1. Health Policy Analysts Using Cost Analysis for Sustainability Cost Analysis Simplified Part 2 January 26, 2016 George H.W. “Gerry” Christie Health Policy Analysts ghchristie@att.net

2. Housekeeping Sign-In and Evaluation Forms –Scan to JDecker@hcet.org JDecker@hcet.org –Fax to (317) 247-9055 Technical difficulties? Call Jason at (317) 247-9008 2015 Cost Analysis Manual Slides archived at www.hcet.org www.hcet.org 2

3. Health Policy Analysts Type your comment in the Chat box and hit “send.” The drop-down menu should be set to “All Panelists.” 3

4. Health Policy Analysts Our Instructor George “Gerry” Christie PhD from Syracuse University Health Policy Analysists – Senior Partner Director of Health Services of a community- based center affiliated with a county health department

5. Health Policy Analysts Objectives For This Session By the end of this training, participants will be able to: Complete the IL Simplified Cost Analysis. Understand how to use the Outside Laboratory Form. Describe the role Relative Value Units (RVUs) play in an effective cost analysis. List the steps involved in collecting the RVUs relevant to their clinics. Set Fees for Services based on the Cost Analysis.

6. Health Policy Analysts Today’s Plan for Learning 1. 1. Complete the Clinical Sheet. 2. 2. Review of the Outside Laboratory Form. 3. 3. The importance of Current Procedural Terminology (CPT) Codes. 4. 4. How to find RVUs for your program/ 5. 5. How to set fees based on the Cost Analysis.

7. Health Policy Analysts Completion of the Clinical Form Complete the utilization column on the Clinical Form using data for the same time frame as the fiscal data on the Cost Report. Count CPT Codes that are accompanied by an ICD-9 V25 code (before 10/15) or ICD-10 Z30 codes, as the primary or secondary diagnosis. Complete the utilization for lab services provided In-house.

8. Health Policy Analysts Completion of the Outside Laboratory Form

9. Health Policy Analysts Completion of the Outside Lab Form Costs associated with laboratory services provided by the family planning program to clients for tests sent to an outside reference laboratory. as defined in your proposal and/or contract.). Tests in this category are limited to those that are a direct part of the core family planning program (as defined in your proposal and/or contract.).

10. Health Policy Analysts Completion of the Outside Lab Form Complete the utilization column on the Outside Lab form using data for the same time frame as the fiscal data on the Cost Report. After you enter an utilization number on Column “C”, go to the corresponding cell on Column “I” and enter the cost, or average cost, you paid to the reference lab for that test last year.

11. Health Policy Analysts Assigning Relative Values to Services

12. Health Policy Analysts The Importance of CPT Codes Almost all Cost Analysis models rely on Current Procedural Terminology (CPT) Codes and a Relative Value system. Calculations involve assigning a CPT code for each service, procedure or visit provided in the clinic. The “Procedures” tab in the ILSCA workbook shows the majority of services provided by most family planning programs.

13. Health Policy Analysts Relative Values There is an established relative value for each of the CPT codes. The relative value is the relationship between each procedure and all others It represents each procedure’s “worth” in terms of time and financial return in relation to all other procedures.

14. Health Policy Analysts Relative Value Units (RVUs) Example: Procedure X relative value unit = 40.0Procedure X relative value unit = 40.0 Procedure Y relative value unit = 20.0Procedure Y relative value unit = 20.0 Procedure X is “worth” twice as much as Procedure YProcedure X is “worth” twice as much as Procedure Y

15. Health Policy Analysts The Importance of CPT Codes If the program uses the same codes for other specialties (primary care, etc.) you must be able to identify when the code is used for family planning. This is generally accomplished by reviewing the diagnostic codes attached to the services.

16. Health Policy Analysts Relative Value Units (RVUs) There is an established RVU for most of the service related CPT codes. The ILSCA uses the Resource Based Relative Value Scale (RBRVS) from the Centers for Medicaid and Medicare Services (CMS) to determine the relative value of services.

17. Health Policy Analysts Resource Based Relative Value Scale (RBRVS) Consists of three elements: Physician (Clinician) workPhysician (Clinician) work Practice’s (Overhead) expenses (net of malpractice expenses)Practice’s (Overhead) expenses (net of malpractice expenses) Cost of malpractice insuranceCost of malpractice insurance

19. Health Policy Analysts The Procedures Tab

20. Health Policy Analysts Finding Relative Value Units (RVUs) Review the document “Finding and Updating Relative Value Units” that we sent to you. This is a more extensive piece than that found in the “obtaining updated relative value units (RVUs)” section of the ILSCA Manual. Begin by going to the CMS webpage for RVUs: http://www.cms.gov/Medicare/Medicare-Fee-for- Service-payment/PhysicianFeeSched/PFS- Relative-Value-Files.html Begin by going to the CMS webpage for RVUs: http://www.cms.gov/Medicare/Medicare-Fee-for- Service-payment/PhysicianFeeSched/PFS- Relative-Value-Files.html http://www.cms.gov/Medicare/Medicare-Fee-for- Service-payment/PhysicianFeeSched/PFS- Relative-Value-Files.html http://www.cms.gov/Medicare/Medicare-Fee-for- Service-payment/PhysicianFeeSched/PFS- Relative-Value-Files.html

24. Health Policy Analysts View Process for Downloading of the RVUs

25. Health Policy Analysts Relative Value Units (RVUs) for Outside Labs The relative values for these codes are established based on the Clinical Diagnostic Laboratory Fee Schedule published by CMS for the current year. The “National Limit” value is used as the relative value for these tests.

26. Health Policy Analysts Relative Value Units (RVUs) for Outside Labs If no “National Limit” values are available, the “midpoint” amount is used. If neither of these is available, the specific payment for the state is used.

27. Health Policy Analysts Finding Relative Value Units (RVUs) for Outside Labs Review “Finding and Updating Relative Value Units”. Begin by going to the CMS webpage for RVUs: Begin by going to the CMS webpage for RVUs: https://www.cms.gov/Medicare/Medicare-Fee- for-Service- Payment/ClinicalLabFeeSched/index.html?redire ct=/ClinicalLabFeeSched/ https://www.cms.gov/Medicare/Medicare-Fee- for-Service- Payment/ClinicalLabFeeSched/index.html?redire ct=/ClinicalLabFeeSched/

30. Health Policy Analysts View Process for Downloading of the Lab RVUs

31. Health Policy Analysts Development of Fees

32. Health Policy Analysts Development of Fees The fee scale you establish will be based on the outcome of the cost analysis. It must generate sufficient income, along with other sources of revenue, to maintain the program.

33. Health Policy Analysts Establishing Fees You need to examine why it is costing so much to provide the service. This is a time to review efficiencies that can be implemented in the program and to ask critical questions. What happens if the fees that are established by the cost analysis are not affordable for the program clients?

34. Health Policy Analysts Establishing Fees What are the costs of comparable services in your area? Are you competitive? Do you offer more than, the same, or fewer services as other providers? Can you afford to continue offering these services? What “discounts” are you offering and when?

35. Health Policy Analysts Questions and Discussion

36. Health Policy Analysts Thanks for attending! Please complete Sign In and Evaluation Forms Fax to (317) 247-9055 Scan to jdecker@hcet.orgjdecker@hcet.org Visit www.hcet.org -- archived webinars + eventswww.hcet.org Follow-up Questions to ezeldin@hcet.orgezeldin@hcet.org 36