How to Create a Defensible Pricing Strategy. National Rural Health Resource Center Rural Hospital Performance Improvement (RHPI) Project

Transcription

1 How to Create a Defensible Pricing Strategy National Rural Health Resource Center Rural Hospital Performance Improvement (RHPI) Project November 30, 2012 John Behn, MPA

2 Pricing Policies and Procedures Hospitals typically do not have written policies governing the pricing of: Technical Procedures Professional Procedures Pharmaceuticals 250 Revenue Code 636 Revenue Code Radiopharmaceuticals / Radioactive Isotopes Contrast Agents Supplies Room and Board rates Observation hourly charges

3 Pricing Policies and Procedures Pricing policies ensure: Consistency across departments Consistency across same procedure codes Compliant and equitable billing process Increased customer service Defensible pricing structure Increased departmental ownership and accountability

4 Medical and Surgical Procedural Pricing Policy

5 Professional and Technical Charges Professional and technical charges should have separate and distinct pricing baselines Administration must decide which payor baseline to utilize Medicare APC Medicare Local or National Part B Fee Schedule BCBS Contract Commercial Contract Pricing policy should be flexible enough to allow for different markups by modality Pricing markup should be based on only one payor Be consistent Utilize markup values to ensure proper revenue capture by modality Pay attention to payor mix

6 Professional and Technical Charges Analysis must be undertaken to identify current pricing structure by department and modality Analysis should include top 3 payors Include Medicare APC values Identify comparative payor multiplier range Identify current payor markup averages Utilize results to identify ongoing markup by modality Analysis mitigates the impact of lesser of charge logic Eliminates pricing variability

7 Department: APC Multiplier Range: BCBS Multiplier Range: COMM Multiplier Range: Mnemonic Gl Dept Charge description HCPCS HCPCS SI Rev Current Charge Amt. APC Payment Rate APC Multiplier Variance APC to Current 3S INSERT NON-INDWELLING CATHETER X 761 $54.00 $ S INSERT TEMP INDWEL CATH SIMPLE X 761 $ $ S BLADER INSTALATION T 761 $ $ S WOUND VAC SURFACE <= 50 SQCM T 761 $ $ S WOUND VAC SURFACE > 50 SQCM T 761 $ $ S OBSERVATION PER HOUR G0378 G0378 N 762 $23.00 #DIV/0! S TELEMETRY OBSERVATION PER HOUR G0378 G0378 N 762 $26.00 #DIV/0! SG DIRECT ADMIT TO OBS NOT MEET G0379 G0379 Q3 761 $69.50 $ Mnemonic Gl Dept Charge description HCPCS HCPCS SI Rev Current Charge Amt. BCBS Fee Schedule BCBS Multiplier Variance BCBS to Current 3S INSERT NON-INDWELLING CATHETER X 761 $54.00 $ S INSERT TEMP INDWEL CATH SIMPLE X 761 $ $ S BLADER INSTALATION T 761 $ $ S WOUND VAC SURFACE <= 50 SQCM T 761 $ $ S WOUND VAC SURFACE > 50 SQCM T 761 $ $ S OBSERVATION PER HOUR G0378 G0378 N 762 $23.00 $0.00 #DIV/0! S TELEMETRY OBSERVATION PER HOUR G0378 G0378 N 762 $26.00 $0.00 #DIV/0! SG DIRECT ADMIT TO OBS NOT MEET G0379 G0379 Q3 761 $69.50 $0.00 #DIV/0! Mnemonic Gl Dept Charge description HCPCS HCPCS SI Rev Current Charge Amt. COMM PRICE COMM Multiplier Variance COMM to Current 3S INSERT NON-INDWELLING CATHETER X 761 $54.00 $ $ S INSERT TEMP INDWEL CATH SIMPLE X 761 $ $ $ S BLADER INSTALATION T 761 $ $ $ S WOUND VAC SURFACE <= 50 SQCM T 761 $ #DIV/0! -$ S WOUND VAC SURFACE > 50 SQCM T 761 $ #DIV/0! -$ S OBSERVATION PER HOUR G0378 G0378 N 762 $23.00 #DIV/0! -$ S TELEMETRY OBSERVATION PER HOUR G0378 G0378 N 762 $26.00 #DIV/0! -$ SG DIRECT ADMIT TO OBS NOT MEET G0379 G0379 Q3 761 $69.50 #DIV/0! -$

8 Professional and Technical Charges Create models with actual utilization data Compare current methodology with new pricing levels by payor and location Calculate gross revenue variance by payor Calculate gross revenue variance by location IP OP ER Analysis allows you to identify the impact of pricing changes on Medicare co-insurance amounts Self-Pay population Deductible plans 8

9 Department: Facility ER APC Multiplier Range: Average APC Multiplier: 2.28 ( National APC Values utilized for comparison ) Procedure Code Description Department Rev Code HCPCS Charge APC Value APC Multiplier 3X APC Variance to Current ID SUB Q ABSCESS SIMPLE ER $ $ $ $ ID SUB Q ABSCESS COMPLEX ER $ $ $ $ ID PILONIDAL SIMPLE ER $ $ $ $ ID PILONIDAL COMPLEX ER $ $ $2, $1, FB REMOVAL SUB Q SIMPLE ER $ $ $ $ FB INCISIONAL REMOVAL COMPLEX ER $ $1, $3, $2, ID HEMATOMA ER $ $ $2, $1, ASPIRATION PUNCTURE ABSCESS ER $ $ $ $ WOUND DEBRIDE SKIN PART THICK ER $ $ $ $ WOUND DEBRIDE SKIN FULL THICK ER $ $ $ $ WOUND DEBRIDE SKIN & SQ TISSUE ER $ $ $ $ WOUND DEBRIDE SKIN/SQ TIS/MUS ER $ $ $ $ AVULSION NAIL PLATE ER $ $ $ $ AVULSION NAIL PLATE EACH ADDL ER $68.50 $ $ $ ID SUBUNGUAL HEMATOMA ER $65.50 $ $82.89 $ EXCISE INGROWN NAIL ER $ $ $ $ NAIL BED REPAIR ER $ $ $ $ REPAIR SIMPLE TO 2.5 CM T,E,S, ER $ $ $ $ REPAIR SIMPLE CM T,E,S ER $ $ $ $ REPAIR SIMPLE CM T,E, ER $ $ $ $ REPAIR SIMPLE CM T,E,S ER $ $ $ $ REPAIR SIMPLE CM T,E ER $ $ $ $ REPAIR SIMPLE OVER 30 CM T,E,S ER $ $ $ $ REPAIR SIMPLE TO 2.5 CM F,E,E, ER $ $ $ $ REPAIR SIMPLE CM F,E,E ER $ $ $ $ REPAIR SIMPLE CM F,E,E ER $ $ $ $ REPAIR SIMPLE CM F,E, ER $ $ $ $ REPAIR SIMPLE CM F,E,E ER $ $ $ $ REPAIR SIMPLE CM F,E ER $ $ $ $ REPAIR SIMPLE OVER 30.0 CM F,E ER $ $ $ $ FB REMOVAL OCULAR SURFACE ER $ $ $ ($26.68) FB REMOVAL OCULAR EMBEDDED ER $ $ $ ($26.68) FB REMOVAL CORNEAL WO SL ER $ $ $ ($26.68) FB REMOVAL AUDITORY CANAL ER $88.00 $ $ $ REMOVAL IMPACTED CERUMEN ER $88.00 $ $ $ GASTRIC INTUBATION/LAVAGE ER $ $ $ ($37.76) CPR ER $ $ $ ($152.03) Department Composition 9

10 Procedure Code Description Dept Rev Code HCPCS Charge APC Comm MCR Self Pay PEIA MCD Other Gov Total Units Current Gross Gross at 3X APC Variance to Current ID SUB Q ABSCESS SIMPLE ER $ $ $13, $16, $3, ID SUB Q ABSCESS COMPLEX ER $ $ $2, $3, $ ID PILONIDAL SIMPLE ER $ $ $ $ $ FB REMOVAL SUB Q SIMPLE ER $ $ $ $2, $1, FB INCISIONAL REMOVAL COMPLEX ER $ $1, $ $3, $2, ID HEMATOMA ER $ $ $ $2, $1, AVULSION NAIL PLATE ER $ $ $ $ $ ID SUBUNGUAL HEMATOMA ER $65.50 $ $ $ $ EXCISE INGROWN NAIL ER $ $ $ $ $ NAIL BED REPAIR ER $ $ $ $ $ REPAIR SIMPLE TO 2.5 CM T,E,S, ER $ $ $18, $18, $ REPAIR SIMPLE TO 2.5 CM T,E,S, ER $ $ $ $ $ REPAIR SIMPLE CM T,E,S ER $ $ $5, $5, $ REPAIR SIMPLE CM T,E, ER $ $ $ $1, $ REPAIR SIMPLE TO 2.5 CM F,E,E, ER $ $ $23, $25, $2, REPAIR SIMPLE CM F,E,E ER $ $ $7, $8, $ REPAIR SIMPLE CM F,E,E ER $ $ $ $ $ REPAIR SIMPLE CM F,E,E ER $ $ $2, $2, $ REPAIR SIMPLE CM F,E, ER $ $ $1, $1, $ LAYER CLOSURE CM S,A,T ER $ $ $ $1, $ LAYER CLOSURE CM S,A, ER $ $ $ $ $ LAYER CLOSURE TO 2.5 CM N,H,F, ER $ $ $ $ $ LAYER CLOSURE CM N,H,F ER $ $ $ $ $ LAYER CLOSURE 2.5 CM LIP,MU MB ER $ $ $ $ $ LAYER CLOSURE LIP,MUMB ER $ $ $ $ $ LAYER CLOSURE CM LIP,MU ER $ $ $ $ $ LAYER CLOSURE CM LIP,M ER $ $ $ $ $ REPAIR CMX CM TRUNK ER $ $ $ $ $

11 Procedure Code Description Dept Rev Code HCPCS Charge APC Commercial Current Commercial Gross Commercial Gross at 3X APC Variance to Current ID SUB Q ABSCESS SIMPLE ER $ $ $1,812 $2,240 $ ID SUB Q ABSCESS COMPLEX ER $ $ $227 $280 $ ID PILONIDAL SIMPLE ER $ $93.33 $0 $0 $ FB REMOVAL SUB Q SIMPLE ER $ $ $0 $0 $ FB INCISIONAL REMOVAL COMPLEX ER $ $1, $0 $0 $ ID HEMATOMA ER $ $ $0 $0 $ AVULSION NAIL PLATE ER $ $54.70 $0 $0 $ ID SUBUNGUAL HEMATOMA ER $65.50 $ $66 $83 $ EXCISE INGROWN NAIL ER $ $ $0 $0 $ NAIL BED REPAIR ER $ $ $0 $0 $ REPAIR SIMPLE TO 2.5 CM T,E,S, ER $ $ $4,850 $4,942 $ REPAIR SIMPLE TO 2.5 CM T,E,S, ER $ $ $255 $260 $ REPAIR SIMPLE CM T,E,S ER $ $ $511 $520 $ REPAIR SIMPLE CM T,E, ER $ $ $237 $260 $ REPAIR SIMPLE TO 2.5 CM F,E,E, ER $ $ $4,494 $4,942 $ REPAIR SIMPLE CM F,E,E ER $ $ $766 $780 $ REPAIR SIMPLE CM F,E,E ER $ $86.70 $0 $0 $ REPAIR SIMPLE CM F,E,E ER $ $ $1,021 $1,040 $ REPAIR SIMPLE CM F,E, ER $ $ $255 $260 $ LAYER CLOSURE CM S,A,T ER $ $ $0 $0 $ ER INTERMEDIATE ER $ $ $139,440 $238,268 $98, ER INTERMEDIATE ER $ $ $3,360 $5,741 $2, ER INTERMEDIATE ER $ $ $240 $410 $ ER EXTENDED ER $ $ $183,918 $220,307 $36, ER EXTENDED ER $ $ $12,552 $15,036 $2, ER EXTENDED ER $ $ $3,275 $3,922 $ ER COMPREHENSIVE ER $ $ $42,667 $41,783 -$ ER COMPREHENSIVE ER $ $ $33,737 $33,038 -$ ER COMPREHENSIVE ER $ $ $3,969 $3,887 -$ CRITICAL CARE MIN ER $1, $ $6,246 $5,825 -$ CRITICAL CARE MIN ER $1, $ $0 $0 $ CRITICAL CARE MIN ER $1, $ $1,562 $1,456 -$105 2,093 $565,727 $720,834 $155,107 % Increase 27%

12 Description Dept Rev Code HCPCS Charge APC Comm MCR Self Pay PEIA MCD Other Gov Total Units Current Gross Gross at 3X APC Variance to Current ID SUB Q ABSCESS SIMPLE ER $ $ $13, $16, $3, ID SUB Q ABSCESS COMPLEX ER $ $ $2, $3, $ ER COMPREHENSIVE ER $ $ $356, $348, ($7,377.45) CRITICAL CARE MIN ER $1, $ $93, $87, ($6,319.80) 1,811 2,417 2, , ,452 $3,157, $4,143, $986, % of Total ER Utilization 16% 21% 19% 6% 35% 4% % Increase 31% Description Dept Rev Code HCPCS Charge APC Comm MCR Self Pay PEIA MCD Other Gov Total Units Current Gross Gross at 3X APC Variance to Current REPAIR SIMPLE CM F,E,E ER $ $ $ $ $4.85 THORACENTESIS W/ INSERT TUBE ER $ $ $0.00 ($476.50) ER COMPREHENSIVE ER $ $ $65, $64, ($1,356.30) CRITICAL CARE MIN ER $1, $ $7, $7, ($526.65) $252, $271, $18, % of Total IP Utilization 5% 71% 7% 3% 13% 2% % Increase 8% Description Dept Rev Code HCPCS Charge APC ` MCR Self Pay PEIA MCD Other Gov Total Units Current Gross Gross at 3X APC Variance to Current REPAIR SIMPLE TO 2.5 CM T,E,S, ER $ $ $ $ $14.55 STRAPPING SHOULDER ER $ $ $ $ $82.42 ER COMPREHENSIVE ER $ $ $192, $188, ($3,986.70) CRITICAL CARE MIN ER $1, $ $7, $7, ($526.65) ,314 $453, $477, $23, % of Total OP Utilization 19% 46% 10% 3% 23% 0.3% 5% 12

13 Surgical procedures Professional charges should be set at the procedural level Majority of facilities bill all surgical procedures via increments of time Issues arise around procedures with minimal time increments: Colonoscopy Endoscopy Podiatry Ophthalmology Minor General Surgery (Lump and Bump) 13

14 Surgical procedures Analysis must take place to compare incremental time methodology versus billing via fixed procedural pricing methodology Actual CAH Example: Colonoscopy 30 minute surgery CPT Colonoscopy and biopsy Time Methodology $600 / half hour Total Charge $ Procedural charge at 3X APC Total Charge $1, BCBS reimbursement $ Ophthalmology Cataract 30 minute surgery CPT Cataract surg w/iol, 1 stage Time Methodology $600 / half hour Total Charge $ Procedural charge at 3X APC Total Charge $4, BCBS reimbursement $2,

15 Surgical Many hospitals cannot handle multiple charging methodologies within a department Limits placed by Billing system Personnel Coding If limits cannot be overcome, bill all surgeries at the procedural level Reimbursement impact of lesser of logic is to great to ignore Utilize all available contractual information available 15

16 Lab Most hospitals have multiple lab platforms Reference labs In-house tests In-house charge based on fee schedule analysis Reference lab charges based on cost Best practice designates separate GL or departmental designation for reference labs Allows lab to conduct real time cost analysis conduct utilization analysis conduct reimbursement review ensure proper pricing determination 16

17 Lab Specific lab CPT designation should live within a lab department only once Multiple listing of same CPTs within the same department creates unnecessary chargemaster complexity opportunity for pricing variability lost gross and net revenue Analyze major payors and determine current payor multiplier Determine base line and create specific, consistent markup Review reference lab invoices on a consistent basis and modify where necessary 17

18 Supplies Hospitals typically do not have written policies governing chargeable versus non-chargeable supplies To be chargeable, supplies should be Patient specific One time patient use Disposable Meet cost threshold Hospitals must create, implement, communicate and maintain a policy governing Supply pricing methodology Chargeable vs. Non Chargeable 18

19 Supplies policy 19

20 Supplies Involve purchasing to review all supplies within the CDM Purchasing review identifiers: Description issues Identifies outdated items for deletion / inactivation Identifies proper EACH cost Many hospitals have supplies in the chargemaster listed with the box, pack, kit, case price Supplies should be exempt from yearly price increase Allow actual cost to determine base for markup 20

21 Dept Rev I do not know Does facility still Correct Number Num Description Code what this is. use this supply? EACH Price Price Comment MS X 4'S 8PLY STERILE MS CANNISTER SUCT. 1100ML ER 0 X 0 not recognized MS IN 1 CLEAN CONNECTOR MS ACE BANDAGE 2" MS ADAPT FLAT BARRIER RINGS 0 MS ADAPT OSTOMY BELT MED 26" 0 MS AIRWAY BERMAN 100MM ADULT MS ALCOHOL OS TYPEWRITER RIBBON NUK DRESSING CHARGE 270 X 7 not recognized CIDA-STAT SCRUB FRACTURE PAN CATHETER SUCTION CRUTCH TIPS ENEMA OIL ADAPTIC / XERO SQ " 272 X 7.2 not recognized OS PRINTER RIBBON GSX190 CIT COLOSTOMY BAG 270 X 7.5 not recognized DE LEE SUCTION 270 X 7.5 not recognized DISPOSABLE VAGINAL SPEC. 270 X 7.5 not recognized NITRAZINE TEST 270 X 7.5 not recognized AMNIO HOOK DISPOSABLE STRAPS STAPLE REMOVER WOUND CLEANSER SIMPLE DRESSING 270 X 8 not recognized STER-STRIPS 272 X 8 not recognized POPE EAR-WICKS UNDERPADS FM CT DEPT & NUCLEAR MED ALLDRESS 4x4 16" OR < 272 X 8.12 not recognized CATHETER PLUGS CLEAN CATCH KIT FACE MASK 270 X 8.5 not recognized SUTURE REMOVAL KIT KOTEX PERI WASH FM CCH SUPPLY REQUISITION OS PRINTER RIBBON OKI192PREM JOINT ASPIRATING/INJECTIO 270 X 9 not recognized MEDIUM DRESSING PHY.THER FM PATIENT FAMILY EDUCATION FM DAILY WORKSHEET FM MEDICAL/SURGICAL 8 1/2X

22 Pharmaceuticals, Contrast Agents, Radiopharmaceuticals and Radioactive Isotopes 22

23 Pharmaceuticals, Contrast Agents, Radiopharmaceuticals and Radioactive Isotopes Create specific designations within the CDM for the utilization of pharmacological agents Revenue Code 25X Utilize for pharmacological agents provided on the IP floors, within the ER and OR Utilize for contrast agents which do not have specific HCPCS designation Pricing based on administration dose / vial size Units are usually 1 Facilities will base price on cost or AWP Be Consistent Items are generally billed via interface directly onto the billing system Investigate options for the pharmacy system to control pricing Pricing and markup stored in pharmacy system CDM codes set to charge editable with a price of $

24 Pharmaceuticals, Contrast Agents, Radiopharmaceuticals and Radioactive Isotopes Create specific designations within the CDM for the utilization of pharmacological agents Revenue Code 63X Utilize for all OP services Pricing based on HCPCS value Differs from the pricing of 25X drugs Drugs are billed with appropriate unit designation Pharmacy must be involved in setting the appropriate price Facilities will base price on cost or AWP Be Consistent. 24

25 Pharmaceuticals, Contrast Agents, Radiopharmaceuticals and Radioactive Isotopes Create specific designations within the CDM for the utilization of pharmacological agents Revenue Code 63X All contrast agents, radiopharmaceuticals and radioactive isotopes with HCPCS designation fall under this methodology Pricing is based on acquisition cost correlated to HCPCS value Identify who purchases the items: Pharmacy Purchasing Department Involve the purchasing agent and technical expert to determine HCPCS price This is vital for Nuclear Medicine 25

26 Room and Board Hospitals should have a policy governing the constitution of Room and Board rates Does your facility have a policy which identifies components? What is included / excluded Nursing bed side procedures Facility component of physician bed side procedures Overhead, salaries, etc. How is it calculated? Do you have multiple rates based on acuity and location? Do you differentiate between pediatric and adult services? Does administration steering committee know what is included and excluded? Do you currently bill for non physician bedside procedures? PT/OT/ RT/ ST Does the hospital bill for physician bedside procedures? How do you bill for oxygen? Daily, hourly? 26

27 Observation Set rates for G0378, G0379, 99218, and All but G0379 Direct Admit to Observation are hourly charges Majority of hospitals set observation hourly rates lower than average nursing salary rates should be priced incrementally to reflect increased acuity Majority of facilities will match G0378 to Direct admit should be based on established fee schedule markup Observation rates should not be included in the automatic pricing increase Increases should be based on the actual costs for providing the services When prices are set to cover nursing costs observation rates will exceed inpatient room rates Administration, business office and customer service must be aware in order to handle patient inquiries 27

28 Next presentation How to Implement Departmental Revenue Cycle Accountability and Ownership Date: 12/5/2012 Time: 11:00 12:00 pm CT