you would calculate this as: 5 X ADGR for Gov. PayersIt is critical to success that the DNFB be managed and sustained with the targeted range as that with is not coded/released cannot be converted to cash.
Unbilled beyond SuspenseWith in the DNFB receivable is a subset of accounts that have moved beyond the targeted date (which is called the Suspense Cutoff date). These receivables represent a direct delay in cash conversion opportunity.The target for this calculation, whether expressed as Days, Net Days or $ is ZEROUnbilled beyond Suspense receives high attention from all functional areas within the revenue cycle, tends to represent the exact co-efficient of any cash short fall being expressed during the month.
DNFB DaysDNFB Receivable Outstanding / Average Daily Gross Revenue (Or Net DNFB Receivable Outstanding / Average Daily net revenue)Fin Class specific, usually 3-5 daysAlso calculated as Net DNFB daysSee above
Gross Days In Revenue OutstandingActive accounts receivable outstanding / Average daily Gross RevenueCalculations can vary: Gross Days Target at the Financial Class level and then aggregates the total for a more specific (and less anecdotal) approach to managing days.This KPI is in the top 5 and is a strong “processing KPI” but may not be tied directly to cash performance. (Avoidable write – offs and high bad debt may produce lower AR days while cash performance is at a variance to target.
Net Days in Revenue OutstandingActive Accounts Receivable / Average Daily Net RevenueCalculations can vary: Net days target at the financial class level and then aggregates the total for more specific approach to managing daysSee above
Days Lower Control LimitA term used to describe absolute perfection for A/R Days at the Financial Class (and the aggregate) level. For Example, a perfect Medicare Inpatient Claim is Inhouse for 3.2 Days, DNFB for 5 days and the submitted and adjudicated in 14-16 days.Financial Class SpecificDays LCL, for both Net and Gross, is an input used for several targets and KPI’s within the Revenue cycle.
Held Claims DaysClaim submission date – Final Billed Date expressed as # of calendar days.No claim should be held longer than 1 business day for correction and submission/re-submission.This is a standard Claims Management KPI that seeks to place rigid controls on predictable, regular billing porduct in CBO.
Clean Claim RateClean Claims/Total Claims expressed as a %95-98%This is a standard Claims Management KPI that seeks to place rigid controls on predictable, regular billing product in CBO
ErosionAs accounts get older, then become less collectible – or “erode” on the Accounts Receivable.
1. A/R > 90Creditors that loan hospitals money against their A/R asset use A/R > 90 as a critical measure of the health of the accounts receivableThrough the use of Days Lower Control Limitis, Financial class specific targets can be set around tolerable volumes of accounts moving past 90 Days.Must maintain acceptable targets from an aging perspective to ensure strong cash performance, and avoid Finance “devaluing” the Active A/R based upon volumes moving into this aging category.
2. A/R > 120Self pay accounts may be deemed worthless (either in A/R or Bad Debt) after valid collection effors for 120 days.Financial Class Specific and is dependent upon whether SP after Insurance is blended with pure Self Pay.120 is an important trigger for Mediare Cost Report compliance and set the standard for Bad Debt Transfers on account that are validated to be uncollectible
POS CashCash collected at, or as a direct result of front end functional area efforts (such as Financial Counseling)Targeting for POS Cash becomes meaningful when measured against an estimated patient portion due.Initiative to implement a Patient Payment Estimator.POS Cash Management is critical because the psychological opportunity to collect declines rapidly after the Patient leaves.There is a direct correlation between POS Cash performance and bad debt reduction.
POS Cash as % of Self Pay Cash CollectedThis Metric measures the overall composition of Self Pay Cash Performance and seeks to understand the contribution of POS Cash Management to the Overall Self pay campaign.See AboveSee above
Percentage of Receivable over 120 DaysPercentage of current total receivables, as defined by amounts owed to the provider/facility by patients, third party payers etc. that is greater than 120 days post dischargeFind this data in your Aged Trial BalanceBenchmarks:
Best practice less than 12%
Average between 12 and 25%
Alarm Greater than 25%
% business in VBC

Payer Contract Modeling

Contract modeling, or analyzing potential scenarios of reimbursements to understand financial outcomes, provides a proactive approach to financial management by analyzing the impact of different elements such as methodologies, rate changes, pricing, payor mix shifts and ever changing regulations on margins, rather than net revenue alone.

Do it like a Pro: Managed Care Payer Contract Analysis

Contract modeling, or analyzing potential scenarios of reimbursements to understand financial outcomes, provides a proactive approach to financial management by analyzing the impact of different elements such as methodologies, rate changes, pricing, payor mix shifts and ever changing regulations on margins, rather than net revenue alone.

To determine current and future performance, contract modeling can be applied to current contracts and various “what-if” scenarios.

Various Modeling Approaches

1. Medicare break-even computation

A simple way to evaluate the current state of contract performance is to conduct a basic Medicare break-even analysis. This analysis determines the financial impact if payment for all patient populations were according to Medicare rates. A Medicare break-even analysis is a way to benchmark how well commercial payers pay, and a way to evaluate the performance of key service lines, because it takes the payor mix out of the equation and instead uses a consistent reimbursement approach.

2. Assessment of performance of current contracts.

This straightforward analysis determines whether payment is in accordance with the terms of the commercial contract. The analysis will, for example, determine which service lines have the greatest variances between expected and actual payment.

3. Assessment of proposed contracts

This “what-if” analysis determines how changes in the rate and terms of a proposed contract would affect the yield. Changes in clinical services, types of products (i.e., HMO vs. PPO), or even payers can also be modeled. This provides an understanding of, either in actual dollars or percent, whether the proposed contract will result in shortcomings or whether it will improve the bottom line.4.

4. Comparison of traditional and non-traditional reimbursement methodologies.

Value-based payment models represent a new approach for providers. Many of these models put the provider at financial risk for meeting quality/outcomes targets, so understanding the financial implications of such methods before entering into a contract is critical. Likewise, modeling can help determine how implications of potential decreases in Medicaid funding resulting from changes or repeal of the Affordable Care Act, along with increased self pay and bad debt, will affect the bottom line.

5. Assessment of pricing changes.

Contract modeling can be used to better understand the impact of chargemaster pricing changes. For example, if the charge for a procedure increased by 10 percent, the modeling can show how reimbursement would be affected.

Physical Therapy Referrals: Not Needed

Physical therapist services are generally covered as a basic benefit by all major health insurance companies. Ask your physical therapist to contact your insurance company to determine your specific benefits.

Physical therapist services are generally covered as a basic benefit by all major health insurance companies. Ask your physical therapist to contact your insurance company to determine your specific benefits.

CAN I RECEIVE PHYSICAL THERAPY SERVICES WITHOUT A PHYSICIAN’S REFERRAL?

Consumers are not required to have a referral or diagnosis in order to receive physical therapist services in the State of California. Physical therapist services may be obtained without a physician’s referral if you are a cash carrying patient, receiving treatment for up to 45 calendar days/12 visits, receiving health and wellness services, or if you are a UnitedHealthCare or Medicare beneficiary.

Please note: some health insurance companies require a referral in order for your provider to be paid. Please confirm your benefit requirements by reviewing your coverage documents or calling member services of your respective insurance company. The contact number to your insurance company is listed on the back of your health insurance identification card.

The California Physical Therapy Practice Act requires all licensed physical therapists to disclose (in writing) the following information to all consumers receiving physical therapist treatment without a physician or surgeon referral or diagnosis:

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Under California law, you may continue to receive direct physical therapy treatment services for a period of up to 45 calendar days or 12 visits whichever occurs first.


Under California law, you may continue to receive direct physical therapy treatment services for a period of up to 45 calendar days or 12 visits, whichever occurs first, after which time a physical therapist may continue providing you with physical therapy treatment services only after receiving, from a person holding a physician and surgeon’s certificate issued by the Medical Board of California or by the Osteopathic Medical Board of California, or from a person holding a certificate to practice podiatric medicine from the California Board of Podiatric Medicine and acting within his or her scope of practice, a dated signature on the physical therapist’s plan of care indicating approval of the physical therapist’s plan of care and that an in-person patient examination and evaluation was conducted by the physician and surgeon or podiatrist.

ADDITIONAL RESOURCES

Noridian Healthcare Solutions is the current Medicare Administrative Contractor for all healthcare services provided in California
Centers for Medicare and Medicaid Services
Health Insurance and Physical Therapy (For consumers)
Consumer Guide to Health Insurance