Takeaways From CMS’ FY 2012 Financial Report
Here a few highlights from Becker’s Hospital Review 10 Major Takeaways From CMS’ FY 2012 Financial Report–Click here to view the article in full.nnOne of the most important organizations within the healthcare sector is CMS, and for obvious reasons. It is one of the largest healthcare payors in the world, and the federal agency dictates many of the rules that will directly and indirectly impact the finances of hospitals and health systems.
nnOn Nov. 15, CMS posted its FY 2012 financial report. CMS CFO Deborah Taylor, a certified public accountant, prepared the 202-page document, which is required by law every year. Here are 10 of the biggest takeaways from the report.nnWhat the nation’s healthcare dollar looked like in 2012. Government health programs consume the largest parts of the U.S. healthcare system, and CMS’ report broke down the different healthcare payors and how much money they represented in FY 2012. Here’s how much each sector represented for every dollar spent on the U.S. healthcare last year:nn• Private insurance: 31.6 centsn• Medicare: 21 centsn• Medicaid: 16.3 centsn• Other government programs: 13.3 centsn• Out-of-pocket: 11.1 centsn• Other private programs: 6.7 centsnnFurthermore, Medicare and Medicaid, including state funding, represented 54 cents of every dollar spent on nursing homes, 49 cents of every dollar received by hospitals and 33 cents of every dollar spent on physician services.nnMedicare Part A Benefit Payments. Inpatient hospital spending accounted for 54 percent of Medicare Hospital Insurance, or Part A, benefit outlays in FY 2012. Managed care represented the next-highest total at 25 percent, while skilled nursing facilities received 12 percent of Part A payments.nnMedicare Part B Benefit Payments. Medicare Part B, or Supplementary Medical Insurance, covers all physician, hospital outpatient, home health, lab test and other services not covered by Part A. Physicians services accounted for the largest slice of Part B at 24 percent. Prescription drugs accounted for 21 percent, while hospital outpatient services represented 11 percent.nnMedicaid Enrollees. Children represented the largest portion of Medicaid beneficiaries in FY 2012 at 50 percent. The remaining enrollees were adults (23 percent), disabled (18 percent) and elderly (9 percent).nnFederal Medicaid costs. State and federal medical assistance payments and administrative costs totaled $452.5 billion last year. CMS’ share of Medicaid outlays totaled $260.1 billion of that total.nnMedicare and Medicaid Recovery Auditors. Medicare RACs recovered $2.3 billion in over–payments in FY 2012, as reported earlier. However, that figure does not include dollar amounts related to claims in the appeals process or claims that had been successfully appealed by providers.nnMedicaid RACs were supposed to go live Jan. 1, 2012, although not all states have finalized their programs. According to the report, “states that have been unable to implement Medicaid RAC programs by Jan. 1, 2012, have been submitting [state plan amendments] to CMS requesting implementation delay exceptions.” CMS released a Medicaid RAC final rule in September 2011, projecting savings of $2.1 billion over the next five years. Roughly $910 million of that total would be returned to states.nnSource: www.beckershospitalreview.com Bob Herman; December 7, 2012.
nnThere is no single, universal definition for ACOs. In its census, Oliver Wyman counted not just participants in Medicare’s various ACO programs, but also commercial ACOs and healthcare delivery organizations that apply some other name to themselves but follow the basic elements of the accountable care organization: They are healthcare providers that take responsibility for the full healthcare needs of a defined population, receiving savings payments based on cost savings and quality.nnThe ACA directed Medicare to create ACO programs – today there are 150 Medicare ACOs, and the number is expected to more than double in January, when Medicare announces the next class of participants in its Shared Savings Program. Because it is difficult to operate a single organization under a fee-for-service and an ACO model at the same time, most participants in Medicare ACO programs eventually shift their non-Medicare patients to ACO models as well.nnA total of 25 to 31 million U.S. patients currently receive their care through ACOs. They include:n
At the 98th meeting of the Radiological Society of North America in Chicago on Nov. 26, 2012, Keith J. Dreyer, DO, PhD, vice chairman of radiology at Massachusetts General Hospital in Boston and associate professor of radiology at Harvard Medical School, discussed the future of imaging informatics in the face of meaningful use.nnCMS’ meaningful use program is one of the ways the federal government is focusing on quality, safety and access with healthcare, said Dr. Dreyer. By urging providers to use certified electronic health record technology, the federal government is hoping that safety and quality of healthcare will increase while the cost of healthcare will decrease. According to Dr. Dreyer, physicians and radiologists need incentives to have a patient-centric focus in their healthcare decisions and that is what meaningful use is — an incentive.nnDr. Dreyer pointed out that more than 50 percent of physicians and 80 percent of hospitals have enrolled in the meaningful use program, with payments passing $7 billion, from when meaningful use legislation as part of the HITECH Act was first passed in February 2009 to when the most recent regulations — stage 2 of meaningful use — were released.nn”What does this mean for radiologists? Well, nearly all radiologists are eligible for the program. In 2011, 32 percent of radiologists said they planned to participate, and in 2012, that percentage has doubled,” said Dr. Dreyer. “While meaningful use can be a challenge for radiologists, there are various exclusions and temporary exemptions available. The thing to remember is that the stages of meaningful use are important.”nnThe stage 2 regulations for meaningful use have two specific objectives for imaging:n
nna coordinated team can deliver a consistent experience, regardless of where this patient experience begins and ends. A clinic can either take the opportunity to define its own reputation through its approach to patient engagement or have its reputanntion determined by its patients, who will talk to each other about what should have happened and why and why.nnAccessibility of electronic health information is already changing the nature of the patient-clinic interaction. We all know of the reputations of the clinics in our neighborhoods that have evolved over time. And these reputations I’m referring to have had little to do with their online or “digital” reputation. The experiences that patients and clinic staff have shared over the years (perhaps even generations) that have established these reputations are those that have occurred between people in the face-to-face interactions in the clinic. However, as the patient experience continues to grow in terms of population health outcomes and the individual’s day-to-day experience, it is an important time for physicians and their staff to recognize how to participate in the culture of care that is defined by the brand that is the physician as well as the clinic as a whole.nnJust as the accessibility of health information continues to expand from the patient’s personal history to general educational material in digital form, so too is the nature of the interaction between patient and clinic expanding. Now we are seeing the convergence of those longstanding reputations built upon one-on-one encounters and digital reputation established by connecting with patients in convenient formats and online.nnThis evolution demands a new level of reception in the clinic, one requiring a sustained and fully engaged dialogue among the entire clinic staff. The conversation about traditional and digital patient experiences is one that represents a great opportunity to accept the gratitude of each patient. Whether it’s an unconditional “thank you” or even one that is qualified with a comment or concern for future encounters, this is the reputation of the clinic as a whole and each individual physician. What’s more, because this patient experience is happening in so many ways well beyond the walls of the exam room, a fully engaged staff members will find themselves contributing to this reputation more every day.nnWhereas in the past the patient experience was defined by the coveted clinic appointment, what happens before and subsequent to that encounter has now become equally important in terms of the reputation of the clinic and physician. The challenge is to keep in mind within conversations about and interactions related to EHR and health IT that this converged clinic reputation is driven by a well-defined patient experience supported by a fully engaged clinic staff.nnSource: www.ehrintelligence.com; Robert Green, November 20, 2012.
The Centers for Medicare & Medicaid Services (CMS) issued a final rule with comment period on November 1, 2012 for Medicare’s payments for physician fees for 2013. It includes a new policy to pay a patient’s physician or practitioner to coordinate the patient’s care in the 30 days following a hospital or skilled nursing facility stay. Recognizing the work of community physicians and practitioners in treating a patient following discharge from a hospital or nursing facility will ensure better continuity of care for these patients and help reduce patient readmissions. The changes in care coordination payment and other changes in the rule are expected to increase payment to family practitioners by seven percent—and other primary care practitioners between three and five percent—if Congress averts the statutorily required reduction in Medicare’s physician fee schedule.n(
The Centers for Medicare and Medicaid Services (CMS) has released updated reference grids for Stage 1 and 
The International Classification of Diseases, Tenth Revision (ICD-10), comprises two sets of codes, one for documenting diagnoses (ICD-10-CM) and the other for documenting procedures (ICD-10-PCS). Compared to ICD-9, these codes are more extensive and more numerous. ICD-10-CM codes number close to 68,000 and contain 3–7 characters compared to ICD-9-CM total more than 14,000 3–5 digit codes. Similarly, ICD-10-PCS comprise 7 characters and approximate nearly 87,000 compared to 4,000 ICD-9-CM codes of 3–4 numbers in length.nnGiven the size and scale of ICD-10, the new code set will demand more from hospital staff, not just coders. Unless physicians improve their methods of documenting clinical encounters with patients, they and their hospitals could find themselves in dire financial straits:nnEssentially what’s going to happen is physicians are going to have to have more specific documentation in order to meet medical necessity so that they can even be paid and in order to be able to make sure they’re getting the most appropriate reimbursement when they do get paid, both for the physicians and the hospitals. When a physician is treating a patient in the hospital, you have two patients: one to the physician and one to the hospital. They both are dependent on better documentation with ICD-10.nnTo avoid loss in revenue and uncertainty in productivity, experts recommend that hospitals pay special attention to their clinical documentation as well as the templates used by physicians in their electronic health record (EHR) systems.nnIn this second installment of ICD-10 Best Practices, we address how hospitals undertake an important health information technology project necessary to ensure a smooth transition to ICD-10: identifying and making improvements to EHR templates.nnModifying EHR templates for ICD-10nThe most successful ICD-10 implementations begin with an assessing of current procedures and systems. Considering that ICD-10 demands more information than ICD-9, hospital leadership must first identify where physicians presently fall short in capturing data necessary for ICD-10.nnThose tasked with updating EHR templates need strike the right balance so as to avoid stimulation overload for physicians using the system:nnICD-10 has a lot of detail that you can collect that’s informational only, and it allows you to assign a more specific code. However, that code is not based on or will not lead you to a change in the way a physician manages that patient, and it won’t have an impact financially. Your alerts have to be focused on those areas where you’re improving documentation because it’s going to improve payment or capture of severity of illness and risk of mortality.nnThe real challenge is identifying what’s necessary versus what’s superfluous. And this extends to the details physicians will now have to capture. By and large, many parts of ICD-9 carry over to ICD-10; however, the level of specificity changes greatly:nnMost of things that you have to document for ICD-9 to improve reimbursement are going to still hold true with ICD-10. But there are some additional things in ICD-10 and the problem is that they’re buried. It’s not easy to identify where the shift in payment is going to come from based on all the specificity that we have available, and that’s why you need to have the assessment to really drill down and identify. You take that information to improve the templates you have because some of it is not intuitive. You wouldn’t think that adding this little is going to have a financial impact, but it does.nnWhile the modifications to the EHR templates represent a significant undertaking, they are only successful if preceded by a thorough assessment of ICD-10 and its requirements on physicians and hospitals.nnSource: www.ehrintelligence.com; Kyle Murphy, PhD; October 30. 2012.
few months ago, we paired with Novitas Solutions, INC. as our new Medicare Administrative Contractor (MAC). Effective October 29, 2012, Novitas Solutions, Inc. will begin handling all fee-for-service claims processing for the Part A providers.nnIn order to facilitate a smooth Part A JH transition, please take note of the following important dates:nnEDI Claims Submissionn
P.O. Boxes and Mailn
Smartphones and tablets are playing a bigger role in healthcare, and more change will take place when providers connect with patients using mobile apps, healthcare experts say.nnThe number of U.S. adults using mobile phones for health-related activities, including looking up health information, grew from 61 million in 2011 to 75 million in 2012, according to a Manhattan Research survey of 8,745 adults. Meanwhile, the number of people using tablet computers for healthcare nearly doubled from 15 million to 29 million.nnOlder consumers haven’t been left behind: Nearly half of online consumers aged 55 and older who own or use a tablet are using these devices to look up health information or tools. Finally, among the 15% of online consumers who have tablets, smartphones, and desktop computers or laptops, 60% are using all three types of devices for health-related online activities.nn”What we’re witnessing is the rise of a technology that enables people to easily get health information without going to the high priests of healthcare,” Joe Smith, MD, told InformationWeek Healthcare. “The longstanding asymmetry between providers and patients on health information is starting to break down.” Older consumers’ use of tablets for healthcare purposes, he said, “heralds a wonderful change in healthcare. You’re seeing an emboldened, engaged aging population, and the country definitely needs that.”nnAs for the use of multiple devices, he said, “it’s pretty easy to access the information independent of the hardware platform. So I think it’s more representative of the fact that people are using whatever gadget is available to them to find out information about their health.”nnMany consumers are already using standalone mobile health applications to track their fitness, wellness, exercise, and diet. Some are utilizing apps created for people with chronic conditions such as diabetes and hypertension, noted Smith, but there’s still less use of those than there is for fitness and wellness tracking, he said.nnNevertheless, he said, as people get used to mobile technology that reminds them to take their pills or get more exercise, “they’ll start using it to find out whether their asthma is likely to be worse today because of a pollen count, or is my heart rate climbing with my activity today in a different way than it has in the past, and as a result, is my heart failure getting worse?”nnSource: www.informationweek.com; Ken Terry; October 8, 2012.
to their areas of practice. Moreover, covered entities would have the opportunity to participate in end-to-end testing, perhaps the most crucial component of the implementation process and one that is often not afforded enough resources (i.e., time.)n
Below is a portion of Selena Chavis’ article on ICD-10 Testing Strategies, from the publication, 
nnThe Centers for Medicare & Medicaid Services (CMS) released an updated 
Adoption of EHRs helps physicians to get up to speed on incoming patients before handoffs from the emergency department.nnAs the number of hospitals with electronic health record systems grows, a new study finds that inpatient physicians who receive patients from the emergency department have begun to do “chart biopsies” of electronic records to prepare for the handoffs.nnAlthough the study in the Journal of the American Medical Informatics Association (JAMIA) doesn’t reach any conclusions about whether chart biopsies are an improvement over traditional handoff methods, it points outs that “chart biopsies appear to impact important clinical and organizational processes. Among these are the nature and quality of handoff interactions and the quality of care.”nnThe study defines a chart biopsy as “the activity of examining a patient’s health record to orient oneself to the patient and the care that the patient has received in order to inform subsequent conversations about or care of the patient.” To understand how this process works, the researchers studied general internal medicine physicians and surgeons who received patients from the ED at the University of Michigan Health System (UMHS) for a two-year period.nnAt UMHS, hospital physicians had access to two EHRs: one was for inpatient and outpatient documentation, and the other was used in the ED. When ED doctors and nurses entered data into their EHR, the inpatient doctors could view that data immediately. Over time, they began to review the ED charts before having a conversation with the ED physician who admitted the patient.nnThe three main functions of chart biopsies, according to the study, are getting an overview of the patient, preparing for handoff and subsequent care, and defending against potential biases.nnAccording to Hilligoss, every UMHS physician that he observed did some kind of chart biopsy. But they didn’t do one in every case–sometimes they were too busy–and every doctor did them differently. Hilligoss did point out, however, that doctors in hospitals other than UMHS were also starting to perform chart biopsies; fellow academics at other institutions have told him this. “It isn’t something that anyone has preplanned for, but because the EHR is there, they’re naturally doing it,” he said.nnSource: www.informationweek.com; Ken Terry; September 17, 2012.
Today, hospitals and doctors use a system of about 18,000 codes to describe medical services in bills they send to insurers. Apparently, that doesn’t allow for quite enough nuance.nnA new federally mandated version will expand the number to around 140,000—adding codes that describe precisely what bone was broken, or which artery is receiving a stent.nnIt will also have a code for recording that a patient’s injury occurred in a chicken coop.nnIndeed, health plans may never again wonder where a patient got hurt. There are codes for injuries in opera houses, art galleries, squash courts and nine locations in and around a mobile home, from the bathroom to the bedroom.nnSome doctors aren’t sure they need quite that much detail. “Really? Bathroom versus bedroom?” says Brian Bachelder, a family physician in Akron, Ohio. “What difference does it make?”nnThe federal agencies that developed the system—generally known as ICD-10, for International Classification of Diseases, 10th Revision—say the codes will provide a more exact and up-to-date accounting of diagnoses and hospital inpatient procedures, which could improve payment strategies and care guidelines. “It’s for accuracy of data and quality of care,” says Pat Brooks, senior technical adviser at the Centers for Medicare and Medicaid Services.nnBilling experts who translate doctors’ work into codes are gearing up to start using the new system in two years. They say the new detail is welcome in many cases. But a few aspects are also causing some head scratching.nnSome codes could seem downright insulting: R46.1 is “bizarre personal appearance,” while R46.0 is “very low level of personal hygiene.”nnIt’s not clear how many klutzes want to notify their insurers that a doctor visit was a W22.02XA, “walked into lamppost, initial encounter” (or, for that matter, a W22.02XD, “walked into lamppost, subsequent encounter”).nnWhy are there codes for injuries received while sewing, ironing, playing a brass instrument, crocheting, doing handcrafts, or knitting—but not while shopping, wonders Rhonda Buckholtz, who does ICD-10 training for the American Academy of Professional Coders, a credentialing organization.nnCode V91.07XA, which involves a “burn due to water-skis on fire,” is another mystery she ponders: “Is it work-related?” she asks. “Is it a trick skier jumping through hoops of fire? How does it happen?”nnMuch of the new system is based on a World Health Organization code set in use in many countries for more than a decade. Still, the American version, developed by the Centers for Disease Control and Prevention and the Centers for Medicare and Medicaid Services, is considerably more fine-grained.nnThe WHO, for instance, didn’t see the need for 72 codes about injuries tied to birds. But American doctors whose patients run afoul of a duck, macaw, parrot, goose, turkey or chicken will be able to select from nine codes for each animal, notes George Alex, an official at the Advisory Board Co., a health-care research firm.nnThere are 312 animal codes in all, he says, compared to nine in the international version. There are separate codes for “bitten by turtle” and “struck by turtle.”nnU.S. hospitals and insurers are bracing for possible hiccups when the move to ICD-10 happens on Oct. 1, 2013, even though they’ve known it was coming since early 2009.nn”You have millions of transactions flowing in the health-care system and this is an opportunity to mess them all up,” says Jeremy Delinsky, chief technology officer for athenahealth Inc., which provides billing services to doctors.nnMedicare officials say they believe many big insurers and hospital systems are making preparations, but there may be some issues with smaller ones that won’t be ready.nnWith the move to ICD-10, the one code for suturing an artery will become 195 codes, designating every single artery, among other variables, according to OptumInsight, a unit of UnitedHealth Group Inc. A single code for a badly healed fracture could now translate to 2,595 different codes, the firm calculates. Each signals information including what bone was broken, as well as which side of the body it was on.nnSome companies hope to grab business from the shift. One medical-coding website operator, Find A Code LLC, has created a series of YouTube videos with the tagline, “Yeah, there’s a code for that.” Snow White biting the poisoned apple, the firm says, may be a case of T78.04, “anaphylactic shock due to fruits and vegetables.” On April 1, the company posted a document with the secret “X-codes” to describe medical conditions stemming from encounters with aliens.nnOther coding cognoscenti spot possible hidden messages in the real codes. The abbreviation some use for the new system itself, I10, is also a code for high blood pressure. Several codes involving drainage devices end in “00Z.” Then there are two of the codes describing sex-change operations that end in N0K1 and M0J0. “You could see it ripple through the room as people said, ‘nookie and mojo!'” says Kathryn DeVault, who has been teaching ICD-10 classes for the American Health Information Management Association. “Was it purposeful? We don’t know.”nnNo, it wasn’t, says the Medicare agency’s Ms. Brooks, who says the codes are built according to a consistent pattern in which each digit has a meaning.nn”I couldn’t if I wanted to insert a cute message,” says Ms. Brooks, who admits that she could be described by Z73.1, “Type A behavior pattern.”nnMedicare and CDC officials say codes were selected based on years of input from medical experts in various fields. Codes describing the circumstances of injuries are important for public-health researchers to track how people get hurt and try to prevent injuries, they say.nnBeing able to tabulate risks tied to locations such as chicken coops could be “important as far as surveillance activities” for public health research, says Donna Pickett, a medical systems administrator at the CDC. She says the current code for a badly healed fracture is so vague it isn’t useful.nnAnother CMS official, Denise M. Buenning, compares ICD-10 to a phone book. “All the numbers are in there,” she says. “Are you going to call all of the numbers? No. But the numbers you need are in there.”nnThis 
elp providers and health plans spend less time filling out paperwork and more time seeing their patients,” Secretary Sebelius said.nnCurrently, when a health care provider bills a health plan, that plan may use a wide range of different identifiers that do not have a standard format. As a result, health care providers run into a number of time-consuming problems, such as misrouting of transactions, rejection of transactions due to insurance identification errors, and difficulty determining patient eligibility. The change announced today will greatly simplify these processes.nnThe rule also makes final a one-year proposed delay – from Oct. 1, 2013, to Oct. 1, 2014– in the compliance date for use of new codes that classify diseases and health problems. These code sets, known as the International Classification of Diseases, 10th Edition diagnosis and procedure codes, or ICD-10, will include codes for new procedures and diagnoses that improve the quality of information available for quality improvement and payment purposes.nnThe rule announced Friday is the fourth administrative simplification regulation issued by HHS under the health reform law:n
HHS, on August 14, issued a final “blueprint” that states can use to operate their own health insurance exchanges. The blueprint details the functions that state-based exchanges will perform, how exchanges operated as partnerships between the federal government and states will perform, and what actions states may take in “federal facilitated” exchanges.nnFor example, a state-based exchange may opt to use the federal government to determine the advance premium tax credit (APTC) and cost-sharing reduction, the individual responsibility requirement and payment exemptions, reinsurance, and risk adjustment. States seeking to operate a state-based exchange or electing to participate in a state partnership exchange must submit a complete exchange blueprint no later than 30 business days prior to the required approval date of January 1 (November 16, 2012, for plan year 2014). The blueprint is available 
The rising tide of electronic health records (EHRs) in hospitals is lifting many other boats, ranging from clinical analytics apps to private health information exchanges. Another beneficiary is medical device integration (MDI) software, which connects medical device data output to EHRs.nnAccording to a new Capsite survey, 44% of the nearly 300 responding hospitals said they had purchased an MDI application in recent years. The majority of those purchases were made in 2011 and 2012. 
Colorado Providers:nnWe are getting a new Medicare Administrative Contractor (MAC). No longer will Trailblazer be our Medicare contractor. The new company, Novitas Solutions, Inc.nnIf you receive payments through EFT (and you probably do) you must update your information.nnIf you need assistance please e-mail us at 
d on July 13 that it has not imposed a deadline on states to determine whether to expand their Medicaid programs. The Supreme Court recently ruled that states are not required to participate in the Affordable Care Act’s expansion of the Medicaid program, which expands eligibility to people with incomes up to 133 percent of the federal poverty level. In response to a letter from 10 Republican governors, CMS Acting Administrator Marilyn Tavenner responded that “there will be no deadline for a state to tell [the Department of Health and Human Services] its plans on the Medicaid eligibility expansion.” In addition, states that do not expand Medicaid or establish a health insurance exchange will not have to pay back any federal funding that it has received already.nnIn related news, the National Association of Public Hospitals and Health Systems (NAPH) is concerned that up to 30 states may decline to expand Medicaid. The NAPH President and CEO, Bruce Siegel, said that up to 13 million people would remain uninsured if 30 states, including the 26 that filed suit against the federal government to challenge the ACA and the Medicaid expansion, do not expand Medicaid. NAPH is concerned that hospitals will not be able to provide services if states do not expand Medicaid, particularly in light of the ACA’s reduction in Disproportionate Share Hospital (DSH) payments.nnSource: www.polsinelli.com; Polsinelli Shughart PC; July 18, 2012.