Unit 7 Financial Analysis and Risk HCA B Frank Ceo Slides adapted from slideset by Adrienne Palmer, BSPH, MHA, FACHE

EMTALA  What is EMTALA?  Emergency medical treatment and active labor act  Governs when and how the patient must be examined and offered treatment or transferred from one hospital to another he/she is in an unstable medical condition  Passed in 1986 and sometimes referred to as the COBRA law (different from continuing coverage COBRA)  Applies only participating hospitals under Medicare  Overall principle is to prevent hospitals from rejecting patients because they are unable to pay.

EMTALA  Provisions:  Hospital must have a dedicated emergency department  Any patient who comes to the emergency department requesting examination or treatment for medical condition must be provided with appropriate medical screening examination to determine if has an emergent medical condition  Coming to the emergency department = within 250 yards  If patient does not have emergency medical condition than hospital has no further obligation  If a pregnant woman presents in active labor, some deliveries completed or transferred as appropriate

EMTALA  Emergency medical condition:  Acute symptoms of sufficient severity (including severe pain) such that the absence of immediate medical attention could be reasonably expected to result in placing the health of the individual or health of the woman and/or her child in serious jeopardy, serious impairment of bodily functions, or serious dysfunction of any bodily organ or part

EMTALA  Patient transfers to another facility:  Transfer after a patient has become stable can occur at any point and is not restricted by statute  Transfer of patient without emergency medical condition is permitted at any time and not restricted by statute  Transfer to another facility before the patient has become stable can only take place if it is an appropriate transfer under the statute

EMTALA  Stabilized: new material deterioration of the patient’s condition is likely to occur during transfer; for patients in labor – the infant and the placenta have been delivered  Should patient refuse examination and/or treatment: hospital must inform the patient of risk and benefits and patient must sign refusal to consent

EMTALA  Appropriate transfer:  Patient has been treated and stabilized as far as possible within the limits of the hospital’s capabilities  Patient needs treatment and medical risk of transferring outweighed by benefit of treatment at new facility  Process must be certified in writing by physician  Receiving hospital has been contacted and agrees to accept the transfer and has the facilities to provide the necessary treatment  Copies of patient’s medical records accompany patient during the transfer  Transfer includes qualified personnel and transportation equipment, potentially including life-support measures during the transfer

Your Turn:  Can you think of an example which would qualify for an “appropriate transfer” under EMTALA?  What steps would the hospital take to make sure the transfer occurred?

Good Business Plan  Reading List: Reading List: Reading List:  content/- /article_display_list/ /sick-baby- is-miles-from-anyone content/- /article_display_list/ /sick-baby- is-miles-from-anyone content/- /article_display_list/ /sick-baby- is-miles-from-anyone  Ingram and Spooner (2004)

Alternate Site  Demo/Tutorial From SBA:   htm htm

Writing a business plan  Begin with an executive summary  Detail what you are proposing  Business justification  Outline of costs  Risks that should be considered  Summary should be concise and compact; more is not necessarily better

Business plan  Your objectives are clearly stated  Consider the viewpoints of all stakeholders  Included evaluation of cost versus benefits; potentially calculate ROI for project or other financial measures  Evaluate personnel performance targets and any impact the project might have  Consider the patient perspective – i.e. patient centered concerns versus financial concerns

Business plan -- costs  Ensure they are legitimate costs  Realistic and accurate  If unable to be precise, then utilize both aggressive and conservative assumptions to illustrate potential project impact

Business plan -- questions  May be a good idea to build in questions that you may receive from board members in order to address them in advance  Also need to allow time for unanticipated questions after the formal presentation

Business plan – suggested layout  Title and description of proposal  Executive summary  Business objectives  Resources required  Risks

Medicare Hospital prospective payment system  When first established in 1965, Medicare was a retrospective cost-based reimbursement system, meaning that hospitals are reimbursed all of their costs. This resulted in increased costs to the US government of $34 billion between 1967 and  Your Turn: Using an estimate of 250 million Americans, how much was that cost increase per person?

 In 1982, Congress created a prospective payment system (PPS) to control costs. Reimburses on a per case mechanism for inpatient admission cases.

Retrospective payment system  Inflationary costs were enormous  Two factors blamed for growth in expenses:  Paying providers based on their charges created an incentive to provide more services  Increases and costly medical technology

Prospective payment system  Initiated in 1983  Four chief objectives:  Ensure fair compensation for services rendered and not compromise access to hospital services  Ensure process for updating payment rates accounts for new medical technology, inflation, and other factors that affect the cost of providing care  Monitor quality of hospital services for Medicare beneficiaries  Provide a mechanism through which beneficiaries and hospitals could resolve problems with their treatment

 Primary authority for managing PPS was granted to CMS  Your Turn: What does CMS stand for?

Role of peer review organizations  Monitor:  Validity of diagnostic information supplied by hospital for payment purposes  Completeness, adequacy, and quality of care provided to Medicare beneficiaries  Appropriateness of admissions and discharges  Purpose of care and outlier cases in which traditional Medicare payments were made  Managed by HHS

DRG classification system  Your Turn: What do DRG and ICD stand for?

 DRGs bundle services that are needed to treat a patient with a particular disease (ICD)  CMS creates a rate of payment based on the average cost to deliver care for that disease  Claims process:  Initiates with physicians documentation of the patient’s principal diagnosis, secondary diagnosis and other factors affecting patient care or treatment (complications and comorbidities)  Information is submitted through hospital’s medical records to a coder and then electronically to the fiscal intermediary on a UB 92 form  Intermediary inputs this into claims processing system, Medicare code editor, which screens all cases to sort those that need further review

DRG rate calculations:  DRG weights:  Each DRG has a unique weight  Weight reflects average level of resources for an average Medicare patients in the DRG  Cost-of-living adjustments exist and vary across the US  DRG payment factors:  Application of a wage index  Indirect medical education costs  Costs outliers

DRG payment factors  Sole community Hospital – located more than 35 miles from the hospital, sole source of inpatient hospital services in a geographic area, or designated by the secretary as a critical access hospital  Medicare dependent rural hospital– depends on Medicare for the 60% of its patient days or discharges  Regional referral hospital– serves as a referral center for other hospitals in the area, reimbursed according to payment rate for large urban areas  Some hospitals are exempt from the DRG system:  Psychiatric, cancer, long-term care, children’s, and rehabilitation hospitals

Updating DRG classifications and weights  Adjusted annually by CMS in a process referred to as reclassification  Adjustments account for:  Inflation, hospital productivity and new technology  Changes in resource consumption due to technology and other factors  changes in treatment patterns, technology and other factors that may change these of hospital resources

Your turn  What disease or injury does ICD-10 code  What disease or injury does ICD-10 code V9027XA stand for?   How many ICD-9 codes are there?   How many ICD-10 codes?   As administrators, how can you prepare for this change?

Wall Street Journal Article on ICD-10 codes  html?KEYWORDS=hospital+codes html?KEYWORDS=hospital+codes html?KEYWORDS=hospital+codes

Disproportionate Share Payments  Your Turn:  What are disproportionate share payments?

Discussion question  What does the application of DRG payment methodology mean to hospital administrators? i.e. how did this change the way we look at resource utilization?

Discussion question  Imagine you have identified a DRG where your costs significantly outweigh the payments. What steps might you take to evaluate the care process in an attempt to reduce costs? Who would you involve?

Unit 7 assignment   Externship Project – Section II   Financial Management and Planning of the Organization   In this section of your project, consider the financial management and planning aspects of the organization.   This includes an analysis of the service reimbursement for the organization (State, Federal, Insurance and Private Pay). An explanation of the economics involved in the sustainability of this model.   You should also develop a preliminary plan of action for the organization. This can cover any of the following:   Suggestions for human resources   Department or facility budgets   Grant writing   Plan for community outreach   Potential new revenue streams for the organization.   Cite at least four references in addition to your textbook to validate your proposal. Prepare this assignment according to the APA guidelines.   Remember to review final guidelines in Unit 9 for final externship project submission to make sure you are in compliance later.