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Archive for August, 2011

Add Some Science To The Argument

Posted by J. Paul Spencer, CPC, CPC-H in Industry Updates

This week, in the course of my usual perusal of all things newsworthy, I couldn’t help noticing that this has been a big week for science. Two planets, one colder than the human body and one that is made completely out of diamonds, were discovered by astronomers. A study estimated that there are roughly 8.8 million species of organism on the planet, with only 25% having been discovered thus far. Finally, and unfortunately, most every television we turn on right now has at least one oceanographic map showing the path of Hurricane Irene, showing us meteorology in more immediate terms.

In contrast, a majority of the news that came out of the health care sector this week revolved not around medical discoveries, but finance, and not in a good way. My inbox was seasoned with stories of hospital layoffs and mergers between facilities due to financial necessity. This past Tuesday, CMS released yet another payment initiative, this time dealing with bundled payments for facilities and physicians for hospital cases based on conditions treated, with the payments being generous or penurious depending on outcomes and applications of previously agreed-upon standards of care.

I am struck by the appearance of the rest of the scientific world moving forward while the medical community in the United States is focused not on research, discovery or health innovation, but with how to control costs.

There is a cautionary tale in another science story that came forth this week. Perhaps no scientific story will be bigger in 2011 than the end of the Space Shuttle program. In the beginning of the program, the Space Shuttles dealt mostly with the placement of satellites in high Earth orbit. In later years, one of the main tasks of Shuttle missions was delivering supplies to the International Space Station (ISS).

When the final flight of the program concluded earlier this Summer, it was understood that the reason for the demise of the program was its ”extravagant” cost. We were also told that the ISS would be resupplied by ships from the Soyuz program in Russia, as well as Japan and private firms in the United States. We were also told that they could provide the service at a lower cost.

With all of these facts in tow, and seeing what the orthodoxy of getting everything cheaper has done to destroy American businesses in my lifetime, it was with very little surprise that I read the story of the first such post-Shuttle resupply ship being launched in Russia on Wednesday, and subsequently crashing in Siberia. Three tons of food, water and other supplies instantly vanished. Lest anyone think that this is an isolated incident, it’s worth noting that this is the fourth failed launch from the Russian space program in the past nine months.

We find ourselves at a similar crossroads with regard to our health care system. The forces focused on lowering costs are beginning to dominate the argument about what’s best for the system as a whole. Lost in all the hand-wringing about dollars and cents is forgetting about the core mission of the field of medicine, which is healing the sick while doing no harm.

The study and application of the fundamentals of medicine is, at its root, a purely scientific endeavor. It has been a common refrain from our medical community, in the face of nearly 40 years of insurance company battering, that defensive medicine is now the norm. This style of practice is not what they have been trained to apply. We have learned far too often in human history that science must possess, above all other things, precision. When this is sacrificed to save a few dollars, you get results such as the children of thalidomide, E. coli outbreaks from our food and supply rockets crashing in rural Asia.

The study of evolution is in large part a study of adaptation. Our health care system is beginning to adapt to a cheaper model, but more and more I suspect that the evolving organism resulting from cost-cutting orthodoxy may turn out to be one far more lethal than any we have seen before.

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August 26th, 2011 | 2 Comments »

David K. Hoover, Vice President – Corporate Development

Posted by Lisa Velasquez in Fi-Med Management, Inc, Fi-Med News, Fi-Med's Executive Team

David Hoover brings thirty years of diverse healthcare leadership experience to the Fi-Med team.  A Kellogg MBA and Marquette lawyer, Hoover has served as senior executive and legal counsel for hospitals, physician organizations, healthcare systems and managed care organizations.  He has worked extensively with healthcare organizations in all phases of the business life cycle, from start-ups to closures, and in all environments including nonprofit, privately and publicly owned for-profits, secular and faith-based.

As Vice President – Corporate Development, Hoover will focus on strategy, business development and organizational alignment for the Fi-Med family of businesses.

Mr. Hoover has served on a variety of boards and committees for various professional organizations including the American Surgical Hospital Association, the Wisconsin Hospital Association, and the Wisconsin Bar Association, in addition to numerous community-based charitable organizations.

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August 22nd, 2011 | No Comments »

When Is A Business Model Not A Business Model?

Posted by J. Paul Spencer, CPC, CPC-H in Industry Updates

My wife is not a big fan of gambling. In the few instances during our nearly ten years together where we’ve found ourselves in a casino, we tend not to hang around long. We were in Vegas once and I dropped $60 on a particularly surly slot machine. What I wouldn’t give to have avoided that ten minutes of spousal rage.

When we think of gambling, we tend to think of smoke-filled dens of thick carpeting, thicker cigarette smoke and the thickest dreams of hitting it big. Yet gambling comes in many forms, such as driving a car at rush hour, eating a sandwich from 7-11 or sitting on a toilet seat in a truck stop.

Thanks to data from two recent independent reports, we can add running a medical provider organization to the list.

The first of these reports was released on Tuesday, when the American Medical Group Association (AMGA) detailed the ongoing struggle of physicians nationwide to develop a workable business model. The survey of medical group compensation and finances found that most provider organizations are operating at a loss. 

The section of the country where the group operated in 2010 went a long way in determining the average extent of losses. This ranges from organizations in the Western region of the country averaging a loss of -$27 per physician, to the Northern region of the country, where physicians are operating at a staggering yearly loss of $10,669 each. This was in spite of the fact that compensation increased roughly 2.4% across all specialties in 2010.

If the AMGA survey set the table, another survey from the Medicus Firm offered information that seemed to find at least some sources of the revenue problems faced by physicians. Medicus’ survey, found here, found that the average compensation of those surveyed was down .14% from 2009 to 2010. Sixty-six percent of physicians surveyed stated that they expect their income to either stay the same or decrease in 2011.

When physicians were asked what issue most limits their income, 30.2% selected reimbursement decreases, which far outpaced other factors such as payor mix, increases in overhead and patient volume.

We are in the beginning stages of what is expected to be a critical shortage of primary care physicians. When such a large swath of the established physician community objectively states that they don’t see their financial lot in life improving, that certainly works as a flare fired above the heads of potential medical students faced with a decision to take on ten years of college loans for an occupation where reimbursement has plateaued.

These and other surveys are also taking note of the fact that hospital affiliation doesn’t equate to a better financial outcome. My inbox has been littered lately with stories of hospital systems trimming payroll by removing employees at the bottom of the ladder. This may very well be a side effect of the pre-ACO physician hiring binge. Odds are strong that physicians that have already affiliated with hospital systems will see their salaries flatline as the realization hits home that someone needs to absorb practice expense.

The bottom line is that between declining reimbursement and the looming threat of more of the same under PPACA, the incentives to remain part of the medical profession are disappearing. Physicians are told by a new era of hard line legislators and an entrenched insurance industry that they must accept someone else’s business model and deal with it. In order to build a working model, you have to have a reasonable expectation of revenue, which, given the insurance industry’s penchant for non-compliance with their own fee schedules, is impossible.

Interestingly, in the Medicus survey, less than 5% of physicians overall stated that the concierge practice appeals to them most, with the majority of physicians continuing to prefer the familiarity of a single specialty practice. Sometimes, the worst kind of gambling happens not in a casino, but in the place that is most familiar to you, when you simply decide to do nothing in the hope that things improve. In the immortal words of Kevin Bacon in that cinematic classic Animal House, as he absorbs hits from a wooden paddle to his gluteus maximus, “Thank you sir, may I have another!”.

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August 19th, 2011 | No Comments »

The RAConteur: The Link That Wasn’t There

Posted by J. Paul Spencer, CPC, CPC-H in The RAConteur™

I don’t function well in Summer. It’s not as if being in Wisconsin will fry my brain cells like other places in North America. When I went on vacation, I found myself in Newfoundland with weather that was foggy, overcast and 55 degrees. Apparently, mild weather still doesn’t help at this time of the year. This is a roundabout way to tell the reader that at about 8 PM last night, I realized it was Wednesday.

I looked around the Recovery Audit universe over the weekend and found something quite odd on the CMS website. In the Recent Updates section, there is a new link entitled “8/15/11 Additional Documentation Limit Update for Providers”. Like most things revolving around the federal government these days, when you click on the link, it takes you straight to a page stating that the link cannot be found.

Luckily, in a paragraph on the same page similarly dated 8/15, it is explained that “The new limit increases the number of requests for providers whose calculated limit is below 35″. This new limit applies to “providers, excluding physicians and suppliers”, which I take to mean hospitals.

In the absence of an actual memo, I can relate that prior to Monday, the hospital request limits equated to 1% of all claims submitted in the previous fiscal year, divided into eight 45-day periods, with an upper limit of 300 ADRs per 45-day period. The exception to this rule is that hospitals with over $100 million in payments face up to 500 ADRs per 45-day period.

As a reminder, for physicians, the current documentation request limits that are actually available can be found here. For suppliers, you can find that information here. Continue to watch the link to the new ADR limits for information that can actually be digested.

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August 18th, 2011 | No Comments »

New Brunswick Is Not A Shiny Bowling Ball

Posted by J. Paul Spencer, CPC, CPC-H in Fi-Med Services

At this time last Friday, I was driving on the Massachusetts Turnpike, coming home from a whirlwind car trip to St. John’s, Newfoundland. With regard to our country’s financial health, and in particular how that affects our health care system, I picked an interesting week to drive a total of 5,108 miles from Milwaukee to the eastern edge of the continent and back in just under eight days.

I was taking notes in my car as I observed things about Canada that differed dramatically from life in the sunsetting empire to the south. In honor of that, I’d like to alternate some of these observations with updates from the world of the American health care system.

In Ontario, if you are clocked going 50 kilometers (30 miles) over the posted speed limit, you receive a $10,000 fine, your license is immediately suspended and your car is seized on the roadside. It will surprise many who know me that I returned from Canada with the same car in which I entered the country.

The ”deal” that was struck last week to raise the nation’s debt ceiling, while not addressing health care spending directly, still poses a threat to the Affordable Care Act. Currently, the lines are being drawn on each side for a “Super Congress”, consisting of 6 members from each party hand-selected by party leadership. Thus far, the only programs that are seriously being considered for cuts are Medicare and Medicaid. At best, this could be seen as a severe exercise in denial, given our involvement in two wars. At worst, this is a way to defund PPACA by rendering Medicaid unable to accept the 50 million-plus population of uninsured that will suddenly qualify for this coverage in 2014. Given that the Simpson-Bowles Deficit Reduction Commission had similar goals for Medicare and Medicaid earlier this year but couldn’t even agree on a final report, and given the ideologues that have been appointed to the Super Congress, I have no hope of a forthcoming useful solution to the country’s financial morass.

Radar detectors and honey bee importation are illegal in Nova Scotia. If you’re a honey bee that’s considering speeding in Halifax, prepare to have the book thrown at you.

Hoboken University Hospital in New Jersey recently filed for bankruptcy due to $50 million in debts it could not repay. Somewhere among all the unpaid invoices, the hospital happened to find $600,000 in total compensation as a golden parachute for a former CEO. This and other compensation arrangements are beginning to come under the microscope. The average salary for CEOs of non-profit hospitals in the Midwest is $481,000. The old argument of “we MUST offer high compensation to attract the best talent” unravels when this salary mark is juxtaposed against the trend of non-profits converting to for-profit systems for financial reasons. Throw in money to an ex-CEO whose “talent” led to $50 million is non-payable debts, and it quickly becomes outrageous.

Gasoline is over $5 per gallon in Canada, but due to the roads being in such tremendous condition (except for Montreal, that has roads and infrastructure resembling a war zone), my car got incredible gas mileage North of the Border.

The estate of a patient who passed away two years ago after a lengthy battle with progressive demyelinating neuropathy is being sued by Tampa General Hospital for the cost of care. Hopefully, the late patient at the very least lived in a house made of aluminum cans that can be turned in for recycling cash, because the final bill totals $9.2 million. More than any other story that I have ever come across, this one illustrates what kind of health care system we really have. A majority of the care this patient received was palliative in nature and only minimally decreased the progression of the disease. If a disease has no known cure, what is the best way for a patient to be treated? Additionally, who should pay for it? All the ACO models and expanded insurance pools created in the last two years do not offer a solution to these fundamental questions.

And finally…

There are no bumper stickers on the cars in Canada. When I pointed this out to my wife’s cousins at the end of the Canadian half of my journey, one of them stated “we really have nothing to say”. I disagreed. The reason that Canada has no bumper stickers is that they have no need for self-inflating jingoism. To put a bumper sticker on your car is to deliberately and needlessly pick a fight, either politically, by pointing out how wonderful a student your kid is compared to the car behind you or by telling the car following you that they are driving too close. None of these chest-thumping actions do anything to improve understanding or improve the society as a whole. Canadians argue, but they have the intellectual ability to do it with more than a throwaway phrase. In the end, they make decisions based on what is best for the society as a whole. Most importantly, Canadians NEVER stop rooting for each and every citizen to succeed at their chosen endeavor.

It’s not all hockey and doughnuts. We could learn a few things from Canada.

August 12th, 2011 | No Comments »

The RAConteur: Updates Both Subtle & Blunt

Posted by J. Paul Spencer, CPC, CPC-H in The RAConteur™

As I reintroduce myself to the reader after an extended journey through the northeastern portion of North America, two changes occurred with the Recovery Auditor universe that bear repeating.

I just gave you a hint of the first change. Without notice and without explanation, Medicare has renamed the “Recovery Audit Contractor Program” as the “Recovery Audit Program”. Every link name on the Recovery Audit Program page on the CMS website has now been changed to reflect this verbiage, but the documents themselves still use the “RAC” terminology. A hat tip goes out to Cyndee Weston of the American Medical Billing Association for bringing this change to my attention.  

The next change is a fundamental change to the overpayment process in the artist-formerly-known-as-RAC program. According to a recent Medicare news release, beginning on January 3, 2012, demand letters for identified overpayments will no longer originate from the recovery auditors. Instead, after one of the four auditors identifies an overpayment, the identified claim information will be forwarded to the corresponding Medicare Administrative Carrier (MAC). It will then be up to the MAC to issue a demand letter to the affected provider, showing the amount to be repaid.

Based on a recent issue I came across, in which the amount of the overpayment as identified by the RA and the amount recouped by the MAC were often at odds, this can be seen as a positive change to the program. This can also be seen as a significant savings to the individual recovery auditors. Beginning next year, the automated review process for the RAs becomes a big dollar proposition, as all resources will go into data mining for identification of aberrant claims. 

It’s worth noting that the complex and hybrid review processes will remain virtually the same, with the review results letters being issued by the RAs, and the Discussion Period still being offered as an option to providers who wish to refute findings. Beyond that, the overpayment demand will now come from the MAC.

I drove a lot of miles on my vacation, but eventually my journey came to an end. For the RAs, despite the name change, the road goes on forever.

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August 11th, 2011 | No Comments »