THE TWO MOST IMPORTANT RELATIONSHIPS FOR INDEPENDENT GROUP SUCCESS IN THE AFFORDABLE CARE ERA
By Daniel G. Kirkpatrick and Michael Drinkwater
While the Patient Protection and Affordable Care Act became law in 2010, many of the “meaty” components (which we have come to more colloquially call Obamacare) became effective in 2014. During this interim period from 2010 to 2014 there was a lot of speculation on how the Affordable Care Act would impact hospitals, in general but more specifically emergency services. (The Hospital Executive’s Guide to Emergency Department Management, 2nd Edition) Well, we’re nine months into 2014 what have we learned?
• Hospitals are faced with significant revenue reductions.
• Hospitals are confronted with changes in how they staff their workforce and particularly whether or not to provide benefits to non full-time employees.
• Emergency department volumes, while witnessing a slight dip early in 2014, are increasing at an almost record pace.
• The self pay portion of the ED payer mix is deteriorating in states that have utilized Medicaid enrollment for new Obamacare recipients.
Hospitals are confronted with huge challenges on how to manage the costs of their workforce. Hospitals are confronted with new challenges with dramatically reduced revenues and this influx of newly covered Americans (now with health benefits) who reportedly are coming to the emergency department en masse. How does this play out for emergency department staffing companies? We see two crucial areas requiring focused attention in order for groups to be successful in this new affordable care era.
1. Your relationship with your client hospital – your client must understand that you are as interested in the hospital’s success as the hospital’s Board is.
2. Your relationship with managed care payers must be current, exceedingly well thought out and negotiated for success today and flexibility in the years to come.
How is your relationship with your client hospital?
Do you and members of your group understand the priorities of the Board? Are you and members of your group well informed about publically reported metrics that “paint the picture” of how your emergency department performs? Do you fully understand how your emergency department compares to local competitor emergency departments as well as regional emergency departments? If your hospital client is part of a chain or hospital group do you understand how your emergency department compares on key metrics to sister hospital emergency departments? If you and your group are not lock step in understanding the current pressures of your client hospital, you’re vulnerable to either being replaced or losing precious political capital in how you interact with your administrative leaders.
It is clearly our experience that hospitals seek partners that role model collaboration, cooperation and creative problem solving. In order to be a creative problem solver and proactive collaborator you have to understand your client hospital as well as they do. You have to be a nimble partner seeking opportunities to help the hospital be successful in all of its health service ventures.
Recommendations to Improve Your Client Hospital Relationship
1. Meet regularly with hospital leadership – you and members of your group should have deep relationships with all members of the C sweep (CEO, CMO, CNO, CIO, CFO, COO).
2. At least annually meet with your designated administrative contact and go through a formalized practice planning session. During this process ask your client hospital representative how they define “success” for the emergency services throughout the coming year. Drill these success characteristics into quantifiable measures. They should relate to your performance metrics, financial indicators and how the emergency department collaborates with inpatient services, ancillary services and community based services. Make these quantitative so that throughout the year you can monitor your progress.
3. At least annually your group should present to the Board. Give the Board an update on services provided through the emergency department, publicly reported performance metrics and new initiatives to improve services, collaborate with inpatient and community-based providers, achieve cost effective resource utilization or other specific initiatives identified through the annual practice plan.
How Is Your Relationship With Your Managed Care Payers?
Who in your group has initiated and sustained contact with the managed care payers and evaluated the effectiveness of relationships you have negotiated? How have you evaluated your fee schedule both as it relates to collections as well as competitive ED staffing groups in the area? How have you evaluated direct payer contracting versus multi-plan arrangements? If you have made decisions to remain nonparticipating with a payer, has that decision resulted in better collections? OR burdened the subscriber with onerous self-pay portions? OR resulted in assignment to the subscriber?
How frequently are your payer specific reimbursement models updated? One of the unintended (we think) consequences of the Affordable Care Act is a continued shifting by payers of self-pay responsibility to the patient, or subscriber. This has come in the form of increased annual deductibles and increased copay responsibilities.
In our experience many previously negotiated managed care contracts which may provide for a 3 to 5 percent annual increase are, in fact, not improving reimbursement to the groups in the current affordable care era. This occurs because of the increasing portion of the responsibility that is shifted to the patient through increased deductibles or copayment. Unfortunately the overall collection rate on self-pay portions is exceedingly low. Consequently the result of 3 to 5 percent annual increases doesn’t result in improving collections for the provider. (Martin Gottlieb & Associates)
Recommendations To Improve Your Managed Care Payer Relationships
1. Find a coding, billing and practice management partner that can assist you in fully understanding and analyzing current reimbursement levels of all your payers.
2. After understanding current reimbursement levels of all payers, develop a strategy to review opportunities for improvement and share those strategies with your client hospital (particularly if the client hospital is requiring that you perform direct contracting with poorly reimbursing managed care payers).
3. Form a relationship with someone who has expertise in negotiating with managed care payers in order to explore the best relationship for your group both short term and long term. You’ll need to understand current concessions and what they may provide for in future benefit and vice versa.
The Hospital Executive’s Guide to Emergency Department Management, 2nd Edition. HCPro, 2014.
Martin Gottlieb & Associates. The Shell Game – Reimbursement in the ACA Era. Jacksonville, FL, 2014.