2. Introduction
• VP of Corporate Pharmacy contacted Mark
Huizenga to assess eight of the HOPD /
Hospital Out Patient Department infusion
centers across the Hospital service area
• The Infusion Centers were located in Three
states and provided a broad range of products
and services.
3. Assessment
• The infusion center assessments reviewed:
– Charge Capture
– Correct Coding
– Product Pricing
– Rejections
– Revenue Cycle
– Work Flow
– General Observations
4. Observations
• Documentation was inconsistent
• Charge capture was inconsistent
• Verification / Eligibility of insurance process needed
improvement
• No understanding of the financial performance of the infusion
centers
• Medical staff in some facilities were unaware that the facility
existed
• Little or no mention of the facility in marketing materials,
website and external pharmaceutical websites
• Perception that “someone else was taking care of problems”
i.e. billing, authorizations , etc.
5. Observations Continued
• Infusion was identified as not a key service / service line
– but rather an adjunct to the hospital
• Perception by many hospitalists providers that they do
not have the ability to refer to the infusion center
• Hours of operations / location of services may vary from
one day to the next
• Infusion operations in silos with minimal intra-
departmental communication i.e. billing / scheduling
• Pricing of products resulted in low reimbursement
• Documentation forms varied dramatically from site to
site
6. Recommendations
• A “deep dive” of the infusion center processes
• The “turn-around” of infusion services was
projected to take 18 months
7. Outcomes
• Identified a manager of infusion services
• Facilitated infusion center therapy plan protocols
• Analyzed various drugs to identify margin on infused
products
• Collaborated with Business Development / Sales &
Pharmacy to revise Charge Master Methodology
• Collaborated with revenue cycle service to improve
verification / eligibility / authorization process
• Identified an interface issue at one hospital
• Identified and developed study for a consistent, meaningful
productivity metric
• Identified methodology to determine margin statement for
infusion centers (Dimensions facilities)
8. Outcomes
• Identified opportunity for more referrals from
hospitalist physicians
• Increased awareness to support the methodology
to Increase referrals from outside physicians
• Identified and escalated data dictionary issues at
one hospitals data system
• Identified issues with pharmaceuticals being
charged as non-formulary (and not receiving
reimbursement)
• Created margin study for Remicade / Infliximab vs
self-injectable
9. Identified a manager of Infusion
Services
• New manager was identified and transitioned
to the position of manager of infusion services
• Infusion centers now have a central point
person to assist with questions about
reimbursement and new products as well as
to coordinate corporate strategies
10. Facilitated Therapy Plan Protocols
• Utilizing an evidence based approach, infusion
center drugs were evaluated based on
volumes and referring physicians to identify
products that most urgently needed therapy
plans
• Participated in conference calls with teams as
therapy plans were developed / deliberated
• Ensured feedback was obtained from all
facilities
11. Conducted Patient Chart Assessments
and Data Analysis
• Worked with finance department to identify data
elements to provide data for multiple deep dive
analyses
– Identified a greater understanding of products and
volumes in the various infusion centers
– Provided in depth knowledge of payor mix
• Detail chart audits were critical for identifying
reimbursement and product pricing issues
– Identified payor that was not reimbursing based on
contract expectations) – should have paid based on J-Code
but was transmitted as if it were a commercial payor
(identified 4,161 claims to be resubmitted, total charges of
$20,615,483)
12. Charge Master Methodology
• Charge Master methodology had been based on a
complex formula that resulted in leaving “money on
the table” for certain products (often complex /
expensive infusion biologics)
• In the past, mark-up categorized all drugs into 26
categories and applied various mark-ups
• Recommended using the same basis for markup for all
drugs for 2014. A new markup basis, GPO cost, was
implemented
• An ad hoc mark-up for 21 drugs and a mid-year mark-
up of additional chemo and biologic drugs,
implemented and are projected to increase charges by
$12.9 million
13. Charge Master Example
• Tysabri (Natalizumab) was priced at such a low rate that the commercial
payor (70% of Charges) actually paid less than Medicare
• The charge for 300 mg was $3,789 – Medicare Reimbursement was $3,687
vs $2,652.30 for commercial payors
• Revised charge was increased to $7,813
• This drug is for MS – many patients will be younger and more likely to
have a commercial insurance
2013 340B Facility Non-340 B 2014 340B Facility Non-340B
Charge 3,789.00 7,813.20
Acquisition Cost 1,302.00 4,414.00 1,302.00 4,414.00
Medicare Reimbursement* 3,687.00 2,385.00 (727.00) 4,191.00 2,889.00 (223.00)
Commercial 70% of charges payor 2,652.30 1,350.30 (1,761.70) 5,469.24 4,167.24 1,055.24
*ASP +6 as of 4/1/2013
Pharmacutical Margin Pharmacutical Margin
14. Ensure verification / eligibility /
authorization process
• Identified the need for Revenue Cycle Advocate
position for pharmacy. Collaborated with pharmacy
and prior authorization team to determine why
products were not being authorized
– 29 encounters of IVIG, generating charges of $235,905
were analyzed only $6,482 in receipts primarily due to a
lack of authorization
– IVIG may have been preauthorized but authorized as IVIG
not the specific product.
– Identified that a broad number of IVIG products were
utilized, and collaborated with pharmacy team to reduce
the formulary of IVIG products to 3, Gammagard, Privigen
and Gamunex-C (decreased costs, # of products to carry,
increased net reimbursement)
15. Identified Interface Issue
• An audit of infusion transactions was
conducted
• An issue was identified with the charge entry
system; facility code was not interfaced to the
billing system correctly
• Total of $507,288 was rebilled based on this
interface error; projected reimbursement
$201,545
16. Financial Statements
• Infusion center financial reports only provided staffing
expenses and professional infusion revenue
– Many of the facilities have blended nursing departments
– Worked with finance to establish cost centers to provide
segregation of nursing revenues and expenses
• Majority of expense, revenue, and margin is in the
pharmacy department combined with all other facility
pharmacy business
• Working with finance to separate infusion pharmacy
costs/charges from the larger pharmacy budget to result in
a baseline for the business
• HER data is now available for ad hoc analysis that can
create an understanding of financial performance for
pharmaceuticals for an infusion center as never before
17. Financial Statements—
New cost centers implement results in the
ability to now validate growth
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
Jan Feb Mar Apr May Jun
Charges by Month – Hospital A Infusion
Charges
Linear (Charges)
18. Development of Productivity Metrics
• Infusion centers across the system provide a broad range of services with
varying degree of complexity i.e. chemo vs therapeutic
• Identified all infusion service HCPCS codes, mapped to standard definitions
and tRVU (Total Relative Value Unit) that will allow for a standard
productivity metric
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Hospital A tRVU by CPT code
2014
2013
19. Identification of a Methodology to Determine
Margin Statement for Infusion Centers
• Infusion centers are often in
“blended cost centers.” We
have worked with finance to
obtain approval to create
separate cost centers for
infusion
• Developed ad hoc analysis of
Dimensions data to determine
definitive margin for infusion
centers
Total Charges Infusion $16,549,036
Collection %* 36.517%
Gross Revenue $6,043,708
Less Acquisition Cost (Rx) $4,405,366
Net Revenue (Rx) $1,638,341
Annualized Net Revenue $2,457,511
Infusion Center Performance
Jan 1-Aug 31
*Business Dev & Sales, Gross and Hybrid Net Rev, Jan thru July 2013
20. Identified Opportunities for More
Hospitalist Referrals
• Many hospitalists physicians were not aware
that the infusion center existed
• Many hospitalists physicians were under the
impression that they could not refer cases to
the infusion center
• Coordinated discussion with leadership to
obtain clarification
21. Recommended Increasing
Referrals from Outside Physicians
• Unlike other ancillary services (Radiology)
facilities non-privileged physicians cannot
refer to outpatient infusion
– Worked with leadership to define the issue and
define the barriers
– Affiliate and Associate classes can now refer
patients to outpatient infusion (no admitting
privileges)
22. Increase Awareness of Infusion Services
for Patients
• Infusion Centers were not listed consistently on the
hospital Health website
• External pharmaceutical websites did not list the
hospital as a provider of many drugs that are infused
• Information on pharma websites is ready to be
deployed – a unique account was developed for each
facility by MHSC staff
– Patients that seek locations for specific products will now
be able to identify the hospital as a provider
• Presence for Infusion Services and for most facilities on
corporate hospital website
– Facility-specific information collected to provide more
detail to patients and physicians
23. Hospital C– Multiplier Issue
• Audit of Hospital C infusion identified an issue with the
“multiplier” that was in the system for the product
Daptomycin
• A 500mg dose should have been billed as 500 units (for gov’t
payors), but was billed as 1 unit (the number of vials used).
• 500 mg of Daptomycin is charged at $578.13 – unfortunately
when the charge is 1 mg vs 500 mg the reimbursement is only
$0.54 (Acquisition cost for this product is ~ $275 / 500 mg
• The product had been charged erroneously as far back as we
could examine
• Claims within filing limits were resubmitted
24. Identified Issues with Pharmaceuticals
Being Charged as Non-formulary
• Data analysis revealed that Pralatrexate was being charged as
“non-formulary” which resulted in a non specific HCPCS code
being submitted to the insurance company (J-3490)
• The J-3490 non-specific code is typically reserved for
products that are inclusive in the procedure or products
typically used in procedures while Pralatrexate is a complex,
very expensive drug used to treat Lymphoma
• The patient evaluated had 6 visits at the HOPD facility
generating charges of $26,977 per encounter or a total of
$188,839 which was reimbursed at $0.00. The acquisition
cost of this product is approximately $11,000 per dose. It
was also billed in 1 mg increments and should have been
billed as 54 mgs
• All visits were rebilled
25. Margin Study for Remicade / Infliximab
vs. Self-injectable
• It was stated that the hospital intended to transition patients from
Infliximab to Humira to reduce spend
• A margin study based on actual reimbursement from EOB’s
indicated a strong positive margin, particularly in 340B facilities
– Medicare $1,240.40
– BCBS McareOP $1,290.89
– BCBS OOS $4,482.32
• This study helped ensure that we did not move forward to eliminate
use of a drug that physicians want to prescribe that also has a
positive margin
