Improving Reimbursement: Time for a New Approach?
San Diego—The complexities surrounding health care reimbursement in the United States have prompted some health systems and hospitals to rethink their billing models.
At the 2019 OR Business Management Conference, three employees from Carris Health, a health care system in southwest and west central Minnesota, described recent efforts to revise their institution’s reimbursement model with the aim of increasing revenue and providing more accurate, transparent prices to patients. More specifically, the health system moved to a reimbursement model based on weighted averages. Using weighted averages instead of averages accounts for the fact that not all Current Procedural Terminology (CPT) codes are created equal, and assigns greater value to CPT codes associated with greater revenue.
OR Management News spoke to the presenters—Jaclyn Hinderks, FHFMA, MBA, MSA, the director of revenue cycle; Kristine Lingle, MSN, RN, CNOR, the director of perioperative services; and Sheila Irons, AAS, a reporting analyst—about the current state of reimbursement in the United States and their efforts to improve reimbursement at Carris Health. The following answers are composites of their responses.
Can you provide insights on the growing dissatisfaction with the state of reimbursement?
A: Dissatisfaction may not be the best word; it’s more about managing reimbursement in a dynamic and changing environment by thinking differently from traditional OR charge structure models. The traditional business model of fee-for-service reimbursement is evolving and transforming across the country from new incentives and new competition. Reimbursement rates continue to decline and payors are enacting site-of-service policies, forcing providers to change where and how services are provided. The current reimbursement structure for acute care facilities is being outpaced by the expenses required to provide care—supply and labor, as well as the intense regulatory and clinical documentation integrity requirements. High-deductible insurance plans that may lead patients to delay care as well as a shift in health care cost responsibilities to the consumer also present new challenges to patients and providers.
What was the goal of revising your institution’s reimbursement strategy?
A: Our main goal is to improve the accuracy and transparency of pricing. We want to be known as a leader in affordability in the region for price-sensitive services, create a pricing strategy that is competitive in the marketplace and aligned with our value proposition, and have rational pricing ahead of the market as the transition to value accelerates.
Why does adjusting to a weighted average method provide a better assessment of pricing compared with averages or relative weight?
A: Transitioning from generic-level procedure charging and adopting the weighted method to create a standardized rate came from the idea of being paid for the actual procedures being documented, performed and reported on claims. This method became a defensible way to stand behind our charging and see trends in revenue, which could be used to implement changes to workflow or cost analysis. The focus of the project was to align prices in a method that was supportive and transparent. The change to the new methodology allowed us to mitigate losses from an inaccurate charge structure that didn’t allow us to optimize full legal reimbursement. Additionally, this method improved our patient bill estimates by providing more accurate out-of-pocket expenses based on services provided.
Do you have any recommendations or advice for other health systems/hospitals on managing their reimbursement?
A: The solution does not reside in one department alone. Rather, it takes a team of knowledgeable individuals across a broad spectrum of expertise with varying viewpoints to provide input and direction.