The document discusses how hospitals and health systems can prepare for bundled payments and pay-for-performance contracting. It outlines challenges such as fluctuating profits, rising costs, and shifting to outpatient care. It also discusses the need for data aggregation and business intelligence tools to track costs, utilization, and quality measures in order to succeed under new payment models.

2. 7 th Annual The Revenue Cycle Management Summit Panel Discussion How to Prepare Providers, Hospitals and Health Systems for Bundling Payments and Pay-For- Performance Contracting

3. The future requires out of the box thinkers Information processing continues to become faster and cheaper. Information exchange between professionals will be the norm (nationally and internationally) Connectivity between people will expand exponentially Banks will predominate healthcare via financial tools and clinical applications Employer groups will promote Banking Institutions involvement in health care cost control, information technology and exchange Communities will become the engines to promote health

4. We have an app for that….

5. Insurance Premium Breakdown Administrative Fee Profit Medical Costs

6. How Does an Insurance Plan Make Money? Controlling costs of services Controlling utilization of services Controlling network of providers Improving administrative efficiency Selling actuarial sound premiums to large populations (rule of large numbers) Insuring actuarial sound contracting to providers & facilities to match “state approved” premiums

7. What three regulatory changes, near future, will alter insurance plans profits? (requiring change to systems of improving patient outcome and cost controls) Cap on Medical Cost ICD 10 Aggregation & Analysis of High Volume, Divergent Data

8. getting squeezed? How do hospitals… Track costs of goods, clinical services, link charges to services, couple services to payments, analyze payments to expected reimbursements and aggregate information by payor, by groups, by providers? Assure coordination of insurance benefit payments, recognize underpayments, overpayments, patient financial responsibility and maximize A/R? Identify diagnosis for payment, manage cash flow, understand accounts relievable, track performance standards and meet regulatory billing requirements? … ..with difficulty, high administrative expense and lost opportunity costs.

9. Financial Pressures Flattening profit margins Growing administrative expenses Shifting from in-patient to out-patient services Multiple variations in payment arrangements Technology pressures: * Medical error reductions * Legacy computer systems * EMR integration * HIPAA

10. Bundling of Payment Information Challenges Variability (data, populations, clinical services) Flexibility (regulatory compliance, state/federal rules, third party payors needs, patients requirements) Personal preferences (CEO, CMO, CFO, Risk Manager, Clinical Pharmacist, Physicians, Materials Management, Nursing, Janitorial services, House Keeping, Bed Control, Registration etc.) Different financial requirements (in patient/outpatient costs, reimbursements, charges, purchasing, denials, appeals etc.) Trends (clinical errors, high risk/low risk procedures, readmissions, utilization, quality measures etc.)

11. A real balancing act

12. Data aggregation, track, trend, alerts against clinical & financial benchmarks Hospital’s Current Projects Electronic Medical Records Tools Needed to Identify Medical & financial Risk 2011+ Business Intelligence Software

13. Integrating healthcare information… clinical & financial Performance indicators: Stricter regulations & billing requirements Speed of collections Reduced contractual allowances Lower bad debt Understanding underpayments Controlling pre-authorization and pre-certification Claims denial management Identifying overpayments BI applications attributes: 1. Recognition of meeting regulatory requirements 2. Tracks, monitors, alerts variation 3. Provides a picture into contract application verse group 4. Tool to help indentify “at risk” pop. 5. Tool to identify high risk devises 6. Tool to help indentify “at risk” pop. 7. information on appeals 8. Tool to ID risk for audits.

14. Identification of Medical Risk Tools to Identify Financial Medical Risk late 90’s To Present Numerator Medicine Tools to Identify Financial Medical Risk 2011+ Denominator Medicine

15. Data elements consistent in hospital’s information silos which run in different software environments Materials Management Patient Demographics Medical Record Number Third Party Payor Location of Service ICD-9/CPT-4/DRG Provider Information Lawson Data Elements

16. Data Engine DATANEX (powered by proprietary pattern recognition software) ADT, 837, 835, Billing, Collection Charge Master Information Pharmacy Financial & Utilization Information In/Out Patient Clinical Utilization Physician Information, ICD9, CPT etc . Self Building Longitudinal Patient & Physician information Key Information Dash Board & “ Alert” engines Rules, Laws, Regulations, Comparison data Materials Management (medical devises) Sentry Data Systems Current Structure

17. Adopting and accepting new process “ Doing more with less”

18. Hospitals need to link services preformed to hospitals charge codes The charge codes need to link to revenue codes Revenue codes are aggregate to an episode of care and then billed electronically as a claim 837 Insurance plans process the claim and return the information (electronically or on paper) with payment in standardized form 835 The information of billed, paid and allowed need to be compared and then a bill to the patient is generated or another claim is generated to the secondary insurer Patient Information Medical Record Number Patient Account Number (Visit Number) Patient Last Name Patient First Name Patient Mid Initial Patient Status (Inpatient/Outpatient) Drug Information Charge Drug Master (CDM) Code Charge Drug Master (CDM) Description Charge Amount Revenue Code CPT-4 Code HCPCS Code J-Code Quantity Date of Service Time of Service Batch Date (Posting Date) Type of Charge (Batch or Journal) Medical Record Number Account Number Patient Last Name Patient First Name Patient Middle Initial Patient Status Charge Drug Master (CDM) Code Charge Drug Master Description Charge Amount Revenue Code CPT-4 Code HCPCS Code J-Code Code Quantity Date of Service Time of Service Posting Date Type of Charge Hospital Charge Information

19. Why do hospitals need claims BI Applications? To assure proper reimbursement in the shortest time at the lowest administrative cost Understand & manage costs and cash flow Decrease write offs Assure services rendered are billed Link costs to specific contracts Evaluate financial information timely Monitors electronic claims submission Tracks claim outliers Alerts when services are not billed Allows for specific contract analysis Provides high level and drill down for A/R Hospital’s Requirements Claims Guardian output

20. BI Applications allows hospitals to evaluate contract reimbursement & performance measures 1. Contract terms Claim submission timeframes Authorization / referral processes 2. Payment terms Prompt-pay / payment timeframes Explanation of payment / benefits 3. Governing regulations HIPAA, CMS (HCFA), NCQA, JCAHO, ERISA, State laws 4. Analyze & profile contract specifics: Trend by payor, claims in A/R over 61 days. 5. Track disputed claims use information to improve payor’s contract language.

21. Examples of critical Information generated by revenue cycle BI applications 1 . Hospital Charge master codes Links charge master to revenue codes Provides a tracking system that alerts missing charge master to revenue codes Example: A service with no charge and consequently not linked to revenue code. 2 . Link Revenue Code to a Claim Assures that all the revenue codes are link to a claim No volume or time limitation for alert system 3. Explanation of Payment (EOP): Links 837 claim to reimbursement form 835 No volume or time limitation for alert system 4 . Provides a way to analysis the service preformed Eg. CPT, HCPC, J Code Links patient and physician and location of service to the ICD-9 codes , Charge master and revenue codes associated with hospital’s intervention Clinical aspect: Performed service, captured the service, billed for service, reimbursed for service, link to physician that performed service, link to patient that received the service and the diagnostic codes. All of the key components are reflected in both physician and patient databases

22. 5 . Provides linkage of diagnostic codes with patient event The system captures both the primary and all secondary diagnosis codes (ICD-9) which will allow institutes to better bill secondary insures 6 . Recognition of utilization patterns: Links specific revenue codes/charges/procedures to a specific third party payor (BCBS plan 123, with employer group 8910) 7. Are we flagging (alerting) change in patient clinical severity eg. Transfer from Med/Surg bed to an ICU bed. eg. How does system recognize death events. 8. Recognition of utilization patterns: Must link specific revenue codes/charges/procedures to a specific third party payor (BCBS plan 123, with employer group 8910) 9. Utilization What are the mechanisms established to link utilization of services other than pharmacy to location, physician, patient, and third party payor?

23. Identification of financial & medical risk Tools to Identify Medical Risk late 90’s Numerator Medicine Tools to Identify Medical Risk 2011+ Denominator Medicine

24. Identification of financial & medical risk Tools to Identify Medical Risk late 90’s Identify patients in “risky in environments” Identify patients getting “risky services” Identify providers who “over-utilize” Identify patients who “over-utilize” services Identify facilities who are “high priced” Tools to Identify Medical Risk 2012+ Population Based Medicine Analytic applications to pre-determine risk & measure under-utilization Benchmarks to measure variations from standards Evaluation of community needs and services (apply small scale epidemiology) Aggregation of vast data depositories to analyze & measure trends Computer generated analytics to alert for interventions Computer assisted decision support engines Patient self-selection (community wide education)

25. Medical Cost Drivers Numerator vs. Denominator Data Medical Cost Drivers late 90’s Long Length of Hospital Stays (LOS) High Hospital Bed Day Rates (bed days/1000) Unbridled Use of Expensive Technology (out-patient) Underutilization of Sub-Acute Care, Home Care, Hospice Care “ Fee for Service” Specialists Medical Cost Drivers 2011+ Health Plan Cap on Medical Costs (no shifting between service products) Reduction or Elimination of Small Group Insurance Shifting Insurance Plan’s Administrative Medical Costs to Providers “ Pay for Performance” Measures

26. Balancing the Pie Bundle Payments for Providers linked to Performance Measures Insurance Premium Administrative Fee Profit Medical Costs

27. Medical Cost Controllers Medical Cost Controllers late 90’s Capitation for specialists (PMPM) Moving PCPs to “Fee for Service” away from capitation Carve outs for Disease Management Providers (global fees) Intense medical management at insurance plan -Daily hospital utilization review (nurse on site) - Preauthorization for out patient services Aggressive “Fee for Service” hospital contracting Medical Cost Controllers 2011+ Global Fee contracting with all health care providers Detailed medical coding (ICD-10) to define global fee contracting Significant reduction or complete elimination of medical management by insurance plan Investment in “Pay for Performance Models” (Care Targets) Data converted to timely information for action within the fiscal quarter

28. To manage “Bundled Payments” one needs to build technology systems like Lego's (integrated & connected) Consider options for health information technology that fits within the organization’s financial limitations and operational structure to assist in capturing data and converting it to information to meet evolving “meaningful use” & reimbursement requirements. Examine technology systems that build upon each other and allow seamless integration for exchange and flexibility in capturing data to allow variations in software applications required to meet the dynamic definition of “meaningful use”, Variations in reimbursement structure.

29. “ Bundling Payments link to performance measures ” promotes linkage of divergent data sets to manipulate and re-compile information into transaction sets that, if applied, will have financial and clinical impact

30. Sentry Data Systems Key Values 1. A non intrusive Web based addition that integrates with any technology platform 2. Operates in a cloud computing environment coupled with propriety aggregation engines to allow rapid development and implementation, both retrospectively and prospectively, of unique applications empowering the management team to make critical decision within a financial quarter. 3. Software flexibility to aggregate and link all financial and healthcare data into individual longitudinal patient and physician records which then can be reassembled with focused applications on medication utilization/purchases, charge Master entries, quality initiatives, clinical/ financial protocols, third party contracting and risk management without a tether to a technical team. 4. Sentry’s platform will import divergent elements, store, aggregate, integrate vendors and export data to generate information to effect financial and quality drivers, which if altered, improves a institution’s bottom line.

31. Thinking about “bundled payments linked to performance measures”… requires thinking out of the box

32. About Sentry Sentry offers healthcare business intelligence technology solutions that address a variety of operational, workflow, compliance, and financial challenges found within hospitals and pharmacies. These products include the hospital pharmacy management application Sentinel RCM™ (Revenue Cycle Manager), pharmacy transaction processing platform Sentrex™, and the healthcare business intelligence application HealthBIT™ (Business Intelligence Technology). These products run on Sentry's healthcare cloud computing platform, Datanex™, which is available to independent software developers and other healthcare entities. Headquartered in Deerfield Beach, FL, Sentry Data Systems, Inc. currently serves clients in over 35 states and its systems process millions of healthcare transactions per day William D. Kirsh, DO, MPH Chief Medical Officer [email_address] 800-411-4566