Business Models, Mergers & Acquisitions, and Legal Issues
Although much has been made about the difference between non-profit and for-profit healthcare systems, there is really little difference when it comes to the RCM process. Both will work to optimize the process, streamline coding, and attempt to minimize the time between the patient care and the payment. The major difference has been the ability to invest capital into the process, which has traditionally been easier in for-profit systems.
The use of the EHR makes it much easier to collect the data for RCM usage. Even before this, larger organizations were better able to implement Clinical Documentation Integrity (CDI) teams as part of the evolution of Medical Records into Health Information Management. 24 Until the push for implementation of EHRs as part of 2009’s HITECH Act, only the larger and for-profit (or very well endowed academic) organizations were able to make the capital investment. Current CDI efforts, however, have reached a maturity level so that continued improvements in case mix are near a plateau. 34
The continued run of mergers and acquisitions generally contributes to efficiencies in RCM. It’s not, however, as simple as just having the new facility switch to the parent facility’s system. Each facility should start by stabilizing their current processes, then standardizing their processes, and finally consolidating the process. It is important to remember that this, like almost every other aspect of business, is a process, not an endgame. Consolidation should lead to streamlined patient experience (and thus improved patient satisfaction), greater nimbleness in responding to external pressures, and an overall reduction in costs. 41 Continued merger and acquisition activity also has potential for negative impact, particularly with concerns that both horizontal and vertical provider consolidation raises prices, and that payer consolidation lowers payments (although does not necessarily decrease premiums). The Federal Trade Commission (FTC) has cited several constraints in their ability to review and enforce anti-trust laws, particularly on non-profit hospitals. 42
The otolaryngology department at Henry Ford Health System noted that general coding teams, responsible for a wide range of specialties, tend to have more variability in the coding process, leading to submission of inconsistent or incorrect claims. They implemented a specialty-specific team for their service line, which included training sessions with coders and practitioners together, fostering better understanding of the process for both sides. Although they saw no significant change in the dollars collected, every other metric improved, particularly days to completion of coding, and days in A/R, which dropped by 50%. 43
Optimizing the RCM for a facility or health system is not without risks, however. There are legal precedents and ongoing lawsuits about billing and antitrust issues in California and other states.
A class-action lawsuit was filed against Sutter Health by the UFCW & Employers Benefit Trust (UEBT) and the Attorney General of California in 2014. The anticompetitive practices identified in the lawsuit included Sutter’s expanding their market power in Northern California, and then using that power to negotiate significantly higher healthcare prices than would have been charged in a more competitive market. Sutter denies the claims and has pointed to data showing that it actually charged less for inpatient care compared to other hospitals in the region (including Kaiser Permanente, Dignity, and Adventist). Nevertheless, a $575M antitrust settlement has been approved. 44,45
Sutter’s issues have continued. The Department of Justice announced a $90M settlement under the False Claims Act for care provided to Medicare Part C (Medicare Advantage). The government alleged that Sutter Health, including both hospitals and affiliated clinics, submitted unsupported diagnosis codes for certain patient encounters, and that once they were aware of the error, failed to take sufficient corrective action. 46
Prime Healthcare, along with their founder and CEO, Dr. Prem Reddy, agreed to pay $65M to settle allegations that 14 of their hospitals knowingly submitted false claims by admitting patients who required less costly outpatient care, and by billing for more expensive patient diagnoses. This settlement was issued in 2018, for patient care that occurred between 2006-2013. The statement by the Department of Justice specifically mentions including complications and comorbidities as part of upcoding practices. Prime Healthcare, along with Dr. Reddy and Dr. Siva Arunasalam, settled with the DOJ in 2021 for another alleged violation of the False Claims Act as well as illegal kickbacks paid to Dr. Arunasalam. In addition, Prime and Dr. Reddy have entered into a new Corporate Integrity Agreement with the HHS-OIG. 47,48
Stanford Healthcare is currently in the midst of a lawsuit by the Department of Justice for alleged fraud, in excess of $468M. Of note, the complaint alleges that the scheme began in about 2008 when the “newly implemented ‘EPIC’ electronic medical record system came into use.” The case is currently before the Ninth Circuit District Court. 49,50
The RCM process continues to evolve, as providers and payers alike play the game. New rules from CMS appear annually. Healthcare continues to shift towards Value Based Purchasing instead of Fee For Service or even DRGs.
One of the most significant changes in recent years was the passage of the No Surprises Act. 51-53 Part of the Consolidated Appropriations Act of 2021, part 1 of the interim regulations were posted July 1, 2021, and they take effect September 13, 2021. Key components include
- insurance plans disclosing the Qualifying Payment Amount (QPA) and the methodology by which it was calculated with the provider/facility,
- notice and consent which includes a good faith estimate of the amount that a provider may charge the patient, even if they intend to bill the plan or coverage directly.
Recent reports in the popular press have been shaking the business of healthcare. UnitedHealthcare strongly influenced the report written by Yale researchers about out of network billing, which in turn strongly influenced Congress. Questions about the integrity of the research have not been answered. 54 Early evaluation of the Merit-Based Incentive Payment System (MIPS) scores showed limited evidence that a better score was associated with lower rates of hospital complications, and noted that “the main problem with MIPS may not be whether the incentives are large enough to influence physician behavior but rather whether the MIPS quality score is scientifically valid and measures physicians’ contribution to outcomes.” 55,56 And The New York Times reported on hospital and insurer prices, noting that sometimes “insured patients are getting prices that are higher than they would if they pretended to have no coverage at all.” 57
The modern history of healthcare has seen a variety of attempts to control rising costs, with increasing demands by insurance payers and government agencies for specification, systemization, and specialization. This has in turn increased the amount of data to be analyzed, which leads again to systems and agencies with their own biases and agendas. Since data gathered by these systems will be used to justify system changes, gaming the system changes the rules of the game.
How does this relate to Informatics? It’s all about that data…
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