CFOs must 'rev' up for 2014 (Healthcare Finance News)
[Written January 27,2014 by John Andrews]
Looking forward 12 months may cause some hospital CFOs to reach for the aspirin and antacids after considering the oncoming implementation deadlines, compliance mandates, policy questions and their combined impact on revenues. Even the most optimistic observers consider 2014 to be a formidable challenge.
To be sure, the next year will be a busy one for all involved in healthcare finance, between handling the influx of patients newly insured under the Affordable Care Act, the ICD-10 coding launch on Oct. 1, the continued proliferation of RAC audits and a variety of Medicare regulations, such as the readmission penalty. It is a lot to handle in one calendar year, said Ronnie Dail, revenue cycle leader for Chicago-based Huron Healthcare.
“The biggest issue is the concurrence of all these concerns,” he said. “The new exchange insurance plans are live in January and likely ramping up throughout the year; ICD-10 hits in October, meaningful use is still out there, many organizations are in the middle of health information system conversions and also under intense pressure to reduce costs.”
These are all high priorities, which Dail refers to as “Quadrant 1” activities. Because healthcare leaders will be consumed with these issues, the lower-priority-but-still-important “Quadrant 2” initiatives, such as patient engagement, physician integration and strategic alliances, are likely to sit on the back burner throughout the year.
“It is going to be very challenging for organizations to do all of this, let alone do it well,” he said.
Bobbi Brown, vice president of financial engagement for Salt Lake City-based Health Catalyst, believes a lot of large providers are prepared for ICD-10, but that small providers most likely are not. While time is running down, she said it’s not too late to get ready for the fall transition.
“I think 10 months is enough time for the smaller providers – the larger ones have already done their testing,” Brown said. “We’re doing everything we can to make sure they are thinking about it and the new 1500 forms come out in April, which will force physicians to look at it.”
As the year develops, CFOs are likely to find themselves juggling a number of priorities – healthy days outstanding levels, positive accounts receivables and manageable bad debt, along with maintaining a steady billing cycle, clean claims filing and correct coding.
Additionally, the ACA will be in its execution phase, said Brown, “… and while we hope it will be flawless, it probably won’t be.” CFOs need to be extra vigilant, look at Hopefully it will be agile but CFOs need to be extra vigilant, particularly by stepping up A/R monitoring.
Though many providers do a solid job of managing the revenue cycle, even a small percentage of revenue leakage can amount to tens of millions of lost dollars in a typical well-performing health system, Dail said.
“There is not usually a ‘silver bullet’ to fix, but a host of interconnected processes that require concurrent review,” he said. “The greatest priority should be a comprehensive assessment of opportunities and an appropriately prioritized action plan to deal with a complex array of issues.”
Prioritizing revenue cycle issues should be paramount for CFOs, Dail said, who should seize the opportunity to address them as soon as possible.
“All the changes above are coming and even more are expected as value-based reimbursement takes grip,” he said. “If you are not high performing now, it is going to be more challenging as cost elimination starts to supplement reimbursement shortages and you are asked to do more with even less and under greater strain and environmental demands.”
Year of the ____
If 2014 is to be characterized with a definitive phrase, there are a multitude of descriptions that could fit.
In Dail’s view, it should be Year of the Healthcare Exchange.
“Thirty five million patients who were previously without third party coverage will now have access to coverage, but there will be less overall reimbursement in the system,” he said.
While it is impossible to predict all the impacts of the exchanges, Dail thinks that as macro-economic trends converge, providers will be driven to radically reassess costs, which may further spur merger activity to achieve better scale and lower overhead. Without a doubt, though, “… the introduction of healthcare exchanges and associated rules and regulations will impact healthcare economics and delivery for decades to come.”
As for Brown, she offers to options describing the coming year. The first is Year of the Revenue Cycle Recheck and the other is Year of Patient Transparency. Of the two, she said patient transparency is a financial consideration that providers should pay more attention to going forward.
“Patients should know what they owe when they arrive at the hospital,” Brown said. “Charge masters don’t tell patients everything they need to know. Providers need to have proper training and policies so that staff know how to work with patients and let them know their deductibles.”
[Written January 27,2014 by John Andrews]