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Winter 2021 - Critical Care

COVID-19 Business Recovery

The pandemic has caused a downturn in elective procedures, fewer non-COVID-19 admissions and decreased clinic/office visits, impacting margins and creating technological struggles.

Life during the COVID-19 pandemic is surreal even after a year. Healthcare organizations are being pressured to do more with less while at the same time contribute revenue to whittle away at staggering losses. The definition of “recover” is to return to normal. Yet certainly, patients are not returning as anticipated. The pandemic has caused a downturn in elective procedures, fewer non-COVID-19 admissions and decreased clinic/office visits, impacting margins and creating technological struggles. And, while some practices have succeeded in reinforcing existing revenues, other haven’t.

But beyond recovery, systemic issues predating the pandemic need solutions. Most importantly, providers must evaluate whether they have the tools to generate new revenue streams. This necessitates giving top priority to improved infrastructure, addressing data accuracy and completeness, and knowing who the payers are and their requirements for reimbursing drugs and biologicals either as separate line items or as part of a bundle or package. 

Combating Revenue Loss

As the coronavirus continues to plague the country, hospitals may continue to face lower patient volumes, so they must respond to and plan for this possibility. Some are taking drastic measures, including slashing budgets and furloughing workers. Others are cutting specialty care that wasn’t previously profitable but provided a continuum of care. Some are developing their own insurance plans since the pandemic has reduced expenses for payers.

However, more strategic approaches include enhanced new revenue streams, integrated systems that bring payers and providers together and improved medication use for Medicare patients. Most importantly, providers need to adapt and avoid missteps often caused by freezing innovation and relying only on what has worked in the past. 

As patients become increasingly involved in their healthcare decisions, patient-centricity has become a common goal. Therefore, providers must support positive patient outcomes by prioritizing patient experiences, understanding how they live with their conditions and openly responding to feedback and analytics.

Managing Healthcare Environments

There are numerous environments in the healthcare setting, including acute/inpatient, outpatient, clinics, infusion center, diagnostic areas, the emergency department, observation patient areas, home infusion, ambulatory pharmacy, ambulatory surgery centers (ASCs), physician offices, retail, mail order and specialty pharmacy. And, each has its own payer relationships, requirements, federal manuals and resources. Accordingly, these settings will determine how compliance and data, clinical documentation, pharmacy and therapeutics committees, electronic health records, charge masters and coding, billing and claims clearinghouses are structured and managed. And, it will require a new focus on billing and reimbursement to optimize the revenue cycle. 

Evaluating Site of Care

There are dramatic differences in costs associated with site-of-care choice, with the inpatient setting the most expensive, followed by hospital-based outpatient areas and free-standing ambulatory clinics/ASCs, care in the home either by a home health service or self-care, and telehealth, the latter of which could evolve to hospital-at-home programs that will require communications technology, portable medical equipment and teams of doctors, nurses, X-ray technicians, paramedics and pharmacy services. 

When site-of-care expenses decrease, co-pays also decrease, which benefits patients directly. Pandemics, payer mandates and the availability of subcutaneous versus intravenous drugs and biologicals are all reasons for fast pacing site-of-care changes. 

An embedded theme in 2021 reimbursement rule sets is increasing choice and encouraging site neutrality. The rationale is to continue to give beneficiaries more affordable choices about where to obtain care with the potential for lower out-of-pocket expenses, including those for surgeries.

The Centers for Medicare and Medicaid (CMS) 2021 rule sets allow hospitals and ASCs to operate with better flexibility and patients to make informed decisions about where they receive care. CMS expanded the number of procedures Medicare will pay for in hospital outpatient settings by eliminating the inpatient-only list over three years. CMS stresses that hospital outpatient departments are subject to the same quality and safety standards as inpatient settings under Medicare rules. 

CMS also removed regulatory barriers to give beneficiaries the choice to receive services in a lower-cost setting and the convenience to go home as early as the same day after a procedure when clinicians decide the setting is appropriate. These changes gradually allow more than 1,700 additional services to be paid for when furnished in the hospital outpatient setting, including approximately 300 newly payable musculoskeletal services (e.g., certain joint replacement procedures). 

Because services in ASCs are paid at a lower rate than hospital outpatient departments, patients can potentially lower their out-of-pocket costs even more when receiving care in an ASC. For example, on average, a Medicare beneficiary pays $101 for a common cataract surgery if the procedure is performed in a hospital outpatient department compared to $51 if performed in an ASC.

CMS added 11 procedures Medicare will pay for when provided in an ASC, including total hip arthroplasty. Expanding the number of procedures Medicare will pay for when performed in an ASC gives patients more choices about where they receive care and ensures CMS does not favor one type of care setting over another. 

Site-neutral payments were first introduced in the 2019 Medicare outpatient prospective payment system final rule when CMS made payments for clinic visits site-neutral, reducing the payment rate for evaluation and management services provided at off-campus provider-based departments by 60 percent. However, this prompted complaints and legal action, and several lawsuits later, a final decision was made July 20, 2020, when a federal appeals court ruled the U.S. Health and Human Services Department has the authority to cut Medicare payments to off-campus clinics to bring them in line with independent physician practices.

Bonnie Kirschenbaum, MS, FASHP, FCSHP
Bonnie Kirschenbaum, MS, FASHP, FCSHP, is a freelance healthcare consultant with senior management experience in both the pharmaceutical industry and the pharmacy section of large corporate healthcare organizations and teaching hospitals. She has an interest in reimbursement issues and in using technology to solve them. Kirschenbaum is a recognized industry leader in forging effective alliances among hospitals, physicians, pharmaceutical companies and distributors and has written and spoken extensively in these areas.