Issues and Implications: MedPAC to Benchmarks to KPIs

Observations, questions and answers during a week of pontification. 

So what’s new this week? In a previous Monitor Monday, I mentioned the recently released 2022 Medicare Payment Advisory Commission report to Congress that addressed several site neutral payment proposals. One other tidbit from that report is that they have suggested to the Centers for Medicare & Medicaid Services (CMS) that ED visits, critical care visits and trauma care facility charges be converted from standard APCs to Comprehensive APCs.

 That means the hospital would get one single payment for the ED patient who is not subsequently admitted to the hospital, just as Medicare now pays for outpatient surgery and outpatient care with observation services. With this proposal, if the ED physician does no CT scans or three CT scans and an MRI, no labs or a whole panel of labs, it is that one same payment. Once again, their motivation is to save Medicare money, but one must wonder at what cost? How many trauma centers will become financially nonviable if trauma visits are paid at one set level and lead to limited access to trauma care?

Next, I have been talking a lot about observation and billing. And that’s because there is a lot to talk about. It’s confusing. But last week I got an email from a hospital that was one of those “aha” moments. This person was inquiring about the observation patient that stays a few hours after they have been determined stable for discharge. Now for most hospitals Medicare pays the observation visit as a comprehensive APC, one fixed price so a few extra hours does not affect payment in most cases. But this hospital gets paid based on a percent of charges. That means that if an observation patient stays an additional six hours waiting for a ride and is not formally discharged until their ride arrives, as is routine in most hospitals, this hospital gets paid more money for the visit.

The Claims Processing Manual says “Billing ends when all clinical or medical interventions have been completed including care after the discharge order has been given” so that is not much help. Should these hours be billed as observation and paid as such? I am not so sure. Billing any unnecessary services is problematic but when there is actual direct revenue implication, it seems more significant.

Finally, last week I was talking to a group about my other favorite topic, the admission status of patients having elective joint replacement. And I was asked what was the benchmark inpatient admission rate?

Well, that was just the opening I needed to provide my definitions of a key performance indicator (KPI) and a benchmark. A key performance indicator is a random measurement of something/anything that can be easily generated by a hospital computer system with a couple of clicks that the C-suite has been convinced means something and a benchmark is an arbitrary target for that KPI set by someone with a cursory knowledge of the facts.

Of course, these definitions represent the epitome of my well-known negativism and should be taken with a grain of salt, but the request for a benchmark rate of inpatient admissions is a great example. Now what I was able to tell the questioner is that in 2021, the average inpatient percent was 30 to 35 percent.  But in no way is that the right rate for any one facility. The benchmark rate is when every patient is placed in the right status every time. That is the goal to which we should all strive.

Programming Note: Listen to Dr. Ronald Hirsch as he makes his Monday rounds during Monitor Mondays and sponsored by R1 RCM.

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Ronald Hirsch, MD, FACP, ACPA-C, CHCQM, CHRI

Ronald Hirsch, MD, is vice president of the Regulations and Education Group at R1 Physician Advisory Services. Dr. Hirsch’s career in medicine includes many clinical leadership roles at healthcare organizations ranging from acute-care hospitals and home health agencies to long-term care facilities and group medical practices. In addition to serving as a medical director of case management and medical necessity reviewer throughout his career, Dr. Hirsch has delivered numerous peer lectures on case management best practices and is a published author on the topic. He is a member of the Advisory Board of the American College of Physician Advisors, and the National Association of Healthcare Revenue Integrity, a member of the American Case Management Association, and a Fellow of the American College of Physicians. Dr. Hirsch is a member of the RACmonitor editorial board and is regular panelist on Monitor Mondays. The opinions expressed are those of the author and do not necessarily reflect the views, policies, or opinions of R1 RCM, Inc. or R1 Physician Advisory Services (R1 PAS).

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