Medicare

When I started writing this, Congress hadn’t settled the issue of the 21% cut in Medicare reimbursement for services called for by the sustainable growth rate (SGR) formula. Fortunately, Congress stepped up and passed another extension with a 2.2% pay increase; however, the quick fix only lasts until November.

The process is all too routine: The deadline for these reimbursement cuts looms, Medicare instructs its fiscal intermediaries (the organizations that actually write the checks to providers) to hold claims rather than pay at the lower rate, and, within a few days of the deadline passing, Congress decides to pass an extension, which allows Medicare to continue paying the historical (higher) rate for the time being.

Imagine Medicare reimbursement rates dropping 21% overnight. I suspect it would be cataclysmic. But I hear remarkably little chatter about this possibility. In fact, while with 2,500 other hospitalists for several days at HM10 in April, I didn’t hear a single person bring up the SGR issue.

One reason there isn’t more handwringing about the looming, draconian cuts is that we’ve been there before. In fact, reimbursement cuts required by the SGR have come up every year since 2001. Each time, Congress has chosen not to implement the cuts; and in some years it has approved reimbursement increases instead. So most in healthcare circles basically have come to expect Congress to pass last-minute legislation to avoid the drastic cuts. (SHM and most other medical societies want a repeal of the flawed SGR formula. Visit SHM’s Legislative Action Center, http://capwiz.com/hospitalmedicine/home/, to write your legislators and urge repeal of the SGR. It only takes about two minutes, and you don’t even need to remember who your representatives are; you just need to know your ZIP code.)

Don’t Be Too Smug

There is another reason many hospitalists, and other doctors who are employed and salaried by a large entity like a hospital, might not be more concerned about proposed cuts: They probably think their own salaries will be unaffected by decreases in reimbursement from Medicare and other payors. My experience is that a lot of hospitalists are so unconcerned about payor reimbursement rates that they aren’t even aware of the threatened Medicare cuts.

Their thinking goes something like this: “I’m paid mostly via a fixed annual salary with a small productivity and quality incentive. None of this is connected to the payor mix or collection rates from the patients I see. So if the portion of uninsured patients I see goes up, my compensation is unaffected. Or if payors decrease their rates, my compensation is unaffected. So I don’t need to sweat the possibility of a 21% decrease in Medicare rates. The hospital will have to make up the difference, so my salary is unaffected, and it will be up to bean counters at the hospital to get the numbers to work out.”

In fact, this is true, in theory, for the majority of hospitalists. But I think it is a mistake to assume your salary is untouchable. If Medicare were to cut rates by 21%, you’d better run to your hospital CEO’s office right away, because a long line will form immediately. Every doctor who sees patients at your hospital will be in that line asking the CEO to provide some money to offset the Medicare cuts, and I doubt any hospital will be able to satisfy their doctors without spending so much money that the hospital goes bankrupt or out of business.

Even if you have a valid contract that calls for your compensation to be paid independent of the amount of professional fee collections, a dire shortage of money could lead a hospital to lay off hospitalists or cancel the contract (most contracts would allow the hospital to do this simply by giving a 90-day notice).

I suggest that no hospitalist feel too smug about how well their employment contract protects the group from broader market forces like reimbursement rates. I doubt we’ll ever see an overnight 21% reduction in Medicare rates, but over time, we could see ever-increasing pressure to limit the growth in our incomes.

I believe every hospitalist should spend at least a little time following broader financial issues like this one, and get involved in the political process to let your legislators know your thoughts. For the record, I think the financial underpinnings of our healthcare system are disastrously messed up and something has to be done. And I don’t think anyone’s salary, including mine, is untouchable. But I also believe the SGR is an ineffective way to make the system more financially sound. That said, you don’t need to agree with me; I only recommend that you have a reasonably informed opinion.

One approach might be for your HM group to appoint a “political” or “marketplace” watchdog. This person could be charged with following issues closely and reporting back to the whole group during regular meetings.

“Marketplace” Risk

Medicare rates are only one part of the complex financial ecosystem on which we depend. It is awfully common, and I think pretty reasonable, for hospitalists to have a contractual arrangement with hospitals. The majority of the time, the hospital has most—or all—of the risk for the financial performance of the practice. In fact, most prospective hospitalists, especially those seeking their first jobs out after residency, say one of the most attractive reasons for choosing work as a hospitalist is that many practices provide a salary that is nearly fixed. Any variable components to the salary, such as those based on production or quality, are typically very small.

A hospitalist might think, “I want a practice that pays a fixed salary so I don’t have to worry about any business and financial issues other than when to show up to work.” In fact, a lot of recruitment ads trumpet this very idea (i.e., “you handle the doctoring and get to enjoy the wonderful recreational opportunities and schools our locale provides, and we’ll worry about all the business issues”). That may sound nice, but I worry it is a little short-sighted.

Here is another point of view, which is only slightly more complicated. In most cases, you should try to negotiate a contract that insulates you from “payor risk” (e.g., changes in payor mix and rates paid by payors don’t flow through to your compensation). But you should think twice before asking your employer to assume all the risk for staffing and scheduling decisions, such as whether you get the work done with 10 hospitalists or 11, or whether you have an evening admitter (“swing”) shift. If the employer holds all the risk, then the hospitalists give up nearly all their autonomy to decide how hard they want to work and how they want to schedule themselves. This causes problems for many practices, and is the No. 1 reason I’m called in as a consultant. Contrary to being very risky and stressful, many hospitalists find it liberating to assume financial risk for their staffing and workload decisions.

You should realize that if your employer pays you a fixed compensation, then someone has to ensure that you do enough work to justify that compensation. This can mean that the employer “issues decrees” (i.e., “we won’t add another provide to the practice until we’ve averaged ‘X’ encounters per month for 6 months”). A hospitalist might see this as unreasonable, yet the group has limited recourse since the employer has already guaranteed the compensation.

If you’d rather have more autonomy in your staffing and workload, then you will need to connect your paycheck to these decisions. Although it might sound terribly risky, those who make the switch often say they wouldn’t have it any other way. Most importantly, it ensures hospitalists have much more say in big decisions. TH

Dr. Nelson has been a practicing hospitalist since 1988 and is co-founder and past president of SHM. He is a principal in Nelson Flores Hospital Medicine Consultants, a national hospitalist practice management consulting firm (www.nelsonflores.com). He is also course co-director and faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official position of SHM.

When I started writing this, Congress hadn’t settled the issue of the 21% cut in Medicare reimbursement for services called for by the sustainable growth rate (SGR) formula. Fortunately, Congress stepped up and passed another extension with a 2.2% pay increase; however, the quick fix only lasts until November.

The process is all too routine: The deadline for these reimbursement cuts looms, Medicare instructs its fiscal intermediaries (the organizations that actually write the checks to providers) to hold claims rather than pay at the lower rate, and, within a few days of the deadline passing, Congress decides to pass an extension, which allows Medicare to continue paying the historical (higher) rate for the time being.

Imagine Medicare reimbursement rates dropping 21% overnight. I suspect it would be cataclysmic. But I hear remarkably little chatter about this possibility. In fact, while with 2,500 other hospitalists for several days at HM10 in April, I didn’t hear a single person bring up the SGR issue.

One reason there isn’t more handwringing about the looming, draconian cuts is that we’ve been there before. In fact, reimbursement cuts required by the SGR have come up every year since 2001. Each time, Congress has chosen not to implement the cuts; and in some years it has approved reimbursement increases instead. So most in healthcare circles basically have come to expect Congress to pass last-minute legislation to avoid the drastic cuts. (SHM and most other medical societies want a repeal of the flawed SGR formula. Visit SHM’s Legislative Action Center, http://capwiz.com/hospitalmedicine/home/, to write your legislators and urge repeal of the SGR. It only takes about two minutes, and you don’t even need to remember who your representatives are; you just need to know your ZIP code.)

Don’t Be Too Smug

There is another reason many hospitalists, and other doctors who are employed and salaried by a large entity like a hospital, might not be more concerned about proposed cuts: They probably think their own salaries will be unaffected by decreases in reimbursement from Medicare and other payors. My experience is that a lot of hospitalists are so unconcerned about payor reimbursement rates that they aren’t even aware of the threatened Medicare cuts.

Their thinking goes something like this: “I’m paid mostly via a fixed annual salary with a small productivity and quality incentive. None of this is connected to the payor mix or collection rates from the patients I see. So if the portion of uninsured patients I see goes up, my compensation is unaffected. Or if payors decrease their rates, my compensation is unaffected. So I don’t need to sweat the possibility of a 21% decrease in Medicare rates. The hospital will have to make up the difference, so my salary is unaffected, and it will be up to bean counters at the hospital to get the numbers to work out.”

In fact, this is true, in theory, for the majority of hospitalists. But I think it is a mistake to assume your salary is untouchable. If Medicare were to cut rates by 21%, you’d better run to your hospital CEO’s office right away, because a long line will form immediately. Every doctor who sees patients at your hospital will be in that line asking the CEO to provide some money to offset the Medicare cuts, and I doubt any hospital will be able to satisfy their doctors without spending so much money that the hospital goes bankrupt or out of business.

Even if you have a valid contract that calls for your compensation to be paid independent of the amount of professional fee collections, a dire shortage of money could lead a hospital to lay off hospitalists or cancel the contract (most contracts would allow the hospital to do this simply by giving a 90-day notice).

I suggest that no hospitalist feel too smug about how well their employment contract protects the group from broader market forces like reimbursement rates. I doubt we’ll ever see an overnight 21% reduction in Medicare rates, but over time, we could see ever-increasing pressure to limit the growth in our incomes.

I believe every hospitalist should spend at least a little time following broader financial issues like this one, and get involved in the political process to let your legislators know your thoughts. For the record, I think the financial underpinnings of our healthcare system are disastrously messed up and something has to be done. And I don’t think anyone’s salary, including mine, is untouchable. But I also believe the SGR is an ineffective way to make the system more financially sound. That said, you don’t need to agree with me; I only recommend that you have a reasonably informed opinion.

One approach might be for your HM group to appoint a “political” or “marketplace” watchdog. This person could be charged with following issues closely and reporting back to the whole group during regular meetings.

“Marketplace” Risk

Medicare rates are only one part of the complex financial ecosystem on which we depend. It is awfully common, and I think pretty reasonable, for hospitalists to have a contractual arrangement with hospitals. The majority of the time, the hospital has most—or all—of the risk for the financial performance of the practice. In fact, most prospective hospitalists, especially those seeking their first jobs out after residency, say one of the most attractive reasons for choosing work as a hospitalist is that many practices provide a salary that is nearly fixed. Any variable components to the salary, such as those based on production or quality, are typically very small.

A hospitalist might think, “I want a practice that pays a fixed salary so I don’t have to worry about any business and financial issues other than when to show up to work.” In fact, a lot of recruitment ads trumpet this very idea (i.e., “you handle the doctoring and get to enjoy the wonderful recreational opportunities and schools our locale provides, and we’ll worry about all the business issues”). That may sound nice, but I worry it is a little short-sighted.

Here is another point of view, which is only slightly more complicated. In most cases, you should try to negotiate a contract that insulates you from “payor risk” (e.g., changes in payor mix and rates paid by payors don’t flow through to your compensation). But you should think twice before asking your employer to assume all the risk for staffing and scheduling decisions, such as whether you get the work done with 10 hospitalists or 11, or whether you have an evening admitter (“swing”) shift. If the employer holds all the risk, then the hospitalists give up nearly all their autonomy to decide how hard they want to work and how they want to schedule themselves. This causes problems for many practices, and is the No. 1 reason I’m called in as a consultant. Contrary to being very risky and stressful, many hospitalists find it liberating to assume financial risk for their staffing and workload decisions.

You should realize that if your employer pays you a fixed compensation, then someone has to ensure that you do enough work to justify that compensation. This can mean that the employer “issues decrees” (i.e., “we won’t add another provide to the practice until we’ve averaged ‘X’ encounters per month for 6 months”). A hospitalist might see this as unreasonable, yet the group has limited recourse since the employer has already guaranteed the compensation.

If you’d rather have more autonomy in your staffing and workload, then you will need to connect your paycheck to these decisions. Although it might sound terribly risky, those who make the switch often say they wouldn’t have it any other way. Most importantly, it ensures hospitalists have much more say in big decisions. TH

Dr. Nelson has been a practicing hospitalist since 1988 and is co-founder and past president of SHM. He is a principal in Nelson Flores Hospital Medicine Consultants, a national hospitalist practice management consulting firm (www.nelsonflores.com). He is also course co-director and faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official position of SHM.

When I started writing this, Congress hadn’t settled the issue of the 21% cut in Medicare reimbursement for services called for by the sustainable growth rate (SGR) formula. Fortunately, Congress stepped up and passed another extension with a 2.2% pay increase; however, the quick fix only lasts until November.

The process is all too routine: The deadline for these reimbursement cuts looms, Medicare instructs its fiscal intermediaries (the organizations that actually write the checks to providers) to hold claims rather than pay at the lower rate, and, within a few days of the deadline passing, Congress decides to pass an extension, which allows Medicare to continue paying the historical (higher) rate for the time being.

Imagine Medicare reimbursement rates dropping 21% overnight. I suspect it would be cataclysmic. But I hear remarkably little chatter about this possibility. In fact, while with 2,500 other hospitalists for several days at HM10 in April, I didn’t hear a single person bring up the SGR issue.

One reason there isn’t more handwringing about the looming, draconian cuts is that we’ve been there before. In fact, reimbursement cuts required by the SGR have come up every year since 2001. Each time, Congress has chosen not to implement the cuts; and in some years it has approved reimbursement increases instead. So most in healthcare circles basically have come to expect Congress to pass last-minute legislation to avoid the drastic cuts. (SHM and most other medical societies want a repeal of the flawed SGR formula. Visit SHM’s Legislative Action Center, http://capwiz.com/hospitalmedicine/home/, to write your legislators and urge repeal of the SGR. It only takes about two minutes, and you don’t even need to remember who your representatives are; you just need to know your ZIP code.)

Don’t Be Too Smug

There is another reason many hospitalists, and other doctors who are employed and salaried by a large entity like a hospital, might not be more concerned about proposed cuts: They probably think their own salaries will be unaffected by decreases in reimbursement from Medicare and other payors. My experience is that a lot of hospitalists are so unconcerned about payor reimbursement rates that they aren’t even aware of the threatened Medicare cuts.

Their thinking goes something like this: “I’m paid mostly via a fixed annual salary with a small productivity and quality incentive. None of this is connected to the payor mix or collection rates from the patients I see. So if the portion of uninsured patients I see goes up, my compensation is unaffected. Or if payors decrease their rates, my compensation is unaffected. So I don’t need to sweat the possibility of a 21% decrease in Medicare rates. The hospital will have to make up the difference, so my salary is unaffected, and it will be up to bean counters at the hospital to get the numbers to work out.”

In fact, this is true, in theory, for the majority of hospitalists. But I think it is a mistake to assume your salary is untouchable. If Medicare were to cut rates by 21%, you’d better run to your hospital CEO’s office right away, because a long line will form immediately. Every doctor who sees patients at your hospital will be in that line asking the CEO to provide some money to offset the Medicare cuts, and I doubt any hospital will be able to satisfy their doctors without spending so much money that the hospital goes bankrupt or out of business.

Even if you have a valid contract that calls for your compensation to be paid independent of the amount of professional fee collections, a dire shortage of money could lead a hospital to lay off hospitalists or cancel the contract (most contracts would allow the hospital to do this simply by giving a 90-day notice).

I suggest that no hospitalist feel too smug about how well their employment contract protects the group from broader market forces like reimbursement rates. I doubt we’ll ever see an overnight 21% reduction in Medicare rates, but over time, we could see ever-increasing pressure to limit the growth in our incomes.

I believe every hospitalist should spend at least a little time following broader financial issues like this one, and get involved in the political process to let your legislators know your thoughts. For the record, I think the financial underpinnings of our healthcare system are disastrously messed up and something has to be done. And I don’t think anyone’s salary, including mine, is untouchable. But I also believe the SGR is an ineffective way to make the system more financially sound. That said, you don’t need to agree with me; I only recommend that you have a reasonably informed opinion.

One approach might be for your HM group to appoint a “political” or “marketplace” watchdog. This person could be charged with following issues closely and reporting back to the whole group during regular meetings.

“Marketplace” Risk

Medicare rates are only one part of the complex financial ecosystem on which we depend. It is awfully common, and I think pretty reasonable, for hospitalists to have a contractual arrangement with hospitals. The majority of the time, the hospital has most—or all—of the risk for the financial performance of the practice. In fact, most prospective hospitalists, especially those seeking their first jobs out after residency, say one of the most attractive reasons for choosing work as a hospitalist is that many practices provide a salary that is nearly fixed. Any variable components to the salary, such as those based on production or quality, are typically very small.

A hospitalist might think, “I want a practice that pays a fixed salary so I don’t have to worry about any business and financial issues other than when to show up to work.” In fact, a lot of recruitment ads trumpet this very idea (i.e., “you handle the doctoring and get to enjoy the wonderful recreational opportunities and schools our locale provides, and we’ll worry about all the business issues”). That may sound nice, but I worry it is a little short-sighted.

Here is another point of view, which is only slightly more complicated. In most cases, you should try to negotiate a contract that insulates you from “payor risk” (e.g., changes in payor mix and rates paid by payors don’t flow through to your compensation). But you should think twice before asking your employer to assume all the risk for staffing and scheduling decisions, such as whether you get the work done with 10 hospitalists or 11, or whether you have an evening admitter (“swing”) shift. If the employer holds all the risk, then the hospitalists give up nearly all their autonomy to decide how hard they want to work and how they want to schedule themselves. This causes problems for many practices, and is the No. 1 reason I’m called in as a consultant. Contrary to being very risky and stressful, many hospitalists find it liberating to assume financial risk for their staffing and workload decisions.

You should realize that if your employer pays you a fixed compensation, then someone has to ensure that you do enough work to justify that compensation. This can mean that the employer “issues decrees” (i.e., “we won’t add another provide to the practice until we’ve averaged ‘X’ encounters per month for 6 months”). A hospitalist might see this as unreasonable, yet the group has limited recourse since the employer has already guaranteed the compensation.

If you’d rather have more autonomy in your staffing and workload, then you will need to connect your paycheck to these decisions. Although it might sound terribly risky, those who make the switch often say they wouldn’t have it any other way. Most importantly, it ensures hospitalists have much more say in big decisions. TH

Dr. Nelson has been a practicing hospitalist since 1988 and is co-founder and past president of SHM. He is a principal in Nelson Flores Hospital Medicine Consultants, a national hospitalist practice management consulting firm (www.nelsonflores.com). He is also course co-director and faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official position of SHM.

Many conditions once treated during an “inpatient” hospital stay are currently treated during an “observation” stay (OBS). Although the care remains the same, physician billing is different and requires close attention to admission details for effective charge capture.

Let’s take a look at a typical OBS scenario. A 65-year-old female with longstanding diabetes presents to the ED at 10 p.m. with palpitations, lightheadedness, mild disorientation, and elevated blood sugar. The hospitalist admits the patient to observation, treats her for dehydration, and discharges her the next day. Before billing, the hospitalist should consider the following factors.

Physician of Record

The attending of record writes the orders to admit the patient to observation; indicates the reason for the stay; outlines the plan of care; and manages the patient during the stay. The attending reports the initial patient encounter with the most appropriate initial observation-care code, as reflected by the documentation:¹

• 99218: Initial observation care, requiring both a detailed or comprehensive history and exam, and straightforward/low-complexity medical decision-making. Usually, the problem(s) is of low severity.
• 99219: Initial observation care, requiring both a comprehensive history and exam, and moderate-complexity medical decision-making. Usually, the problem(s) is of moderate severity.
• 99220: Initial observation care, requiring both a comprehensive history and exam, and high-complexity medical decision-making. Usually, the problem(s) is of high severity.

While other physicians (e.g., specialists) might be involved in the patient’s care, only the attending physician reports codes 99218-99220. Specialists typically are called to an OBS case for their opinion or advice but do not function as the attending of record. Billing for the specialist (consultation) service depends upon the payor.

For a non-Medicare patient who pays for consultation codes, the specialist reports an outpatient consultation code (99241-99245) for the appropriately documented service. Conversely, Medicare no longer recognizes consultation codes, and specialists must report either a new patient visit code (99201-99205) or established patient visit code (99212-99215) for Medicare beneficiaries.

Selection of the new or established patient codes follows the “three-year rule”: A “new patient” has not received any face-to-face services (e.g., visit or procedure) in any location from any physician within the same group and same specialty within the past three years.² There could be occasion when a hospitalist is not the attending of record but is asked to provide their opinion, and must report one of the “non-OBS” codes.

The attending of record is permitted to report a discharge service as long as this service occurs on a calendar day different from the admission service (as in the listed scenario). The attending documents the face-to-face discharge service and any pertinent clinical details, and reports 99217 (observation-care discharge-day management).

Length of Stay

Observation-care services typically do not exceed 24 hours and two calendar days. Observation care for more than 48 hours without inpatient admission is not considered medically necessary but might be payable after medical review. Should the OBS stay span more than two calendar days (as might be the case with “downgraded” hospitalizations), hospitalists should report established patient visit codes (99212-99215) for the calendar day(s) between the admission service (99218-99220) and the discharge service (99217).³ The physician must provide and document a face-to-face encounter on each date of service for which a claim was submitted.

A more likely occurrence is the admission and discharge from OBS on the same calendar date. The attending of record reports the code that corresponds to the patient’s length of stay (LOS). If the total LOS is less than eight hours, the attending only reports standard OBS codes (99218-99220). The hospitalist does not separately report the OBS discharge service (99217), even though the documentation must reflect the attending discharge order and corresponding discharge plan. If the total duration of the patient’s stay lasts more than eight hours and does not overlap two calendar days, the attending reports the same-day admit/discharge codes:¹

• 99234: Observation or inpatient care, same date admission and discharge, requiring both a detailed or comprehensive history and exam, and straightforward or low-complexity medical decision-making. Usually the presenting problem(s) is of low severity.
• 99235: Observation or inpatient care, same date admission and discharge, requiring a comprehensive history and exam, and moderate-complexity medical decision-making. Usually the presenting problem(s) is of moderate severity.
• 99236: Observation or inpatient care, same date admission and discharge, requiring a comprehensive history and exam, and high-complexity medical decision-making. Usually the presenting problem(s) is of high severity.

OBS discharge service (99217) is not separately reported with 99234-99236 because these codes are valued to include the discharge component (e.g., the comprehensive service, 99236 [4.26 wRVU, $211], is equivalent to its components, 99220 [2.99 wRVU, $148] and 99217 [1.28 wRVU, $68]). The attending must document the total duration of the stay, as well as the face-to-face service and the corresponding details of each service component (i.e., both an admission and discharge note).³TH

Carol Pohlig is a billing and coding expert with the University of Pennsylvania Medical Center in Philadelphia. She is also on the faculty of SHM’s inpatient coding course.

References

1. Abraham M, Beebe M, Dalton J, Evans D, Glenn R. Current Procedural Terminology Professional Edition. Chicago: American Medical Association Press; 2010:11-16.
2. Medicare Claims Processing Manual: Chapter 12, Section 30.6.7A. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c12.pdf. Accessed May 11, 2010.
3. Medicare Claims Processing Manual: Chapter 12, Section 30.6.8C. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c12.pdf. Accessed May 11, 2010.
4. Medicare Claims Processing Manual: Chapter 12, Section 30.6.8D. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c12.pdf. Accessed May 11, 2010.
5. Medicare Claims Processing Manual: Chapter 1, Section 50.3. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c01.pdf. Accessed May 12, 2010.

Many conditions once treated during an “inpatient” hospital stay are currently treated during an “observation” stay (OBS). Although the care remains the same, physician billing is different and requires close attention to admission details for effective charge capture.

Let’s take a look at a typical OBS scenario. A 65-year-old female with longstanding diabetes presents to the ED at 10 p.m. with palpitations, lightheadedness, mild disorientation, and elevated blood sugar. The hospitalist admits the patient to observation, treats her for dehydration, and discharges her the next day. Before billing, the hospitalist should consider the following factors.

Physician of Record

The attending of record writes the orders to admit the patient to observation; indicates the reason for the stay; outlines the plan of care; and manages the patient during the stay. The attending reports the initial patient encounter with the most appropriate initial observation-care code, as reflected by the documentation:¹

• 99218: Initial observation care, requiring both a detailed or comprehensive history and exam, and straightforward/low-complexity medical decision-making. Usually, the problem(s) is of low severity.
• 99219: Initial observation care, requiring both a comprehensive history and exam, and moderate-complexity medical decision-making. Usually, the problem(s) is of moderate severity.
• 99220: Initial observation care, requiring both a comprehensive history and exam, and high-complexity medical decision-making. Usually, the problem(s) is of high severity.

While other physicians (e.g., specialists) might be involved in the patient’s care, only the attending physician reports codes 99218-99220. Specialists typically are called to an OBS case for their opinion or advice but do not function as the attending of record. Billing for the specialist (consultation) service depends upon the payor.

For a non-Medicare patient who pays for consultation codes, the specialist reports an outpatient consultation code (99241-99245) for the appropriately documented service. Conversely, Medicare no longer recognizes consultation codes, and specialists must report either a new patient visit code (99201-99205) or established patient visit code (99212-99215) for Medicare beneficiaries.

Selection of the new or established patient codes follows the “three-year rule”: A “new patient” has not received any face-to-face services (e.g., visit or procedure) in any location from any physician within the same group and same specialty within the past three years.² There could be occasion when a hospitalist is not the attending of record but is asked to provide their opinion, and must report one of the “non-OBS” codes.

The attending of record is permitted to report a discharge service as long as this service occurs on a calendar day different from the admission service (as in the listed scenario). The attending documents the face-to-face discharge service and any pertinent clinical details, and reports 99217 (observation-care discharge-day management).

Length of Stay

Observation-care services typically do not exceed 24 hours and two calendar days. Observation care for more than 48 hours without inpatient admission is not considered medically necessary but might be payable after medical review. Should the OBS stay span more than two calendar days (as might be the case with “downgraded” hospitalizations), hospitalists should report established patient visit codes (99212-99215) for the calendar day(s) between the admission service (99218-99220) and the discharge service (99217).³ The physician must provide and document a face-to-face encounter on each date of service for which a claim was submitted.

A more likely occurrence is the admission and discharge from OBS on the same calendar date. The attending of record reports the code that corresponds to the patient’s length of stay (LOS). If the total LOS is less than eight hours, the attending only reports standard OBS codes (99218-99220). The hospitalist does not separately report the OBS discharge service (99217), even though the documentation must reflect the attending discharge order and corresponding discharge plan. If the total duration of the patient’s stay lasts more than eight hours and does not overlap two calendar days, the attending reports the same-day admit/discharge codes:¹

• 99234: Observation or inpatient care, same date admission and discharge, requiring both a detailed or comprehensive history and exam, and straightforward or low-complexity medical decision-making. Usually the presenting problem(s) is of low severity.
• 99235: Observation or inpatient care, same date admission and discharge, requiring a comprehensive history and exam, and moderate-complexity medical decision-making. Usually the presenting problem(s) is of moderate severity.
• 99236: Observation or inpatient care, same date admission and discharge, requiring a comprehensive history and exam, and high-complexity medical decision-making. Usually the presenting problem(s) is of high severity.

OBS discharge service (99217) is not separately reported with 99234-99236 because these codes are valued to include the discharge component (e.g., the comprehensive service, 99236 [4.26 wRVU, $211], is equivalent to its components, 99220 [2.99 wRVU, $148] and 99217 [1.28 wRVU, $68]). The attending must document the total duration of the stay, as well as the face-to-face service and the corresponding details of each service component (i.e., both an admission and discharge note).³TH

Carol Pohlig is a billing and coding expert with the University of Pennsylvania Medical Center in Philadelphia. She is also on the faculty of SHM’s inpatient coding course.

References

1. Abraham M, Beebe M, Dalton J, Evans D, Glenn R. Current Procedural Terminology Professional Edition. Chicago: American Medical Association Press; 2010:11-16.
2. Medicare Claims Processing Manual: Chapter 12, Section 30.6.7A. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c12.pdf. Accessed May 11, 2010.
3. Medicare Claims Processing Manual: Chapter 12, Section 30.6.8C. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c12.pdf. Accessed May 11, 2010.
4. Medicare Claims Processing Manual: Chapter 12, Section 30.6.8D. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c12.pdf. Accessed May 11, 2010.
5. Medicare Claims Processing Manual: Chapter 1, Section 50.3. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c01.pdf. Accessed May 12, 2010.

Many conditions once treated during an “inpatient” hospital stay are currently treated during an “observation” stay (OBS). Although the care remains the same, physician billing is different and requires close attention to admission details for effective charge capture.

Let’s take a look at a typical OBS scenario. A 65-year-old female with longstanding diabetes presents to the ED at 10 p.m. with palpitations, lightheadedness, mild disorientation, and elevated blood sugar. The hospitalist admits the patient to observation, treats her for dehydration, and discharges her the next day. Before billing, the hospitalist should consider the following factors.

Physician of Record

The attending of record writes the orders to admit the patient to observation; indicates the reason for the stay; outlines the plan of care; and manages the patient during the stay. The attending reports the initial patient encounter with the most appropriate initial observation-care code, as reflected by the documentation:¹

• 99218: Initial observation care, requiring both a detailed or comprehensive history and exam, and straightforward/low-complexity medical decision-making. Usually, the problem(s) is of low severity.
• 99219: Initial observation care, requiring both a comprehensive history and exam, and moderate-complexity medical decision-making. Usually, the problem(s) is of moderate severity.
• 99220: Initial observation care, requiring both a comprehensive history and exam, and high-complexity medical decision-making. Usually, the problem(s) is of high severity.

While other physicians (e.g., specialists) might be involved in the patient’s care, only the attending physician reports codes 99218-99220. Specialists typically are called to an OBS case for their opinion or advice but do not function as the attending of record. Billing for the specialist (consultation) service depends upon the payor.

For a non-Medicare patient who pays for consultation codes, the specialist reports an outpatient consultation code (99241-99245) for the appropriately documented service. Conversely, Medicare no longer recognizes consultation codes, and specialists must report either a new patient visit code (99201-99205) or established patient visit code (99212-99215) for Medicare beneficiaries.

Selection of the new or established patient codes follows the “three-year rule”: A “new patient” has not received any face-to-face services (e.g., visit or procedure) in any location from any physician within the same group and same specialty within the past three years.² There could be occasion when a hospitalist is not the attending of record but is asked to provide their opinion, and must report one of the “non-OBS” codes.

The attending of record is permitted to report a discharge service as long as this service occurs on a calendar day different from the admission service (as in the listed scenario). The attending documents the face-to-face discharge service and any pertinent clinical details, and reports 99217 (observation-care discharge-day management).

Length of Stay

Observation-care services typically do not exceed 24 hours and two calendar days. Observation care for more than 48 hours without inpatient admission is not considered medically necessary but might be payable after medical review. Should the OBS stay span more than two calendar days (as might be the case with “downgraded” hospitalizations), hospitalists should report established patient visit codes (99212-99215) for the calendar day(s) between the admission service (99218-99220) and the discharge service (99217).³ The physician must provide and document a face-to-face encounter on each date of service for which a claim was submitted.

A more likely occurrence is the admission and discharge from OBS on the same calendar date. The attending of record reports the code that corresponds to the patient’s length of stay (LOS). If the total LOS is less than eight hours, the attending only reports standard OBS codes (99218-99220). The hospitalist does not separately report the OBS discharge service (99217), even though the documentation must reflect the attending discharge order and corresponding discharge plan. If the total duration of the patient’s stay lasts more than eight hours and does not overlap two calendar days, the attending reports the same-day admit/discharge codes:¹

• 99234: Observation or inpatient care, same date admission and discharge, requiring both a detailed or comprehensive history and exam, and straightforward or low-complexity medical decision-making. Usually the presenting problem(s) is of low severity.
• 99235: Observation or inpatient care, same date admission and discharge, requiring a comprehensive history and exam, and moderate-complexity medical decision-making. Usually the presenting problem(s) is of moderate severity.
• 99236: Observation or inpatient care, same date admission and discharge, requiring a comprehensive history and exam, and high-complexity medical decision-making. Usually the presenting problem(s) is of high severity.

OBS discharge service (99217) is not separately reported with 99234-99236 because these codes are valued to include the discharge component (e.g., the comprehensive service, 99236 [4.26 wRVU, $211], is equivalent to its components, 99220 [2.99 wRVU, $148] and 99217 [1.28 wRVU, $68]). The attending must document the total duration of the stay, as well as the face-to-face service and the corresponding details of each service component (i.e., both an admission and discharge note).³TH

Carol Pohlig is a billing and coding expert with the University of Pennsylvania Medical Center in Philadelphia. She is also on the faculty of SHM’s inpatient coding course.

References

1. Abraham M, Beebe M, Dalton J, Evans D, Glenn R. Current Procedural Terminology Professional Edition. Chicago: American Medical Association Press; 2010:11-16.
2. Medicare Claims Processing Manual: Chapter 12, Section 30.6.7A. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c12.pdf. Accessed May 11, 2010.
3. Medicare Claims Processing Manual: Chapter 12, Section 30.6.8C. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c12.pdf. Accessed May 11, 2010.
4. Medicare Claims Processing Manual: Chapter 12, Section 30.6.8D. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c12.pdf. Accessed May 11, 2010.
5. Medicare Claims Processing Manual: Chapter 1, Section 50.3. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c01.pdf. Accessed May 12, 2010.

I encounter a lot of hospitalists who complain that the other doctors at their hospital think of hospitalists as second-class citizens, as sort of like career residents. HM program directors need to make sure that is not the case for the hospitalists in their practice.

SHM has worked with the AMA’s Organized Medical Staff Section to assess the perception of hospitalists by primary-care physicians (PCPs) and hospitalists themselves. When asked in a 2009 survey, “Do you agree or disagree that hospitalists are respected members of the medical staff at a hospital?” only 3 out of 4 respondents agreed or highly agreed. That percentage is up slightly from the same survey conducted in 2007, and we don’t have data regarding how the responses would have been different if the question had been asked about other specialties. But I still find it concerning that about 25% of PCPs and hospitalists don’t see hospitalists as respected members of a medical staff. (If you are wondering, there wasn’t much of a difference between how hospitalists and PCPs answered the question.)

Use First Names

In the 1980s, I left residency and entered private practice as a hospitalist in a nonteaching, suburban hospital. I had a really hard time calling other doctors by their first names, especially the highly regarded senior internist who was my former roommate’s dad. He had always been Dr. McCollough to me, and I insisted calling him “Doctor” until we had been peers on the same medical staff for about a year.

Finally, in a somewhat annoyed voice, he told me I had to start calling him “Bob,” and that I should call all the doctors by their first names. It took a while, but using first names began to feel normal. Looking back on it, I think Dr. McCollough Bob taught me an important lesson about fitting in.

So make sure the hospitalists in your group call other doctors by their first names, too.

Dress the Part

I’ve come to believe that there are a number of things some hospitalists do to sabotage their own interest in being respected by the medical staff at their hospital. To my surprise, I’ve worked with a number of hospitalist groups in which most dress and act like residents, then complain that other doctors at their hospital treat them like residents. I think the way we dress, especially early in our careers, is a pretty big deal. If you’re similar in age to residents, then you’ll sure look like a resident if you dress like them. So don’t wear scrubs and Skechers unless all of the doctors in your hospital wear scrubs and Skechers.

The best advice is to dress the way the respected doctors dress. Follow the lead on things like neckties, dresses, and the white coat (the latter is almost unheard of at my hospital unless it is used to cover up scrubs). Fortunately, few doctors dress formally anymore (e.g., suit, and tie or sport coat for men). Emerging research might push all of us toward shedding ties, long sleeves, and the white coat before long.

Of course, you should keep in mind the way patients would like to see you dress. You can find information about patient expectations through a simple Internet search or by asking the person in charge of patient satisfaction at your hospital.

Seek Social Connections

Just like the issue of dress, I’ve encountered a number of hospitalist groups that have a habit of sneaking into the physician lunchroom, grabbing food in a “to go” container, and heading back to their office to eat together. These hospitalists are missing a valuable opportunity to enjoy social conversation with physicians of all specialties. If your hospital has a physician lunch room that is crowded with doctors, take advantage of the opportunity to build social networks.

You don’t need to eat there every day. (For a number of years, I enjoyed having lunch with the social workers in our main cafeteria.) But you should eat there more frequently than sneaking back to your office to eat only with other hospitalists. (If you don’t have time for lunch, then we need to talk about workload and efficiency issues.)

Look for other opportunities to make connections with other doctors through service on hospital committees, participation in social events at the hospital, or speaking at grand rounds. Although any single activity might not have significant impact, if you do these things regularly, you will form better relationships and be less likely to be or feel “dumped on,” and if it does happen, you’re in a much better position to address it if the dumping doctor is a friend.

Leadership Positions

Work to ensure a member of your group always sits on the medical staff executive committee, and seek out leadership positions like chief of medicine or chief of staff. Don’t simply assume you are too young or too inexperienced. Your hospital really needs the leadership of doctors who have a broad view of hospital operations and medical staff affairs. Few doctors have a broader view than hospitalists.

And if you have an interest in medical staff leadership, think about whether you’d like to serve as your hospital’s chief medical officer (aka vice president of medical affairs). All of these activities are important ways to influence what happens at your hospital, but aside from that, they are an excellent way to build relationships and gain respect from throughout the medical staff.

Worthwhile Effort

Ensuring that the hospitalists in your group feel respected and valued by other doctors and everyone they work with is important. Don’t make the mistake of thinking that working on this is just about stroking hospitalists’ egos.

I coauthored a 2001 research study on hospitalist burnout that failed to show a correlation between workload and burnout, but the study found that things like poor occupational solidarity are associated with burnout.1

Feeling like you fit in and are a respected member of your peer group (medical staff) is important and worth working on diligently. TH

Dr. Nelson has been a practicing hospitalist since 1988 and is cofounder and past president of SHM. He is a principal in Nelson Flores Hospital Medicine Consultants, a national hospitalist practice management consulting firm (www.nelsonflores.com). He is course co-director and faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official position of SHM.

Reference

1. Hoff T, Whitcomb WF, Nelson JR. Thriving and surviving in a new medical career: the case of hospitalist physicians. Jrl Health Social Behavior. 2001;43:72-91.

I encounter a lot of hospitalists who complain that the other doctors at their hospital think of hospitalists as second-class citizens, as sort of like career residents. HM program directors need to make sure that is not the case for the hospitalists in their practice.

SHM has worked with the AMA’s Organized Medical Staff Section to assess the perception of hospitalists by primary-care physicians (PCPs) and hospitalists themselves. When asked in a 2009 survey, “Do you agree or disagree that hospitalists are respected members of the medical staff at a hospital?” only 3 out of 4 respondents agreed or highly agreed. That percentage is up slightly from the same survey conducted in 2007, and we don’t have data regarding how the responses would have been different if the question had been asked about other specialties. But I still find it concerning that about 25% of PCPs and hospitalists don’t see hospitalists as respected members of a medical staff. (If you are wondering, there wasn’t much of a difference between how hospitalists and PCPs answered the question.)

Use First Names

In the 1980s, I left residency and entered private practice as a hospitalist in a nonteaching, suburban hospital. I had a really hard time calling other doctors by their first names, especially the highly regarded senior internist who was my former roommate’s dad. He had always been Dr. McCollough to me, and I insisted calling him “Doctor” until we had been peers on the same medical staff for about a year.

Finally, in a somewhat annoyed voice, he told me I had to start calling him “Bob,” and that I should call all the doctors by their first names. It took a while, but using first names began to feel normal. Looking back on it, I think Dr. McCollough Bob taught me an important lesson about fitting in.

So make sure the hospitalists in your group call other doctors by their first names, too.

Dress the Part

I’ve come to believe that there are a number of things some hospitalists do to sabotage their own interest in being respected by the medical staff at their hospital. To my surprise, I’ve worked with a number of hospitalist groups in which most dress and act like residents, then complain that other doctors at their hospital treat them like residents. I think the way we dress, especially early in our careers, is a pretty big deal. If you’re similar in age to residents, then you’ll sure look like a resident if you dress like them. So don’t wear scrubs and Skechers unless all of the doctors in your hospital wear scrubs and Skechers.

The best advice is to dress the way the respected doctors dress. Follow the lead on things like neckties, dresses, and the white coat (the latter is almost unheard of at my hospital unless it is used to cover up scrubs). Fortunately, few doctors dress formally anymore (e.g., suit, and tie or sport coat for men). Emerging research might push all of us toward shedding ties, long sleeves, and the white coat before long.

Of course, you should keep in mind the way patients would like to see you dress. You can find information about patient expectations through a simple Internet search or by asking the person in charge of patient satisfaction at your hospital.

Seek Social Connections

Just like the issue of dress, I’ve encountered a number of hospitalist groups that have a habit of sneaking into the physician lunchroom, grabbing food in a “to go” container, and heading back to their office to eat together. These hospitalists are missing a valuable opportunity to enjoy social conversation with physicians of all specialties. If your hospital has a physician lunch room that is crowded with doctors, take advantage of the opportunity to build social networks.

You don’t need to eat there every day. (For a number of years, I enjoyed having lunch with the social workers in our main cafeteria.) But you should eat there more frequently than sneaking back to your office to eat only with other hospitalists. (If you don’t have time for lunch, then we need to talk about workload and efficiency issues.)

Look for other opportunities to make connections with other doctors through service on hospital committees, participation in social events at the hospital, or speaking at grand rounds. Although any single activity might not have significant impact, if you do these things regularly, you will form better relationships and be less likely to be or feel “dumped on,” and if it does happen, you’re in a much better position to address it if the dumping doctor is a friend.

Leadership Positions

Work to ensure a member of your group always sits on the medical staff executive committee, and seek out leadership positions like chief of medicine or chief of staff. Don’t simply assume you are too young or too inexperienced. Your hospital really needs the leadership of doctors who have a broad view of hospital operations and medical staff affairs. Few doctors have a broader view than hospitalists.

And if you have an interest in medical staff leadership, think about whether you’d like to serve as your hospital’s chief medical officer (aka vice president of medical affairs). All of these activities are important ways to influence what happens at your hospital, but aside from that, they are an excellent way to build relationships and gain respect from throughout the medical staff.

Worthwhile Effort

Ensuring that the hospitalists in your group feel respected and valued by other doctors and everyone they work with is important. Don’t make the mistake of thinking that working on this is just about stroking hospitalists’ egos.

I coauthored a 2001 research study on hospitalist burnout that failed to show a correlation between workload and burnout, but the study found that things like poor occupational solidarity are associated with burnout.1

Feeling like you fit in and are a respected member of your peer group (medical staff) is important and worth working on diligently. TH

Dr. Nelson has been a practicing hospitalist since 1988 and is cofounder and past president of SHM. He is a principal in Nelson Flores Hospital Medicine Consultants, a national hospitalist practice management consulting firm (www.nelsonflores.com). He is course co-director and faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official position of SHM.

Reference

1. Hoff T, Whitcomb WF, Nelson JR. Thriving and surviving in a new medical career: the case of hospitalist physicians. Jrl Health Social Behavior. 2001;43:72-91.

I encounter a lot of hospitalists who complain that the other doctors at their hospital think of hospitalists as second-class citizens, as sort of like career residents. HM program directors need to make sure that is not the case for the hospitalists in their practice.

SHM has worked with the AMA’s Organized Medical Staff Section to assess the perception of hospitalists by primary-care physicians (PCPs) and hospitalists themselves. When asked in a 2009 survey, “Do you agree or disagree that hospitalists are respected members of the medical staff at a hospital?” only 3 out of 4 respondents agreed or highly agreed. That percentage is up slightly from the same survey conducted in 2007, and we don’t have data regarding how the responses would have been different if the question had been asked about other specialties. But I still find it concerning that about 25% of PCPs and hospitalists don’t see hospitalists as respected members of a medical staff. (If you are wondering, there wasn’t much of a difference between how hospitalists and PCPs answered the question.)

Use First Names

In the 1980s, I left residency and entered private practice as a hospitalist in a nonteaching, suburban hospital. I had a really hard time calling other doctors by their first names, especially the highly regarded senior internist who was my former roommate’s dad. He had always been Dr. McCollough to me, and I insisted calling him “Doctor” until we had been peers on the same medical staff for about a year.

Finally, in a somewhat annoyed voice, he told me I had to start calling him “Bob,” and that I should call all the doctors by their first names. It took a while, but using first names began to feel normal. Looking back on it, I think Dr. McCollough Bob taught me an important lesson about fitting in.

So make sure the hospitalists in your group call other doctors by their first names, too.

Dress the Part

I’ve come to believe that there are a number of things some hospitalists do to sabotage their own interest in being respected by the medical staff at their hospital. To my surprise, I’ve worked with a number of hospitalist groups in which most dress and act like residents, then complain that other doctors at their hospital treat them like residents. I think the way we dress, especially early in our careers, is a pretty big deal. If you’re similar in age to residents, then you’ll sure look like a resident if you dress like them. So don’t wear scrubs and Skechers unless all of the doctors in your hospital wear scrubs and Skechers.

The best advice is to dress the way the respected doctors dress. Follow the lead on things like neckties, dresses, and the white coat (the latter is almost unheard of at my hospital unless it is used to cover up scrubs). Fortunately, few doctors dress formally anymore (e.g., suit, and tie or sport coat for men). Emerging research might push all of us toward shedding ties, long sleeves, and the white coat before long.

Of course, you should keep in mind the way patients would like to see you dress. You can find information about patient expectations through a simple Internet search or by asking the person in charge of patient satisfaction at your hospital.

Seek Social Connections

Just like the issue of dress, I’ve encountered a number of hospitalist groups that have a habit of sneaking into the physician lunchroom, grabbing food in a “to go” container, and heading back to their office to eat together. These hospitalists are missing a valuable opportunity to enjoy social conversation with physicians of all specialties. If your hospital has a physician lunch room that is crowded with doctors, take advantage of the opportunity to build social networks.

You don’t need to eat there every day. (For a number of years, I enjoyed having lunch with the social workers in our main cafeteria.) But you should eat there more frequently than sneaking back to your office to eat only with other hospitalists. (If you don’t have time for lunch, then we need to talk about workload and efficiency issues.)

Look for other opportunities to make connections with other doctors through service on hospital committees, participation in social events at the hospital, or speaking at grand rounds. Although any single activity might not have significant impact, if you do these things regularly, you will form better relationships and be less likely to be or feel “dumped on,” and if it does happen, you’re in a much better position to address it if the dumping doctor is a friend.

Leadership Positions

Work to ensure a member of your group always sits on the medical staff executive committee, and seek out leadership positions like chief of medicine or chief of staff. Don’t simply assume you are too young or too inexperienced. Your hospital really needs the leadership of doctors who have a broad view of hospital operations and medical staff affairs. Few doctors have a broader view than hospitalists.

And if you have an interest in medical staff leadership, think about whether you’d like to serve as your hospital’s chief medical officer (aka vice president of medical affairs). All of these activities are important ways to influence what happens at your hospital, but aside from that, they are an excellent way to build relationships and gain respect from throughout the medical staff.

Worthwhile Effort

Ensuring that the hospitalists in your group feel respected and valued by other doctors and everyone they work with is important. Don’t make the mistake of thinking that working on this is just about stroking hospitalists’ egos.

I coauthored a 2001 research study on hospitalist burnout that failed to show a correlation between workload and burnout, but the study found that things like poor occupational solidarity are associated with burnout.1

Feeling like you fit in and are a respected member of your peer group (medical staff) is important and worth working on diligently. TH

Dr. Nelson has been a practicing hospitalist since 1988 and is cofounder and past president of SHM. He is a principal in Nelson Flores Hospital Medicine Consultants, a national hospitalist practice management consulting firm (www.nelsonflores.com). He is course co-director and faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official position of SHM.

Reference

1. Hoff T, Whitcomb WF, Nelson JR. Thriving and surviving in a new medical career: the case of hospitalist physicians. Jrl Health Social Behavior. 2001;43:72-91.

Whether pure political theater or a real attempt at bipartisanship, the Feb. 25 healthcare summit was a milestone on the way to March’s riveting Congressional vote in favor of healtcare reform.

Both parties arrived with some newly dusted off—or slightly tweaked—ideas to throw into the mix, in part to give voters the impression that they knew best how to move forward with healthcare reform. In the end, the legislation that narrowly prevailed March 20 incorporated some of those ideas while dumping or reshaping others (items in the reconciliation bill weren’t finalized at press time).

The fight isn’t over, however, and we are likely to hear the same dueling themes again: more federal government intervention versus more market-driven solutions for addressing access and cost. Most of the ideas influence hospital care, frequently cited as one of the most expensive sectors of healthcare. Here’s a look at key proposals that rose to the top of their parties’ wish lists in February, and how they fared in March.

Idea: Allow People to Buy Health Insurance across State Lines

Although not new, Republican legislators revived the idea bandied about during the Bush administration, and made it a key element of their alternative to the Democratic plan. Ultimately, it would hold insurance companies accountable through robust competition, but without a “federal bureaucracy,” Rep. Marsha Blackburn (R-Tenn.) said at the summit. With competition fueling reduced insurance premiums for consumers, the argument goes, the number of insured increases.

Michael Cousineau, an associate professor of research at the University of Southern California and a specialist in health policy and health services, isn’t having it. “I think that it’s a stupid proposal,” he says. First, he argues, it’s not practical for someone in California to buy a policy from Mississippi. If a consumer has a problem with an out-of-state health plan refusing to cover care, he asks, “who are you going to complain to?”

If insurance companies set up shop in the states with the lowest level of regulation, he says, younger and healthier adults would migrate to those cheaper plans, leaving the older and sicker adults who really need healthcare in plans with the strongest consumer protections. “So you’ll end up with this massive problem of sick people in some plans and well people in the other plans, and it’s just going to create havoc. I don’t think it’s a sustainable mechanism,” he says. Doctors, hospitals, and even insurers themselves would hate it, he says, because of the massive influx of out-of-state insurance companies.

Democrats, including Oregon Sen. Ron Wyden, introduced their own version of the proposal, but on a more regional level and with more rigorous oversight. Currently, insurance plans must meet the requirements of the states in which they’re sold. But states have incredibly varied mandates about what kind of healthcare must be covered. “If you permit the interstate sales of insurance under the current plans, then more or less all of those state rules go out the door,” says Leighton Ku, a health policy analyst at George Washington University. Although sidestepping state-specific regulations would permit people to buy insurance from the state with the cheapest plan, he says, “in many cases, that would be because the state has the fewest restrictions on it.”

And therein lies another big concern, he says: “That it essentially begins to create a race to the bottom.”

At the summit, President Obama supported selling insurance across state lines, but through a national exchange with at least “minimal standards” through which any insurer could participate.

Ultimately, the new legislation will allow states to form exchanges, but with an option for regional exchanges as well.

Idea: Create a Health Insurance Rate Authority

Championed by Obama, this proposal arrived on the heels of several high-profile rate increases that have generated considerable public angst. Not coincidentally, the House Energy and Commerce Committee held a hearing about soaring premiums the day before the summit.

At the hearing, legislators questioned Wellpoint president and CEO Angela Braly about the company’s Anthem Blue Cross unit and its plans to raise insurance premiums by as much as 39% for some Californians (overall, premium increases average 25%). Braly, in turn, blamed the surge on rising and “unsustainable” pharmacy and hospital care costs, the latter driven primarily by hospital reimbursement rates.

Although the general concept of federal oversight is useful, Ku says, the big question is one of authority. Regulating insurers has traditionally fallen to state governments, which likely will be reluctant to give up jurisdictional power but might accept federal assistance.

“I think in general it would help, but I don’t think it’s going to have as much of an impact unless we control the cost-of-care downlink,” Cousineau adds. Including a mandate for individuals to buy health insurance reduces the need for the authority, though he concedes that some cynics doubt whether health insurers will voluntarily lower rates even if more young, healthy people buy policies. Republicans oppose the idea of an individual mandate and a new federal regulatory entity.

In the March bill, the individual mandate prevailed while the idea of a new insurance watchdog fell by the wayside.

Idea: Provide State Grants to Expand High-Risk Pools for Uninsured

The idea, proposed by Republicans in several iterations, including Sen. John McCain (R-Ariz.) when he ran for president, was offered as a potential alternative to banning insurance companies from denying coverage to patients with pre-existing conditions. Many states already offer high-risk patient pools for patients who have been excluded from the private market, but some have long waiting lists. The Health Insurance Plan of California (HPIC), for example, has a two-year wait, according to Cousineau.

“It’s not a bad idea,” he says of a federal subsidy, but because the pools only include high-risk patients, he says they won’t solve the problem of expensive premiums. Cousineau prefers state-based exchanges that aren’t segregated by risk and spread the cost over a wider range of people, which is included in the March bill. “Otherwise, it’s too expensive, and you’re asking the states to pay for part of it,” he says.

Ku believes high-risk pools could deliver some relief to patients currently priced out of the market. “It’s not going to help the neediest of the needy, but could help some,” he says. As a temporary fix, the new legislation sets up high-risk pools in states that lack them, with $5 billion from the federal coffers. The mechanism will be phased out in 2014, however; by then, all insurers will be banned from denying coverage to anyone.

Idea: Gradually Close the “Doughnut Hole”

An idea popular with senior citizens, closing the gap in Medicare’s Part D prescription drug coverage gained further traction under Obama’s healthcare plan and was included in the healthcare reconciliation bill. The doughnut-hole closure is paid for with savings from cuts to the Medicare Advantage program.

Experts question whether it will affect as many patients as has been widely assumed. “I think it’s an important thing to do,” Cousineau says, “but I’m not as worried as much about the costs there as I am in other parts of the program.”

Uncertainties aside, closing Medicare’s doughnut hole could help ease at least one headache cited by hospitalists: struggling to sort through hospitalized patients’ formularies to insure they can afford the drugs they need upon discharge—so they won’t end up back in the hospital. TH

Bryn Nelson is a freelance medical writer based in Seattle.

Whether pure political theater or a real attempt at bipartisanship, the Feb. 25 healthcare summit was a milestone on the way to March’s riveting Congressional vote in favor of healtcare reform.

Both parties arrived with some newly dusted off—or slightly tweaked—ideas to throw into the mix, in part to give voters the impression that they knew best how to move forward with healthcare reform. In the end, the legislation that narrowly prevailed March 20 incorporated some of those ideas while dumping or reshaping others (items in the reconciliation bill weren’t finalized at press time).

The fight isn’t over, however, and we are likely to hear the same dueling themes again: more federal government intervention versus more market-driven solutions for addressing access and cost. Most of the ideas influence hospital care, frequently cited as one of the most expensive sectors of healthcare. Here’s a look at key proposals that rose to the top of their parties’ wish lists in February, and how they fared in March.

Idea: Allow People to Buy Health Insurance across State Lines

Although not new, Republican legislators revived the idea bandied about during the Bush administration, and made it a key element of their alternative to the Democratic plan. Ultimately, it would hold insurance companies accountable through robust competition, but without a “federal bureaucracy,” Rep. Marsha Blackburn (R-Tenn.) said at the summit. With competition fueling reduced insurance premiums for consumers, the argument goes, the number of insured increases.

Michael Cousineau, an associate professor of research at the University of Southern California and a specialist in health policy and health services, isn’t having it. “I think that it’s a stupid proposal,” he says. First, he argues, it’s not practical for someone in California to buy a policy from Mississippi. If a consumer has a problem with an out-of-state health plan refusing to cover care, he asks, “who are you going to complain to?”

If insurance companies set up shop in the states with the lowest level of regulation, he says, younger and healthier adults would migrate to those cheaper plans, leaving the older and sicker adults who really need healthcare in plans with the strongest consumer protections. “So you’ll end up with this massive problem of sick people in some plans and well people in the other plans, and it’s just going to create havoc. I don’t think it’s a sustainable mechanism,” he says. Doctors, hospitals, and even insurers themselves would hate it, he says, because of the massive influx of out-of-state insurance companies.

Democrats, including Oregon Sen. Ron Wyden, introduced their own version of the proposal, but on a more regional level and with more rigorous oversight. Currently, insurance plans must meet the requirements of the states in which they’re sold. But states have incredibly varied mandates about what kind of healthcare must be covered. “If you permit the interstate sales of insurance under the current plans, then more or less all of those state rules go out the door,” says Leighton Ku, a health policy analyst at George Washington University. Although sidestepping state-specific regulations would permit people to buy insurance from the state with the cheapest plan, he says, “in many cases, that would be because the state has the fewest restrictions on it.”

And therein lies another big concern, he says: “That it essentially begins to create a race to the bottom.”

At the summit, President Obama supported selling insurance across state lines, but through a national exchange with at least “minimal standards” through which any insurer could participate.

Ultimately, the new legislation will allow states to form exchanges, but with an option for regional exchanges as well.

Idea: Create a Health Insurance Rate Authority

Championed by Obama, this proposal arrived on the heels of several high-profile rate increases that have generated considerable public angst. Not coincidentally, the House Energy and Commerce Committee held a hearing about soaring premiums the day before the summit.

At the hearing, legislators questioned Wellpoint president and CEO Angela Braly about the company’s Anthem Blue Cross unit and its plans to raise insurance premiums by as much as 39% for some Californians (overall, premium increases average 25%). Braly, in turn, blamed the surge on rising and “unsustainable” pharmacy and hospital care costs, the latter driven primarily by hospital reimbursement rates.

Although the general concept of federal oversight is useful, Ku says, the big question is one of authority. Regulating insurers has traditionally fallen to state governments, which likely will be reluctant to give up jurisdictional power but might accept federal assistance.

“I think in general it would help, but I don’t think it’s going to have as much of an impact unless we control the cost-of-care downlink,” Cousineau adds. Including a mandate for individuals to buy health insurance reduces the need for the authority, though he concedes that some cynics doubt whether health insurers will voluntarily lower rates even if more young, healthy people buy policies. Republicans oppose the idea of an individual mandate and a new federal regulatory entity.

In the March bill, the individual mandate prevailed while the idea of a new insurance watchdog fell by the wayside.

Idea: Provide State Grants to Expand High-Risk Pools for Uninsured

The idea, proposed by Republicans in several iterations, including Sen. John McCain (R-Ariz.) when he ran for president, was offered as a potential alternative to banning insurance companies from denying coverage to patients with pre-existing conditions. Many states already offer high-risk patient pools for patients who have been excluded from the private market, but some have long waiting lists. The Health Insurance Plan of California (HPIC), for example, has a two-year wait, according to Cousineau.

“It’s not a bad idea,” he says of a federal subsidy, but because the pools only include high-risk patients, he says they won’t solve the problem of expensive premiums. Cousineau prefers state-based exchanges that aren’t segregated by risk and spread the cost over a wider range of people, which is included in the March bill. “Otherwise, it’s too expensive, and you’re asking the states to pay for part of it,” he says.

Ku believes high-risk pools could deliver some relief to patients currently priced out of the market. “It’s not going to help the neediest of the needy, but could help some,” he says. As a temporary fix, the new legislation sets up high-risk pools in states that lack them, with $5 billion from the federal coffers. The mechanism will be phased out in 2014, however; by then, all insurers will be banned from denying coverage to anyone.

Idea: Gradually Close the “Doughnut Hole”

An idea popular with senior citizens, closing the gap in Medicare’s Part D prescription drug coverage gained further traction under Obama’s healthcare plan and was included in the healthcare reconciliation bill. The doughnut-hole closure is paid for with savings from cuts to the Medicare Advantage program.

Experts question whether it will affect as many patients as has been widely assumed. “I think it’s an important thing to do,” Cousineau says, “but I’m not as worried as much about the costs there as I am in other parts of the program.”

Uncertainties aside, closing Medicare’s doughnut hole could help ease at least one headache cited by hospitalists: struggling to sort through hospitalized patients’ formularies to insure they can afford the drugs they need upon discharge—so they won’t end up back in the hospital. TH

Bryn Nelson is a freelance medical writer based in Seattle.

Whether pure political theater or a real attempt at bipartisanship, the Feb. 25 healthcare summit was a milestone on the way to March’s riveting Congressional vote in favor of healtcare reform.

Both parties arrived with some newly dusted off—or slightly tweaked—ideas to throw into the mix, in part to give voters the impression that they knew best how to move forward with healthcare reform. In the end, the legislation that narrowly prevailed March 20 incorporated some of those ideas while dumping or reshaping others (items in the reconciliation bill weren’t finalized at press time).

The fight isn’t over, however, and we are likely to hear the same dueling themes again: more federal government intervention versus more market-driven solutions for addressing access and cost. Most of the ideas influence hospital care, frequently cited as one of the most expensive sectors of healthcare. Here’s a look at key proposals that rose to the top of their parties’ wish lists in February, and how they fared in March.

Idea: Allow People to Buy Health Insurance across State Lines

Although not new, Republican legislators revived the idea bandied about during the Bush administration, and made it a key element of their alternative to the Democratic plan. Ultimately, it would hold insurance companies accountable through robust competition, but without a “federal bureaucracy,” Rep. Marsha Blackburn (R-Tenn.) said at the summit. With competition fueling reduced insurance premiums for consumers, the argument goes, the number of insured increases.

Michael Cousineau, an associate professor of research at the University of Southern California and a specialist in health policy and health services, isn’t having it. “I think that it’s a stupid proposal,” he says. First, he argues, it’s not practical for someone in California to buy a policy from Mississippi. If a consumer has a problem with an out-of-state health plan refusing to cover care, he asks, “who are you going to complain to?”

If insurance companies set up shop in the states with the lowest level of regulation, he says, younger and healthier adults would migrate to those cheaper plans, leaving the older and sicker adults who really need healthcare in plans with the strongest consumer protections. “So you’ll end up with this massive problem of sick people in some plans and well people in the other plans, and it’s just going to create havoc. I don’t think it’s a sustainable mechanism,” he says. Doctors, hospitals, and even insurers themselves would hate it, he says, because of the massive influx of out-of-state insurance companies.

Democrats, including Oregon Sen. Ron Wyden, introduced their own version of the proposal, but on a more regional level and with more rigorous oversight. Currently, insurance plans must meet the requirements of the states in which they’re sold. But states have incredibly varied mandates about what kind of healthcare must be covered. “If you permit the interstate sales of insurance under the current plans, then more or less all of those state rules go out the door,” says Leighton Ku, a health policy analyst at George Washington University. Although sidestepping state-specific regulations would permit people to buy insurance from the state with the cheapest plan, he says, “in many cases, that would be because the state has the fewest restrictions on it.”

And therein lies another big concern, he says: “That it essentially begins to create a race to the bottom.”

At the summit, President Obama supported selling insurance across state lines, but through a national exchange with at least “minimal standards” through which any insurer could participate.

Ultimately, the new legislation will allow states to form exchanges, but with an option for regional exchanges as well.

Idea: Create a Health Insurance Rate Authority

Championed by Obama, this proposal arrived on the heels of several high-profile rate increases that have generated considerable public angst. Not coincidentally, the House Energy and Commerce Committee held a hearing about soaring premiums the day before the summit.

At the hearing, legislators questioned Wellpoint president and CEO Angela Braly about the company’s Anthem Blue Cross unit and its plans to raise insurance premiums by as much as 39% for some Californians (overall, premium increases average 25%). Braly, in turn, blamed the surge on rising and “unsustainable” pharmacy and hospital care costs, the latter driven primarily by hospital reimbursement rates.

Although the general concept of federal oversight is useful, Ku says, the big question is one of authority. Regulating insurers has traditionally fallen to state governments, which likely will be reluctant to give up jurisdictional power but might accept federal assistance.

“I think in general it would help, but I don’t think it’s going to have as much of an impact unless we control the cost-of-care downlink,” Cousineau adds. Including a mandate for individuals to buy health insurance reduces the need for the authority, though he concedes that some cynics doubt whether health insurers will voluntarily lower rates even if more young, healthy people buy policies. Republicans oppose the idea of an individual mandate and a new federal regulatory entity.

In the March bill, the individual mandate prevailed while the idea of a new insurance watchdog fell by the wayside.

Idea: Provide State Grants to Expand High-Risk Pools for Uninsured

The idea, proposed by Republicans in several iterations, including Sen. John McCain (R-Ariz.) when he ran for president, was offered as a potential alternative to banning insurance companies from denying coverage to patients with pre-existing conditions. Many states already offer high-risk patient pools for patients who have been excluded from the private market, but some have long waiting lists. The Health Insurance Plan of California (HPIC), for example, has a two-year wait, according to Cousineau.

“It’s not a bad idea,” he says of a federal subsidy, but because the pools only include high-risk patients, he says they won’t solve the problem of expensive premiums. Cousineau prefers state-based exchanges that aren’t segregated by risk and spread the cost over a wider range of people, which is included in the March bill. “Otherwise, it’s too expensive, and you’re asking the states to pay for part of it,” he says.

Ku believes high-risk pools could deliver some relief to patients currently priced out of the market. “It’s not going to help the neediest of the needy, but could help some,” he says. As a temporary fix, the new legislation sets up high-risk pools in states that lack them, with $5 billion from the federal coffers. The mechanism will be phased out in 2014, however; by then, all insurers will be banned from denying coverage to anyone.

Idea: Gradually Close the “Doughnut Hole”

An idea popular with senior citizens, closing the gap in Medicare’s Part D prescription drug coverage gained further traction under Obama’s healthcare plan and was included in the healthcare reconciliation bill. The doughnut-hole closure is paid for with savings from cuts to the Medicare Advantage program.

Experts question whether it will affect as many patients as has been widely assumed. “I think it’s an important thing to do,” Cousineau says, “but I’m not as worried as much about the costs there as I am in other parts of the program.”

Uncertainties aside, closing Medicare’s doughnut hole could help ease at least one headache cited by hospitalists: struggling to sort through hospitalized patients’ formularies to insure they can afford the drugs they need upon discharge—so they won’t end up back in the hospital. TH

Bryn Nelson is a freelance medical writer based in Seattle.

Hospitalists will be essential players in helping their institutions prepare for the Recovery Audit Contractor (RAC) program, now being rolled out nationwide by the Centers for Medicare & Medicaid Services (CMS). The program is part of CMS’ arsenal to ferret out improper payments and prevent fraud, waste, and abuse in the Medicare system.

All providers who bill Medicare fee-for-service are fair game for an RAC audit, which scrutinizes medical records to validate diagnosis-related groups (DRGs), coding, and the necessity of care provided by hospitals. Hospitalists are being asked to document their diagnosis and treatment decisions more precisely and thoroughly than ever, ensuring that DRG coding is appropriate, medical necessity is watertight, and hospitals are defended from costly overpayment recovery.

Specificity of documentation is the hospitalist’s most potent weapon against this new layer of federal audits.

In a three-year demonstration of the RAC program that ended in March 2008, one-third of all medical records audited resulted in an overpayment finding and collection. RACs collected more than $900 million in overpayments and returned nearly $38 million in underpayments. One-third of provider appeals (physician, hospital, and other providers) were successful during the demo program, according to a June 2008 CMS evaluation report. (Download a copy of the report at www.cms.hhs.gov/RAC/Downloads/RAC_Demonstration_Evaluation_Report.pdf.)

How the Audits Work

Coding rules and terminology often don’t match what we’re used to writing in the record. So hospitalists need to learn what these connections are and use them in their medical record documentation. This is a core skill for hospitalists: being able to translate clinical terminology into the correct coding terminology for hospitals and coders.—Richard D. Pinson, MD, FACP, CCS, principal, HCQ Consulting, Nashville, Tenn.

Listen to an interview with Dr. Pinson

Out of concern that the Medicare Trust Fund might not be adequately protected against improper payments by existing error detection and prevention efforts, Congress directed CMS to use RACs to identify and recoup Medicare overpayments under Section 306 of the Medicare Modernization Act of 2003, and directed CMS to make the program permanent by 2010 under Section 302 of the Tax Relief and Health Care Act of 2006. According to CMS, RACs were implemented so that physicians and other providers could avoid submitting claims that do not comply with Medicare rules, CMS could lower its error rate, and taxpayers and future Medicare beneficiaries would be protected.1

CMS has contracted with four regional RACs for the national program, and each will use proprietary auditing software to review paid claims from Medicare Part A and Part B providers to ensure that they meet Medicare’s statutory, regulatory, and policy requirements and regulations.

The RACs use automated review for claims that clearly contain errors that resulted in improper payments (e.g., claims for duplicate or uncovered services, claims that violate a written Medicare policy or sanctioned coding guideline), in which case the RAC notifies the provider of the overpayment. For cases in which there is a high probability—but not certainty—that the claim contains an overpayment, the RAC requests medical records from the provider (including imaged medical records on CD or DVD) to conduct a complex review and make a determination as to whether payment of the claim was correct, or whether there was an over- or underpayment.

CMS uses a Web-based data warehouse to ensure that RACs do not review claims that have previously been reviewed by another entity, such as a Medicare carrier, fiscal intermediary, the Office of Inspector General, or a quality-improvement organization (QIO).

Connie Leonard

The four regional RACs are ramping up their claim review activities in all states, says Connie Leonard, director of CMS’ Division of Recovery Audit Operations. When overpayments are confirmed, the RACs issue letters demanding providers to repay their Medicare carrier or intermediary within 30 days. For confirmed underpayments, RACs inform the provider’s Medicare contractor or fiscal intermediary, which then forwards the additional payment, Leonard says.

Providers can repay an overpayment by check or installment plan on or before 30 days after receiving the RAC demand letter. The Medicare contractors use recoupment—reducing present or future Medicare payments—on day 41. Providers who wish to dispute overpayment charges can take their case through the usual Medicare claims appeal process. RACs also offer a “discussion period”—from the date the provider gets a “Detailed Review Results” letter until the date of recoupment—to discuss with the RAC an improper payment determination outside the normal appeal process, Leonard says.

RACs are targeting confusion between septicemia and urosepsis.

—Kathy DeVault, RHIA, CCS, CCS-P, manager, Professional Practice Resources, American Health Information Management Association, Chicago

If providers disagree with the RAC’s determination, Leonard says, they should either 1) pay by check by day 30 and file for appeal by day 120 of the demand letter; 2) allow recoupment on day 41 and file for appeal by day 120; 3) stop the recoupment by filing an appeal by day 30; or 4) request an extended payment plan and appeal by day 120.

Some physicians in the demonstration project regarded the third-party RAC companies as “bounty hunters” operating without sufficient CMS oversight, imposing undue administrative burdens on physician practices, and lacking the clinical expertise to adjudicate claims appropriately, according to Michael Schweitz, MD, a rheumatologist from West Palm Beach, Fla., who testified before a Congressional committee in 2008 about RAC activities.

In response, CMS has modified the program (see “Refinements in Permanent RAC Program,” p. 8) in several ways to address those flaws and ensure a fair and smooth auditing process, Leonard says. (Listen to an audio interview with Ms. Leonard)

Connie Leonard

All About the Details

Because RACs focus on coding and documentation that fails to support DRG designations, hospitalists who focus on accurate and precise documentation that can be coded properly will greatly help their hospitals defend against RAC audits, as well as yield better payment and improved quality scores, says Richard D. Pinson, MD, FACP, CCS, principal of HCQ Consulting in Nashville, Tenn. Pinson will present “Documentation Tips Your Hospital Will Love You For” at HM10 in Washington, D.C., this month. A video/audio download of the presentation will be available on SHM’s Web site in May.

“Coding rules and terminology often don’t match what we’re used to writing in the record, so hospitalists need to learn what these connections are and use them in their medical record documentation,” Pinson says. “This is a core skill for hospitalists: being able to translate clinical terminology into the correct coding terminology for hospitals and coders.”

For example, if a hospitalist sees that a pre-operative patient has severe congestive heart failure, that condition cannot be coded as a complication of the patient’s care or considered as such in the DRG assignment, Pinson explains. If the hospitalist says the patient has an acute exacerbation of systolic heart failure, then that is a major comorbidity and ought to be documented as such. The average value of a major comorbidity in a surgical case could be as much as $20,000 per case, Pinson notes. If the DRG assignment included acute exacerbation but the medical chart only said severe congestive heart failure, the hospital would face recoupment of payment from an RAC audit.

“If we’re inconsistent or ambiguous in how we apply our terms, we can end up inadvertently upcoding. The key is: Learn to use the right terms that correspond to the right codes, based on what your patient actually has, and then be consistent throughout the record in your use of those terms,” Pinson says. For example, “we may admit a patient and say at the very beginning that the patient probably has aspiration pneumonia. We then treat the patient for aspiration pneumonia but leave it out of the discharge summary. The coder may code aspiration pneumonia, but the RAC auditor may point out that it was only mentioned in the patient’s record once, as possible, and may recoup any payment for treatment beyond simple pneumonia.”

Level of care and symptom-based DRG designations are red flags for RAC recovery, Pinson says. When the auditor sees a DRG based on symptoms rather than diagnoses (e.g., chest pain, syncope, transient ischemic attack, dehydration) and it is billed as inpatient status instead of observation status, that’s a target. Those symptoms, he says, often don’t meet the medical necessity criteria for inpatient status.

Pinson advises hospitalists to ask their institution’s case-management department, or hire an external consultant, to abstract key criteria for patient status designation, and to consider starting a patient as observation status until a precise diagnosis can be made that warrants hospital admission. Hospitalists should then describe the patient’s situation more precisely in the medical record as a diagnosis, not just as symptoms—e.g., syncope suspected due to cardiac arrhythmia, or chest pain suspected to be angina.

“For inpatient billing, those uncertain diagnoses, described that way, count as if they were established conditions. They don’t go into symptom DRGs,” Pinson says. “If you’re doing these things to protect the validity of you hospital’s billing, you’ll be protecting yourself at the same time, and it’s unlikely that RACs will single you out at all for auditing.”

Hospitalists can be valuable participants on their institutions’ RAC response team, providing clinical clarification on cases and helping to draft appeal letters.

There are several other red flags that RACs zero in on and hospitalists should watch out for, says Kathy DeVault, RHIA, CCS, CCS-P, manager of Professional Practice Resources for the American Health Information Management Association (AHIMA). Specificity in the medical record makes all the difference. For example, by identifying incorrect coding for excisional debridement (removal of infected tissue), RACs collected nearly $18 million in overpayments in fiscal-year 2006 because medical record documentation omitted such details as the word “excisional” (e.g., sharp debridement coded as excisional debridement), whether it was performed in the operating room or not, instruments used, the extent and depth of the procedure, and if the cutting of tissue was outside or beyond the wound margin.

DeVault warns that “RACs are targeting confusion between septicemia and urosepsis.” According to CMS, if the hospital reports a patient’s principal diagnosis as septicemia (03.89) but the medical record indicates the diagnosis of urosepsis, the RAC will bump the diagnosis code down to urinary tract infection (599.0), a lower-payment DRG, and demand recoupment.1

Urosepsis does not have a specific ICD-9-CM diagnosis code, and defaults to a simple UTI code, as referenced in ICD-9-CM. Unless the physician states in his or her documentation that the patient’s condition was systemic sepsis or septicemia, urosepsis would be coded as a UTI. RACS also denied some respiratory-failure claims for incorrect sequencing of principal diagnosis (e.g., respiratory failure vs. sepsis). The American Hospital Association has issued a regulatory advisory about these issues (web.mhanet.com/userdocs/articles/RAC/AHA_RAC_Coding Advisory_071608.pdf).

DeVault highlights three additional RAC targets that might impact HM:

• Documentation for transbronchial biopsy (a surgical DRG) in which the medical record only shows pathology of bronchus tissue (which RACs regard as nonsurgical);
• Failure to document the severity of a patient’s anemia as such to meet the medical necessity requirement of a blood transfusion (e.g., a chronic blood loss anemia or a pernicious anemia); and
• Documentation of treatments performed by intensivists in an ICU. By the time a patient’s attending physician sees their patient out of the ICU, DeVault says, their acute renal failure could be turned around but the attending might not document what happened in the ICU. The intensivist must see to it that the documentation allows the appropriate DRG assignment for the level of care the patient received.

AHIMA has published a 65-page RAC Audit Toolkit that describes the audit process, outlines preparations and procedures, and offers concrete guidance for appeals. Download a copy at www.ahima.org/infocenter/documents/RACToolkitFINAL.pdf. TH

Chris Guadagnino is a freelance medical writer based in Philadelphia.

Reference

1. The Medicare Recovery Audit Contractor (RAC) program: an evaluation of the 3-year demonstration. CMS Web site. Available at: www.cms.hhs.gov/RAC/Downloads/RACEvaluationReport.pdf. Accessed March 3, 2010.

Refinements in CMS’ Permanent RAC Program

Connie Leonard

Based on lessons learned from demonstration programs, CMS has made a number of changes to the permanent Recovery Audit Contractor (RAC) program.

Among the changes are:

• RACs cannot audit claims earlier than three years from the start of the program, with a maximum look-back date of October 1, 2007;
• For physicians, RACs are limited to requesting 10 medical records per 45 days from a single physician, 20 medical records from a small practice of two to five physicians, 30 from a group of six to 15, and 50 from a large group of more than 16 physicians;
• For hospitals, RACs are limited to requesting 1% of all claims submitted for the previous calendar year, divided into eight periods (45 days). Although the RACs may go more than 45 days between record requests, in no case shall they make requests more frequently than every 45 days;
• RACs must send a “Detailed Review Results” letter within 60 calendar days of receipt of the medical records they request for review;
• Each RAC must hire a physician medical director and certified coders, and providers may request the credentials of their auditor and request to speak to their RAC’s medical director regarding a claim denial;
• All new issues that an RAC wishes to pursue for overpayments must be validated by CMS or an independent RAC validation contractor, and posted to the RAC’s Web site before widespread review;
• RACS must have a Web-based “Claim Status” platform that will allow providers to track the status of medical record submissions to RACs;
• RACs must pay back contingency fees when an improper payment determination is overturned at any level in the appeals process (demo RACs were allowed to retain them on determinations overturned on second- and third-level appeal); and
• RAC validation contractors will conduct a third-party review of RAC claims determinations and provide annual accuracy scores for each RAC.—CG

Hospitalists will be essential players in helping their institutions prepare for the Recovery Audit Contractor (RAC) program, now being rolled out nationwide by the Centers for Medicare & Medicaid Services (CMS). The program is part of CMS’ arsenal to ferret out improper payments and prevent fraud, waste, and abuse in the Medicare system.

All providers who bill Medicare fee-for-service are fair game for an RAC audit, which scrutinizes medical records to validate diagnosis-related groups (DRGs), coding, and the necessity of care provided by hospitals. Hospitalists are being asked to document their diagnosis and treatment decisions more precisely and thoroughly than ever, ensuring that DRG coding is appropriate, medical necessity is watertight, and hospitals are defended from costly overpayment recovery.

Specificity of documentation is the hospitalist’s most potent weapon against this new layer of federal audits.

In a three-year demonstration of the RAC program that ended in March 2008, one-third of all medical records audited resulted in an overpayment finding and collection. RACs collected more than $900 million in overpayments and returned nearly $38 million in underpayments. One-third of provider appeals (physician, hospital, and other providers) were successful during the demo program, according to a June 2008 CMS evaluation report. (Download a copy of the report at www.cms.hhs.gov/RAC/Downloads/RAC_Demonstration_Evaluation_Report.pdf.)

How the Audits Work

Coding rules and terminology often don’t match what we’re used to writing in the record. So hospitalists need to learn what these connections are and use them in their medical record documentation. This is a core skill for hospitalists: being able to translate clinical terminology into the correct coding terminology for hospitals and coders.—Richard D. Pinson, MD, FACP, CCS, principal, HCQ Consulting, Nashville, Tenn.

Listen to an interview with Dr. Pinson

Out of concern that the Medicare Trust Fund might not be adequately protected against improper payments by existing error detection and prevention efforts, Congress directed CMS to use RACs to identify and recoup Medicare overpayments under Section 306 of the Medicare Modernization Act of 2003, and directed CMS to make the program permanent by 2010 under Section 302 of the Tax Relief and Health Care Act of 2006. According to CMS, RACs were implemented so that physicians and other providers could avoid submitting claims that do not comply with Medicare rules, CMS could lower its error rate, and taxpayers and future Medicare beneficiaries would be protected.1

CMS has contracted with four regional RACs for the national program, and each will use proprietary auditing software to review paid claims from Medicare Part A and Part B providers to ensure that they meet Medicare’s statutory, regulatory, and policy requirements and regulations.

The RACs use automated review for claims that clearly contain errors that resulted in improper payments (e.g., claims for duplicate or uncovered services, claims that violate a written Medicare policy or sanctioned coding guideline), in which case the RAC notifies the provider of the overpayment. For cases in which there is a high probability—but not certainty—that the claim contains an overpayment, the RAC requests medical records from the provider (including imaged medical records on CD or DVD) to conduct a complex review and make a determination as to whether payment of the claim was correct, or whether there was an over- or underpayment.

CMS uses a Web-based data warehouse to ensure that RACs do not review claims that have previously been reviewed by another entity, such as a Medicare carrier, fiscal intermediary, the Office of Inspector General, or a quality-improvement organization (QIO).

Connie Leonard

The four regional RACs are ramping up their claim review activities in all states, says Connie Leonard, director of CMS’ Division of Recovery Audit Operations. When overpayments are confirmed, the RACs issue letters demanding providers to repay their Medicare carrier or intermediary within 30 days. For confirmed underpayments, RACs inform the provider’s Medicare contractor or fiscal intermediary, which then forwards the additional payment, Leonard says.

Providers can repay an overpayment by check or installment plan on or before 30 days after receiving the RAC demand letter. The Medicare contractors use recoupment—reducing present or future Medicare payments—on day 41. Providers who wish to dispute overpayment charges can take their case through the usual Medicare claims appeal process. RACs also offer a “discussion period”—from the date the provider gets a “Detailed Review Results” letter until the date of recoupment—to discuss with the RAC an improper payment determination outside the normal appeal process, Leonard says.

RACs are targeting confusion between septicemia and urosepsis.

—Kathy DeVault, RHIA, CCS, CCS-P, manager, Professional Practice Resources, American Health Information Management Association, Chicago

If providers disagree with the RAC’s determination, Leonard says, they should either 1) pay by check by day 30 and file for appeal by day 120 of the demand letter; 2) allow recoupment on day 41 and file for appeal by day 120; 3) stop the recoupment by filing an appeal by day 30; or 4) request an extended payment plan and appeal by day 120.

Some physicians in the demonstration project regarded the third-party RAC companies as “bounty hunters” operating without sufficient CMS oversight, imposing undue administrative burdens on physician practices, and lacking the clinical expertise to adjudicate claims appropriately, according to Michael Schweitz, MD, a rheumatologist from West Palm Beach, Fla., who testified before a Congressional committee in 2008 about RAC activities.

In response, CMS has modified the program (see “Refinements in Permanent RAC Program,” p. 8) in several ways to address those flaws and ensure a fair and smooth auditing process, Leonard says. (Listen to an audio interview with Ms. Leonard)

Connie Leonard

All About the Details

Because RACs focus on coding and documentation that fails to support DRG designations, hospitalists who focus on accurate and precise documentation that can be coded properly will greatly help their hospitals defend against RAC audits, as well as yield better payment and improved quality scores, says Richard D. Pinson, MD, FACP, CCS, principal of HCQ Consulting in Nashville, Tenn. Pinson will present “Documentation Tips Your Hospital Will Love You For” at HM10 in Washington, D.C., this month. A video/audio download of the presentation will be available on SHM’s Web site in May.

“Coding rules and terminology often don’t match what we’re used to writing in the record, so hospitalists need to learn what these connections are and use them in their medical record documentation,” Pinson says. “This is a core skill for hospitalists: being able to translate clinical terminology into the correct coding terminology for hospitals and coders.”

For example, if a hospitalist sees that a pre-operative patient has severe congestive heart failure, that condition cannot be coded as a complication of the patient’s care or considered as such in the DRG assignment, Pinson explains. If the hospitalist says the patient has an acute exacerbation of systolic heart failure, then that is a major comorbidity and ought to be documented as such. The average value of a major comorbidity in a surgical case could be as much as $20,000 per case, Pinson notes. If the DRG assignment included acute exacerbation but the medical chart only said severe congestive heart failure, the hospital would face recoupment of payment from an RAC audit.

“If we’re inconsistent or ambiguous in how we apply our terms, we can end up inadvertently upcoding. The key is: Learn to use the right terms that correspond to the right codes, based on what your patient actually has, and then be consistent throughout the record in your use of those terms,” Pinson says. For example, “we may admit a patient and say at the very beginning that the patient probably has aspiration pneumonia. We then treat the patient for aspiration pneumonia but leave it out of the discharge summary. The coder may code aspiration pneumonia, but the RAC auditor may point out that it was only mentioned in the patient’s record once, as possible, and may recoup any payment for treatment beyond simple pneumonia.”

Level of care and symptom-based DRG designations are red flags for RAC recovery, Pinson says. When the auditor sees a DRG based on symptoms rather than diagnoses (e.g., chest pain, syncope, transient ischemic attack, dehydration) and it is billed as inpatient status instead of observation status, that’s a target. Those symptoms, he says, often don’t meet the medical necessity criteria for inpatient status.

Pinson advises hospitalists to ask their institution’s case-management department, or hire an external consultant, to abstract key criteria for patient status designation, and to consider starting a patient as observation status until a precise diagnosis can be made that warrants hospital admission. Hospitalists should then describe the patient’s situation more precisely in the medical record as a diagnosis, not just as symptoms—e.g., syncope suspected due to cardiac arrhythmia, or chest pain suspected to be angina.

“For inpatient billing, those uncertain diagnoses, described that way, count as if they were established conditions. They don’t go into symptom DRGs,” Pinson says. “If you’re doing these things to protect the validity of you hospital’s billing, you’ll be protecting yourself at the same time, and it’s unlikely that RACs will single you out at all for auditing.”

Hospitalists can be valuable participants on their institutions’ RAC response team, providing clinical clarification on cases and helping to draft appeal letters.

There are several other red flags that RACs zero in on and hospitalists should watch out for, says Kathy DeVault, RHIA, CCS, CCS-P, manager of Professional Practice Resources for the American Health Information Management Association (AHIMA). Specificity in the medical record makes all the difference. For example, by identifying incorrect coding for excisional debridement (removal of infected tissue), RACs collected nearly $18 million in overpayments in fiscal-year 2006 because medical record documentation omitted such details as the word “excisional” (e.g., sharp debridement coded as excisional debridement), whether it was performed in the operating room or not, instruments used, the extent and depth of the procedure, and if the cutting of tissue was outside or beyond the wound margin.

DeVault warns that “RACs are targeting confusion between septicemia and urosepsis.” According to CMS, if the hospital reports a patient’s principal diagnosis as septicemia (03.89) but the medical record indicates the diagnosis of urosepsis, the RAC will bump the diagnosis code down to urinary tract infection (599.0), a lower-payment DRG, and demand recoupment.1

Urosepsis does not have a specific ICD-9-CM diagnosis code, and defaults to a simple UTI code, as referenced in ICD-9-CM. Unless the physician states in his or her documentation that the patient’s condition was systemic sepsis or septicemia, urosepsis would be coded as a UTI. RACS also denied some respiratory-failure claims for incorrect sequencing of principal diagnosis (e.g., respiratory failure vs. sepsis). The American Hospital Association has issued a regulatory advisory about these issues (web.mhanet.com/userdocs/articles/RAC/AHA_RAC_Coding Advisory_071608.pdf).

DeVault highlights three additional RAC targets that might impact HM:

• Documentation for transbronchial biopsy (a surgical DRG) in which the medical record only shows pathology of bronchus tissue (which RACs regard as nonsurgical);
• Failure to document the severity of a patient’s anemia as such to meet the medical necessity requirement of a blood transfusion (e.g., a chronic blood loss anemia or a pernicious anemia); and
• Documentation of treatments performed by intensivists in an ICU. By the time a patient’s attending physician sees their patient out of the ICU, DeVault says, their acute renal failure could be turned around but the attending might not document what happened in the ICU. The intensivist must see to it that the documentation allows the appropriate DRG assignment for the level of care the patient received.

AHIMA has published a 65-page RAC Audit Toolkit that describes the audit process, outlines preparations and procedures, and offers concrete guidance for appeals. Download a copy at www.ahima.org/infocenter/documents/RACToolkitFINAL.pdf. TH

Chris Guadagnino is a freelance medical writer based in Philadelphia.

Reference

1. The Medicare Recovery Audit Contractor (RAC) program: an evaluation of the 3-year demonstration. CMS Web site. Available at: www.cms.hhs.gov/RAC/Downloads/RACEvaluationReport.pdf. Accessed March 3, 2010.

Refinements in CMS’ Permanent RAC Program

Connie Leonard

Based on lessons learned from demonstration programs, CMS has made a number of changes to the permanent Recovery Audit Contractor (RAC) program.

Among the changes are:

• RACs cannot audit claims earlier than three years from the start of the program, with a maximum look-back date of October 1, 2007;
• For physicians, RACs are limited to requesting 10 medical records per 45 days from a single physician, 20 medical records from a small practice of two to five physicians, 30 from a group of six to 15, and 50 from a large group of more than 16 physicians;
• For hospitals, RACs are limited to requesting 1% of all claims submitted for the previous calendar year, divided into eight periods (45 days). Although the RACs may go more than 45 days between record requests, in no case shall they make requests more frequently than every 45 days;
• RACs must send a “Detailed Review Results” letter within 60 calendar days of receipt of the medical records they request for review;
• Each RAC must hire a physician medical director and certified coders, and providers may request the credentials of their auditor and request to speak to their RAC’s medical director regarding a claim denial;
• All new issues that an RAC wishes to pursue for overpayments must be validated by CMS or an independent RAC validation contractor, and posted to the RAC’s Web site before widespread review;
• RACS must have a Web-based “Claim Status” platform that will allow providers to track the status of medical record submissions to RACs;
• RACs must pay back contingency fees when an improper payment determination is overturned at any level in the appeals process (demo RACs were allowed to retain them on determinations overturned on second- and third-level appeal); and
• RAC validation contractors will conduct a third-party review of RAC claims determinations and provide annual accuracy scores for each RAC.—CG

Hospitalists will be essential players in helping their institutions prepare for the Recovery Audit Contractor (RAC) program, now being rolled out nationwide by the Centers for Medicare & Medicaid Services (CMS). The program is part of CMS’ arsenal to ferret out improper payments and prevent fraud, waste, and abuse in the Medicare system.

All providers who bill Medicare fee-for-service are fair game for an RAC audit, which scrutinizes medical records to validate diagnosis-related groups (DRGs), coding, and the necessity of care provided by hospitals. Hospitalists are being asked to document their diagnosis and treatment decisions more precisely and thoroughly than ever, ensuring that DRG coding is appropriate, medical necessity is watertight, and hospitals are defended from costly overpayment recovery.

Specificity of documentation is the hospitalist’s most potent weapon against this new layer of federal audits.

In a three-year demonstration of the RAC program that ended in March 2008, one-third of all medical records audited resulted in an overpayment finding and collection. RACs collected more than $900 million in overpayments and returned nearly $38 million in underpayments. One-third of provider appeals (physician, hospital, and other providers) were successful during the demo program, according to a June 2008 CMS evaluation report. (Download a copy of the report at www.cms.hhs.gov/RAC/Downloads/RAC_Demonstration_Evaluation_Report.pdf.)

How the Audits Work

Coding rules and terminology often don’t match what we’re used to writing in the record. So hospitalists need to learn what these connections are and use them in their medical record documentation. This is a core skill for hospitalists: being able to translate clinical terminology into the correct coding terminology for hospitals and coders.—Richard D. Pinson, MD, FACP, CCS, principal, HCQ Consulting, Nashville, Tenn.

Listen to an interview with Dr. Pinson

Out of concern that the Medicare Trust Fund might not be adequately protected against improper payments by existing error detection and prevention efforts, Congress directed CMS to use RACs to identify and recoup Medicare overpayments under Section 306 of the Medicare Modernization Act of 2003, and directed CMS to make the program permanent by 2010 under Section 302 of the Tax Relief and Health Care Act of 2006. According to CMS, RACs were implemented so that physicians and other providers could avoid submitting claims that do not comply with Medicare rules, CMS could lower its error rate, and taxpayers and future Medicare beneficiaries would be protected.1

CMS has contracted with four regional RACs for the national program, and each will use proprietary auditing software to review paid claims from Medicare Part A and Part B providers to ensure that they meet Medicare’s statutory, regulatory, and policy requirements and regulations.

The RACs use automated review for claims that clearly contain errors that resulted in improper payments (e.g., claims for duplicate or uncovered services, claims that violate a written Medicare policy or sanctioned coding guideline), in which case the RAC notifies the provider of the overpayment. For cases in which there is a high probability—but not certainty—that the claim contains an overpayment, the RAC requests medical records from the provider (including imaged medical records on CD or DVD) to conduct a complex review and make a determination as to whether payment of the claim was correct, or whether there was an over- or underpayment.

CMS uses a Web-based data warehouse to ensure that RACs do not review claims that have previously been reviewed by another entity, such as a Medicare carrier, fiscal intermediary, the Office of Inspector General, or a quality-improvement organization (QIO).

Connie Leonard

The four regional RACs are ramping up their claim review activities in all states, says Connie Leonard, director of CMS’ Division of Recovery Audit Operations. When overpayments are confirmed, the RACs issue letters demanding providers to repay their Medicare carrier or intermediary within 30 days. For confirmed underpayments, RACs inform the provider’s Medicare contractor or fiscal intermediary, which then forwards the additional payment, Leonard says.

Providers can repay an overpayment by check or installment plan on or before 30 days after receiving the RAC demand letter. The Medicare contractors use recoupment—reducing present or future Medicare payments—on day 41. Providers who wish to dispute overpayment charges can take their case through the usual Medicare claims appeal process. RACs also offer a “discussion period”—from the date the provider gets a “Detailed Review Results” letter until the date of recoupment—to discuss with the RAC an improper payment determination outside the normal appeal process, Leonard says.

RACs are targeting confusion between septicemia and urosepsis.

—Kathy DeVault, RHIA, CCS, CCS-P, manager, Professional Practice Resources, American Health Information Management Association, Chicago

If providers disagree with the RAC’s determination, Leonard says, they should either 1) pay by check by day 30 and file for appeal by day 120 of the demand letter; 2) allow recoupment on day 41 and file for appeal by day 120; 3) stop the recoupment by filing an appeal by day 30; or 4) request an extended payment plan and appeal by day 120.

Some physicians in the demonstration project regarded the third-party RAC companies as “bounty hunters” operating without sufficient CMS oversight, imposing undue administrative burdens on physician practices, and lacking the clinical expertise to adjudicate claims appropriately, according to Michael Schweitz, MD, a rheumatologist from West Palm Beach, Fla., who testified before a Congressional committee in 2008 about RAC activities.

In response, CMS has modified the program (see “Refinements in Permanent RAC Program,” p. 8) in several ways to address those flaws and ensure a fair and smooth auditing process, Leonard says. (Listen to an audio interview with Ms. Leonard)

Connie Leonard

All About the Details

Because RACs focus on coding and documentation that fails to support DRG designations, hospitalists who focus on accurate and precise documentation that can be coded properly will greatly help their hospitals defend against RAC audits, as well as yield better payment and improved quality scores, says Richard D. Pinson, MD, FACP, CCS, principal of HCQ Consulting in Nashville, Tenn. Pinson will present “Documentation Tips Your Hospital Will Love You For” at HM10 in Washington, D.C., this month. A video/audio download of the presentation will be available on SHM’s Web site in May.

“Coding rules and terminology often don’t match what we’re used to writing in the record, so hospitalists need to learn what these connections are and use them in their medical record documentation,” Pinson says. “This is a core skill for hospitalists: being able to translate clinical terminology into the correct coding terminology for hospitals and coders.”

For example, if a hospitalist sees that a pre-operative patient has severe congestive heart failure, that condition cannot be coded as a complication of the patient’s care or considered as such in the DRG assignment, Pinson explains. If the hospitalist says the patient has an acute exacerbation of systolic heart failure, then that is a major comorbidity and ought to be documented as such. The average value of a major comorbidity in a surgical case could be as much as $20,000 per case, Pinson notes. If the DRG assignment included acute exacerbation but the medical chart only said severe congestive heart failure, the hospital would face recoupment of payment from an RAC audit.

“If we’re inconsistent or ambiguous in how we apply our terms, we can end up inadvertently upcoding. The key is: Learn to use the right terms that correspond to the right codes, based on what your patient actually has, and then be consistent throughout the record in your use of those terms,” Pinson says. For example, “we may admit a patient and say at the very beginning that the patient probably has aspiration pneumonia. We then treat the patient for aspiration pneumonia but leave it out of the discharge summary. The coder may code aspiration pneumonia, but the RAC auditor may point out that it was only mentioned in the patient’s record once, as possible, and may recoup any payment for treatment beyond simple pneumonia.”

Level of care and symptom-based DRG designations are red flags for RAC recovery, Pinson says. When the auditor sees a DRG based on symptoms rather than diagnoses (e.g., chest pain, syncope, transient ischemic attack, dehydration) and it is billed as inpatient status instead of observation status, that’s a target. Those symptoms, he says, often don’t meet the medical necessity criteria for inpatient status.

Pinson advises hospitalists to ask their institution’s case-management department, or hire an external consultant, to abstract key criteria for patient status designation, and to consider starting a patient as observation status until a precise diagnosis can be made that warrants hospital admission. Hospitalists should then describe the patient’s situation more precisely in the medical record as a diagnosis, not just as symptoms—e.g., syncope suspected due to cardiac arrhythmia, or chest pain suspected to be angina.

“For inpatient billing, those uncertain diagnoses, described that way, count as if they were established conditions. They don’t go into symptom DRGs,” Pinson says. “If you’re doing these things to protect the validity of you hospital’s billing, you’ll be protecting yourself at the same time, and it’s unlikely that RACs will single you out at all for auditing.”

Hospitalists can be valuable participants on their institutions’ RAC response team, providing clinical clarification on cases and helping to draft appeal letters.

There are several other red flags that RACs zero in on and hospitalists should watch out for, says Kathy DeVault, RHIA, CCS, CCS-P, manager of Professional Practice Resources for the American Health Information Management Association (AHIMA). Specificity in the medical record makes all the difference. For example, by identifying incorrect coding for excisional debridement (removal of infected tissue), RACs collected nearly $18 million in overpayments in fiscal-year 2006 because medical record documentation omitted such details as the word “excisional” (e.g., sharp debridement coded as excisional debridement), whether it was performed in the operating room or not, instruments used, the extent and depth of the procedure, and if the cutting of tissue was outside or beyond the wound margin.

DeVault warns that “RACs are targeting confusion between septicemia and urosepsis.” According to CMS, if the hospital reports a patient’s principal diagnosis as septicemia (03.89) but the medical record indicates the diagnosis of urosepsis, the RAC will bump the diagnosis code down to urinary tract infection (599.0), a lower-payment DRG, and demand recoupment.1

Urosepsis does not have a specific ICD-9-CM diagnosis code, and defaults to a simple UTI code, as referenced in ICD-9-CM. Unless the physician states in his or her documentation that the patient’s condition was systemic sepsis or septicemia, urosepsis would be coded as a UTI. RACS also denied some respiratory-failure claims for incorrect sequencing of principal diagnosis (e.g., respiratory failure vs. sepsis). The American Hospital Association has issued a regulatory advisory about these issues (web.mhanet.com/userdocs/articles/RAC/AHA_RAC_Coding Advisory_071608.pdf).

DeVault highlights three additional RAC targets that might impact HM:

• Documentation for transbronchial biopsy (a surgical DRG) in which the medical record only shows pathology of bronchus tissue (which RACs regard as nonsurgical);
• Failure to document the severity of a patient’s anemia as such to meet the medical necessity requirement of a blood transfusion (e.g., a chronic blood loss anemia or a pernicious anemia); and
• Documentation of treatments performed by intensivists in an ICU. By the time a patient’s attending physician sees their patient out of the ICU, DeVault says, their acute renal failure could be turned around but the attending might not document what happened in the ICU. The intensivist must see to it that the documentation allows the appropriate DRG assignment for the level of care the patient received.

AHIMA has published a 65-page RAC Audit Toolkit that describes the audit process, outlines preparations and procedures, and offers concrete guidance for appeals. Download a copy at www.ahima.org/infocenter/documents/RACToolkitFINAL.pdf. TH

Chris Guadagnino is a freelance medical writer based in Philadelphia.

Reference

1. The Medicare Recovery Audit Contractor (RAC) program: an evaluation of the 3-year demonstration. CMS Web site. Available at: www.cms.hhs.gov/RAC/Downloads/RACEvaluationReport.pdf. Accessed March 3, 2010.

Refinements in CMS’ Permanent RAC Program

Connie Leonard

Based on lessons learned from demonstration programs, CMS has made a number of changes to the permanent Recovery Audit Contractor (RAC) program.

Among the changes are:

• RACs cannot audit claims earlier than three years from the start of the program, with a maximum look-back date of October 1, 2007;
• For physicians, RACs are limited to requesting 10 medical records per 45 days from a single physician, 20 medical records from a small practice of two to five physicians, 30 from a group of six to 15, and 50 from a large group of more than 16 physicians;
• For hospitals, RACs are limited to requesting 1% of all claims submitted for the previous calendar year, divided into eight periods (45 days). Although the RACs may go more than 45 days between record requests, in no case shall they make requests more frequently than every 45 days;
• RACs must send a “Detailed Review Results” letter within 60 calendar days of receipt of the medical records they request for review;
• Each RAC must hire a physician medical director and certified coders, and providers may request the credentials of their auditor and request to speak to their RAC’s medical director regarding a claim denial;
• All new issues that an RAC wishes to pursue for overpayments must be validated by CMS or an independent RAC validation contractor, and posted to the RAC’s Web site before widespread review;
• RACS must have a Web-based “Claim Status” platform that will allow providers to track the status of medical record submissions to RACs;
• RACs must pay back contingency fees when an improper payment determination is overturned at any level in the appeals process (demo RACs were allowed to retain them on determinations overturned on second- and third-level appeal); and
• RAC validation contractors will conduct a third-party review of RAC claims determinations and provide annual accuracy scores for each RAC.—CG

In light of the recent elimination of consultation codes from the Medicare Physician Fee Schedule, physicians of all specialties are being asked to report initial hospital care services (99221-99223) for their first encounter with a patient.1 This leaves hospitalists with questions about the billing and financial implications of reporting admissions services.

Here’s a typical scenario: Dr. A admits a Medicare patient to the hospital from the ED for hyperglycemia and dehydration in the setting of uncontrolled diabetes. He performs and documents an initial hospital-care service on day one of the admission. On day two, another hospitalist, Dr. B, who works in the same HM group, sees the patient for the first time. What should each of the physicians report for their first encounter with the patient?

Each hospitalist should select the CPT code that best fits the service and their role in the case. Remember, only one physician is named “attending of record” or “admitting physician.”

When billing during the course of the hospitalization, consider all physicians of the same specialty in the same provider group as the “admitting physician/group.”

Admissions Service

On day one, Dr. A admits the patient. He performs and documents a comprehensive history, a comprehensive exam, and medical decision-making of high complexity. The documentation corresponds to the highest initial admission service, 99223. Given the recent Medicare billing changes, the attending of record is required to append modifier “AI” (principal physician of record) to the admission service (e.g., 99223-AI).

The purpose of this modifier is “to identify the physician who oversees the patient’s care from all other physicians who may be furnishing specialty care.”2 This modifier has no financial implications. It does not increase or decrease the payment associated with the reported visit level (i.e., 99223 is reimbursed at a national rate of approximately $190, with or without modifier AI).

Initial Encounter by Team Members

As previously stated, the elimination of consultation services requires physicians to report their initial hospital encounter with an initial hospital-care code (i.e., 99221-99223). However, Medicare states that “physicians in the same group practice who are in the same specialty must bill and be paid as though they were a single physician.”3 This means followup services performed on days subsequent to a group member’s initial admission service must be reported with subsequent hospital-care codes (99231-99233). Therefore, in the scenario above, Dr. B is obligated to report the appropriate subsequent hospital-care code for his patient encounter on day two.

Incomplete Documentation

Initial hospital-care services (99221-99223) require the physician to obtain, perform, and document the necessary elements of history, physical exam, and medical decision-making in support of the code reported on the claim. There are occasions when the physician’s documentation does not support the lowest code (i.e., 99221). A reasonable approach is to report the service with an unlisted E&M code (99499). “Unlisted” codes do not have a payor-recognized code description or fee. When reporting an unlisted code, the biller must manually enter a charge description (e.g., expanded problem-focused admissions service) and a fee. A payor-prompted request for documentation is likely before payment is made.

Some payors have more specific references to the situation and allow for options. Two options exist for coding services that do not meet the work and/or medical necessity requirements of 99221-99223: report an unlisted E&M service (99499); or report a subsequent hospital care code (99231-99233) that appropriately reflects physician work and medical necessity for the service, and avoids mandatory medical record submission and manual medical review.4

In fact, Medicare Administrator Contractor TrailBlazer Health’s Web site (www.trailblazerhealth.com) offers guidance to physicians who are unsure if subsequent hospital care is an appropriate choice for this dilemma: “TrailBlazer recognizes provider reluctance to miscode initial hospital care as subsequent hospital care. However, doing so is preferable in that it allows Medicare to process and pay the claims much more efficiently. For those concerned about miscoding these services, please understand that TrailBlazer will not find fault with providers who choose this option when records appropriately demonstrate the work and medical necessity of the subsequent code chosen.”4 TH

Carol Pohlig is a billing and coding expert with the University of Pennsylvania Medical Center, Philadelphia. She also is faculty for SHM’s inpatient coding course.

References

1. CMS announces payment, policy changes for physicians services to Medicare beneficiaries in 2010. Centers for Medicare and Medicaid Services Web site. Available at: www.cms.hhs.gov/apps/media/ press/release.asp?Counter=3539&intNumPerPage=10&checkDate=&checkKey=&srchType=1&numDays=3500&srchOpt=0&srchData=&keywordType=All&chkNewsType=1%2C+2%2C+3%2C+4%2C+5&intPage=&showAll=&pYear=&year=&desc=&cboOrder=date. Accessed Nov. 12, 2009.
2. Revisions to Consultation Services Payment Policy. Medicare Learning Network Web site. Available at: www.cms.hhs.gov/MLNMattersArticles/downloads/ MM6740.pdf. Accessed Jan. 16, 2010.
3. Medicare Claims Processing Manual: Chapter 12, Section 30.6.5. CMS Web site. Available at: www.cms.hhs.gov/manuals/downloads/clm104c12.pdf. Accessed Jan. 16, 2010.
4. Update-evaluation and management services formerly coded as consultations. Trailblazer Health Enterprises Web site. Available at: www.trailblazerhealth.com/Tools/Notices.aspx?DomainID=1. Accessed Jan. 17, 2010.
5. Beebe M, Dalton J, Espronceda M, Evans D, Glenn R. Current Procedural Terminology Professional Edition. Chicago: American Medical Association Press; 2009;14-15.

In light of the recent elimination of consultation codes from the Medicare Physician Fee Schedule, physicians of all specialties are being asked to report initial hospital care services (99221-99223) for their first encounter with a patient.1 This leaves hospitalists with questions about the billing and financial implications of reporting admissions services.

Here’s a typical scenario: Dr. A admits a Medicare patient to the hospital from the ED for hyperglycemia and dehydration in the setting of uncontrolled diabetes. He performs and documents an initial hospital-care service on day one of the admission. On day two, another hospitalist, Dr. B, who works in the same HM group, sees the patient for the first time. What should each of the physicians report for their first encounter with the patient?

Each hospitalist should select the CPT code that best fits the service and their role in the case. Remember, only one physician is named “attending of record” or “admitting physician.”

When billing during the course of the hospitalization, consider all physicians of the same specialty in the same provider group as the “admitting physician/group.”

Admissions Service

On day one, Dr. A admits the patient. He performs and documents a comprehensive history, a comprehensive exam, and medical decision-making of high complexity. The documentation corresponds to the highest initial admission service, 99223. Given the recent Medicare billing changes, the attending of record is required to append modifier “AI” (principal physician of record) to the admission service (e.g., 99223-AI).

The purpose of this modifier is “to identify the physician who oversees the patient’s care from all other physicians who may be furnishing specialty care.”2 This modifier has no financial implications. It does not increase or decrease the payment associated with the reported visit level (i.e., 99223 is reimbursed at a national rate of approximately $190, with or without modifier AI).

Initial Encounter by Team Members

As previously stated, the elimination of consultation services requires physicians to report their initial hospital encounter with an initial hospital-care code (i.e., 99221-99223). However, Medicare states that “physicians in the same group practice who are in the same specialty must bill and be paid as though they were a single physician.”3 This means followup services performed on days subsequent to a group member’s initial admission service must be reported with subsequent hospital-care codes (99231-99233). Therefore, in the scenario above, Dr. B is obligated to report the appropriate subsequent hospital-care code for his patient encounter on day two.

Incomplete Documentation

Initial hospital-care services (99221-99223) require the physician to obtain, perform, and document the necessary elements of history, physical exam, and medical decision-making in support of the code reported on the claim. There are occasions when the physician’s documentation does not support the lowest code (i.e., 99221). A reasonable approach is to report the service with an unlisted E&M code (99499). “Unlisted” codes do not have a payor-recognized code description or fee. When reporting an unlisted code, the biller must manually enter a charge description (e.g., expanded problem-focused admissions service) and a fee. A payor-prompted request for documentation is likely before payment is made.

Some payors have more specific references to the situation and allow for options. Two options exist for coding services that do not meet the work and/or medical necessity requirements of 99221-99223: report an unlisted E&M service (99499); or report a subsequent hospital care code (99231-99233) that appropriately reflects physician work and medical necessity for the service, and avoids mandatory medical record submission and manual medical review.4

In fact, Medicare Administrator Contractor TrailBlazer Health’s Web site (www.trailblazerhealth.com) offers guidance to physicians who are unsure if subsequent hospital care is an appropriate choice for this dilemma: “TrailBlazer recognizes provider reluctance to miscode initial hospital care as subsequent hospital care. However, doing so is preferable in that it allows Medicare to process and pay the claims much more efficiently. For those concerned about miscoding these services, please understand that TrailBlazer will not find fault with providers who choose this option when records appropriately demonstrate the work and medical necessity of the subsequent code chosen.”4 TH

Carol Pohlig is a billing and coding expert with the University of Pennsylvania Medical Center, Philadelphia. She also is faculty for SHM’s inpatient coding course.

References

1. CMS announces payment, policy changes for physicians services to Medicare beneficiaries in 2010. Centers for Medicare and Medicaid Services Web site. Available at: www.cms.hhs.gov/apps/media/ press/release.asp?Counter=3539&intNumPerPage=10&checkDate=&checkKey=&srchType=1&numDays=3500&srchOpt=0&srchData=&keywordType=All&chkNewsType=1%2C+2%2C+3%2C+4%2C+5&intPage=&showAll=&pYear=&year=&desc=&cboOrder=date. Accessed Nov. 12, 2009.
2. Revisions to Consultation Services Payment Policy. Medicare Learning Network Web site. Available at: www.cms.hhs.gov/MLNMattersArticles/downloads/ MM6740.pdf. Accessed Jan. 16, 2010.
3. Medicare Claims Processing Manual: Chapter 12, Section 30.6.5. CMS Web site. Available at: www.cms.hhs.gov/manuals/downloads/clm104c12.pdf. Accessed Jan. 16, 2010.
4. Update-evaluation and management services formerly coded as consultations. Trailblazer Health Enterprises Web site. Available at: www.trailblazerhealth.com/Tools/Notices.aspx?DomainID=1. Accessed Jan. 17, 2010.
5. Beebe M, Dalton J, Espronceda M, Evans D, Glenn R. Current Procedural Terminology Professional Edition. Chicago: American Medical Association Press; 2009;14-15.

In light of the recent elimination of consultation codes from the Medicare Physician Fee Schedule, physicians of all specialties are being asked to report initial hospital care services (99221-99223) for their first encounter with a patient.1 This leaves hospitalists with questions about the billing and financial implications of reporting admissions services.

Here’s a typical scenario: Dr. A admits a Medicare patient to the hospital from the ED for hyperglycemia and dehydration in the setting of uncontrolled diabetes. He performs and documents an initial hospital-care service on day one of the admission. On day two, another hospitalist, Dr. B, who works in the same HM group, sees the patient for the first time. What should each of the physicians report for their first encounter with the patient?

Each hospitalist should select the CPT code that best fits the service and their role in the case. Remember, only one physician is named “attending of record” or “admitting physician.”

When billing during the course of the hospitalization, consider all physicians of the same specialty in the same provider group as the “admitting physician/group.”

Admissions Service

On day one, Dr. A admits the patient. He performs and documents a comprehensive history, a comprehensive exam, and medical decision-making of high complexity. The documentation corresponds to the highest initial admission service, 99223. Given the recent Medicare billing changes, the attending of record is required to append modifier “AI” (principal physician of record) to the admission service (e.g., 99223-AI).

The purpose of this modifier is “to identify the physician who oversees the patient’s care from all other physicians who may be furnishing specialty care.”2 This modifier has no financial implications. It does not increase or decrease the payment associated with the reported visit level (i.e., 99223 is reimbursed at a national rate of approximately $190, with or without modifier AI).

Initial Encounter by Team Members

As previously stated, the elimination of consultation services requires physicians to report their initial hospital encounter with an initial hospital-care code (i.e., 99221-99223). However, Medicare states that “physicians in the same group practice who are in the same specialty must bill and be paid as though they were a single physician.”3 This means followup services performed on days subsequent to a group member’s initial admission service must be reported with subsequent hospital-care codes (99231-99233). Therefore, in the scenario above, Dr. B is obligated to report the appropriate subsequent hospital-care code for his patient encounter on day two.

Incomplete Documentation

Initial hospital-care services (99221-99223) require the physician to obtain, perform, and document the necessary elements of history, physical exam, and medical decision-making in support of the code reported on the claim. There are occasions when the physician’s documentation does not support the lowest code (i.e., 99221). A reasonable approach is to report the service with an unlisted E&M code (99499). “Unlisted” codes do not have a payor-recognized code description or fee. When reporting an unlisted code, the biller must manually enter a charge description (e.g., expanded problem-focused admissions service) and a fee. A payor-prompted request for documentation is likely before payment is made.

Some payors have more specific references to the situation and allow for options. Two options exist for coding services that do not meet the work and/or medical necessity requirements of 99221-99223: report an unlisted E&M service (99499); or report a subsequent hospital care code (99231-99233) that appropriately reflects physician work and medical necessity for the service, and avoids mandatory medical record submission and manual medical review.4

In fact, Medicare Administrator Contractor TrailBlazer Health’s Web site (www.trailblazerhealth.com) offers guidance to physicians who are unsure if subsequent hospital care is an appropriate choice for this dilemma: “TrailBlazer recognizes provider reluctance to miscode initial hospital care as subsequent hospital care. However, doing so is preferable in that it allows Medicare to process and pay the claims much more efficiently. For those concerned about miscoding these services, please understand that TrailBlazer will not find fault with providers who choose this option when records appropriately demonstrate the work and medical necessity of the subsequent code chosen.”4 TH

Carol Pohlig is a billing and coding expert with the University of Pennsylvania Medical Center, Philadelphia. She also is faculty for SHM’s inpatient coding course.

References

1. CMS announces payment, policy changes for physicians services to Medicare beneficiaries in 2010. Centers for Medicare and Medicaid Services Web site. Available at: www.cms.hhs.gov/apps/media/ press/release.asp?Counter=3539&intNumPerPage=10&checkDate=&checkKey=&srchType=1&numDays=3500&srchOpt=0&srchData=&keywordType=All&chkNewsType=1%2C+2%2C+3%2C+4%2C+5&intPage=&showAll=&pYear=&year=&desc=&cboOrder=date. Accessed Nov. 12, 2009.
2. Revisions to Consultation Services Payment Policy. Medicare Learning Network Web site. Available at: www.cms.hhs.gov/MLNMattersArticles/downloads/ MM6740.pdf. Accessed Jan. 16, 2010.
3. Medicare Claims Processing Manual: Chapter 12, Section 30.6.5. CMS Web site. Available at: www.cms.hhs.gov/manuals/downloads/clm104c12.pdf. Accessed Jan. 16, 2010.
4. Update-evaluation and management services formerly coded as consultations. Trailblazer Health Enterprises Web site. Available at: www.trailblazerhealth.com/Tools/Notices.aspx?DomainID=1. Accessed Jan. 17, 2010.
5. Beebe M, Dalton J, Espronceda M, Evans D, Glenn R. Current Procedural Terminology Professional Edition. Chicago: American Medical Association Press; 2009;14-15.

Jeff Glasheen, MD, FHM

Four eyes staring, boring through me, unblinking. Locked in a pose holding a hand-scrawled sign commanding their father to ♥♥GET WELL NOW♥♥, the photo of the 14-month-old twin girls was reproduced off a cheap color printer and taped to the window, backlit by the Christmas Eve morning sun. Both the sun and the daughters demanded my attention—the former a brilliant reminder of the glories of the day, the latter the sobering reality of a family rocked by illness.

Mr. Jasper, an otherwise healthy 36-year-old male who recently was diagnosed with a rare, life-threatening disease, would not be spending this holiday with his daughters. In fact, because of our hospital’s flu precautions, he hadn’t seen them in the six weeks he’d been an inpatient. In that time, one of his girls had learned to talk; the other had learned to walk. Mr. Jasper was a distant bystander. He was upset but understanding of his situation—even optimistic, remarkably. However, those girls’ eyes told a different story. What weeks ago shone as the cute countenances of toddlers—silly, carefree, cheerful—now articulated a different tone. “Let my father come home!” they beseeched.

Staring into those eyes on rounds that morning, I was haunted by a thought that had gnawed at my subconscious for weeks. It was likely, albeit not guaranteed, that we’d get Mr. Jasper home to his wife and daughters. However, it would be at a cost. Of course, there would be psychological costs, but I was more acutely concerned with the financial costs. Mr. Jasper, you see, is uninsured.

Healthcare Reform: Too Late for Many

Thousands of miles away, the U.S. Senate was, at that exact time, voting for legislation to greatly reform and expand the U.S. healthcare system. Passed along partisan lines, the bill now awaits reconciliation with the House of Representatives’ bill. From there, it will go before President Obama for signature into law. If passed, this legislation promises to give healthcare coverage to another 30 million Americans.

For Mr. Jasper, this new law will come too late.

It’ll also be too late for Mrs. Anderson, a middle-aged asthmatic now intubated in our ICU, wheezing against constricted bronchioles. Three days earlier, she was seen in the ED for worsening dyspnea, cough, and sputum production. Her symptoms resolved after a few courses of nebulized albuterol and IV steroids, and she was sent home with a prescription for prednisone and inhalers. Unable to afford to fill those prescriptions, her disease progressed, eventually strangling her breathing and tangling her in a healthcare system more willing to pay for the care of disease complications than disease prevention.

Face-to-Face with Catastrophe

Later that morning, I was asked by one of our ED physicians to see Mr. Reynolds and “persuade” him to be admitted to the hospital. Mr. Reynolds has insurance. In fact, of the 11 patients I saw that day, he was one of only three who did. One had Medicaid, the other Medicare.

Mr. Reynolds had a high-deductible, catastrophic-insurance policy. As such, he was wrestling with the decision of whether to come into the hospital to treat his severe cellulitis with IV antibiotics (our formal recommendation), or treat this at home with oral antibiotics. His face wore the torment of the trade-offs. The former surely would cost him his entire $5,000 deductible; the latter, perhaps his life, or at least a limb. As the erythema glared at me, I struggled to recollect a medical school lecture applicable to this situation.

My last patient of the day was Mr. Ramon. He, too, was uninsured. Felled by diabetic ketoacidosis, he was admitted and, as 19-year-olds are wont to do, rebounded quickly. New-onset diabetes, however, was the least of his concerns. With a girlfriend and young child at home, he had to get out of the hospital and return to his job as soon as possible: mouths to feed. Having seen his father lose limbs, kidneys, eyes, and ultimately his life to diabetes, he was motivated to do the right thing.

Unfortunately, motivation doesn’t pay for insulin. I wondered what would come of him in the next 30 years. Would he be able to care for his disease and live a long and prosperous life, or would this admission be just one in a long series of hospital stays?

Broken System

Every hospitalist is aware of these issues and could no doubt fill pages with similarly horrific stories of a healthcare system long broken. It’s remarkable how much of my time I spend trying to figure out a way to cobble together a passable (the notion of “gold standard” therapy long gone) therapeutic plan for my patients—the Walmart list of $4 drugs has taken white-coat prominence over my “Pocket Pharmacopoeia.”

This isn’t to say the U.S. healthcare system doesn’t do a lot of great things. It does, and that cannot be discounted. It’s also not to say that the bill before Congress is the answer. Still, the fact that medical costs limit many Americans from accessing needed care and have become the leading cause of bankruptcy in the U.S. should arouse concern in even the most ardent opponents of healthcare reform. Regardless of one’s political leanings and feelings about the current attempts at healthcare reform, it’s difficult to stand by and helplessly watch our patients struggle to maneuver within a system that so often seems to work against so many of them.

What’s easy to lose in the D.C. rhetoric and town-hall warfare is that every day, we delay healthcare reform results in undue patient suffering, both physical and financial. It is a system that is broken and needs, in the words of Mr. Jasper’s daughters, to “get well now.”

Before leaving to celebrate the holiday with my family, I was compelled to return to Mr. Jasper’s room. Unfortunately, the patient was off getting a treatment. But his daughters were still there, faces unchanged. Again, drawn to those eyes, I wondered what would become of this situation.

Would he make it home?

How would his family pay the bills?

What would this mean for his daughters’ future?

Would he and his family be forced to declare bankruptcy?

Would the family ever truly recover?

Staring at the picture in the window, I couldn’t help but think of my own children, also waiting for their father to come home from the hospital to celebrate the holidays.

As I turned to leave, my mind lost in thoughts of untimely illness, ill-fated outcomes, and financial devastation, I realized that in America today, nothing more than circumstances kept me from seeing my own children’s eyes staring back at me from that window. TH

Dr. Glasheen is associate professor of medicine at the University of Colorado Denver, where he serves as director of the Hospital Medicine Program and the Hospitalist Training Program, and as associate program director of the Internal Medicine Residency Program.

Jeff Glasheen, MD, FHM

Four eyes staring, boring through me, unblinking. Locked in a pose holding a hand-scrawled sign commanding their father to ♥♥GET WELL NOW♥♥, the photo of the 14-month-old twin girls was reproduced off a cheap color printer and taped to the window, backlit by the Christmas Eve morning sun. Both the sun and the daughters demanded my attention—the former a brilliant reminder of the glories of the day, the latter the sobering reality of a family rocked by illness.

Mr. Jasper, an otherwise healthy 36-year-old male who recently was diagnosed with a rare, life-threatening disease, would not be spending this holiday with his daughters. In fact, because of our hospital’s flu precautions, he hadn’t seen them in the six weeks he’d been an inpatient. In that time, one of his girls had learned to talk; the other had learned to walk. Mr. Jasper was a distant bystander. He was upset but understanding of his situation—even optimistic, remarkably. However, those girls’ eyes told a different story. What weeks ago shone as the cute countenances of toddlers—silly, carefree, cheerful—now articulated a different tone. “Let my father come home!” they beseeched.

Staring into those eyes on rounds that morning, I was haunted by a thought that had gnawed at my subconscious for weeks. It was likely, albeit not guaranteed, that we’d get Mr. Jasper home to his wife and daughters. However, it would be at a cost. Of course, there would be psychological costs, but I was more acutely concerned with the financial costs. Mr. Jasper, you see, is uninsured.

Healthcare Reform: Too Late for Many

Thousands of miles away, the U.S. Senate was, at that exact time, voting for legislation to greatly reform and expand the U.S. healthcare system. Passed along partisan lines, the bill now awaits reconciliation with the House of Representatives’ bill. From there, it will go before President Obama for signature into law. If passed, this legislation promises to give healthcare coverage to another 30 million Americans.

For Mr. Jasper, this new law will come too late.

It’ll also be too late for Mrs. Anderson, a middle-aged asthmatic now intubated in our ICU, wheezing against constricted bronchioles. Three days earlier, she was seen in the ED for worsening dyspnea, cough, and sputum production. Her symptoms resolved after a few courses of nebulized albuterol and IV steroids, and she was sent home with a prescription for prednisone and inhalers. Unable to afford to fill those prescriptions, her disease progressed, eventually strangling her breathing and tangling her in a healthcare system more willing to pay for the care of disease complications than disease prevention.

Face-to-Face with Catastrophe

Later that morning, I was asked by one of our ED physicians to see Mr. Reynolds and “persuade” him to be admitted to the hospital. Mr. Reynolds has insurance. In fact, of the 11 patients I saw that day, he was one of only three who did. One had Medicaid, the other Medicare.

Mr. Reynolds had a high-deductible, catastrophic-insurance policy. As such, he was wrestling with the decision of whether to come into the hospital to treat his severe cellulitis with IV antibiotics (our formal recommendation), or treat this at home with oral antibiotics. His face wore the torment of the trade-offs. The former surely would cost him his entire $5,000 deductible; the latter, perhaps his life, or at least a limb. As the erythema glared at me, I struggled to recollect a medical school lecture applicable to this situation.

My last patient of the day was Mr. Ramon. He, too, was uninsured. Felled by diabetic ketoacidosis, he was admitted and, as 19-year-olds are wont to do, rebounded quickly. New-onset diabetes, however, was the least of his concerns. With a girlfriend and young child at home, he had to get out of the hospital and return to his job as soon as possible: mouths to feed. Having seen his father lose limbs, kidneys, eyes, and ultimately his life to diabetes, he was motivated to do the right thing.

Unfortunately, motivation doesn’t pay for insulin. I wondered what would come of him in the next 30 years. Would he be able to care for his disease and live a long and prosperous life, or would this admission be just one in a long series of hospital stays?

Broken System

Every hospitalist is aware of these issues and could no doubt fill pages with similarly horrific stories of a healthcare system long broken. It’s remarkable how much of my time I spend trying to figure out a way to cobble together a passable (the notion of “gold standard” therapy long gone) therapeutic plan for my patients—the Walmart list of $4 drugs has taken white-coat prominence over my “Pocket Pharmacopoeia.”

This isn’t to say the U.S. healthcare system doesn’t do a lot of great things. It does, and that cannot be discounted. It’s also not to say that the bill before Congress is the answer. Still, the fact that medical costs limit many Americans from accessing needed care and have become the leading cause of bankruptcy in the U.S. should arouse concern in even the most ardent opponents of healthcare reform. Regardless of one’s political leanings and feelings about the current attempts at healthcare reform, it’s difficult to stand by and helplessly watch our patients struggle to maneuver within a system that so often seems to work against so many of them.

What’s easy to lose in the D.C. rhetoric and town-hall warfare is that every day, we delay healthcare reform results in undue patient suffering, both physical and financial. It is a system that is broken and needs, in the words of Mr. Jasper’s daughters, to “get well now.”

Before leaving to celebrate the holiday with my family, I was compelled to return to Mr. Jasper’s room. Unfortunately, the patient was off getting a treatment. But his daughters were still there, faces unchanged. Again, drawn to those eyes, I wondered what would become of this situation.

Would he make it home?

How would his family pay the bills?

What would this mean for his daughters’ future?

Would he and his family be forced to declare bankruptcy?

Would the family ever truly recover?

Staring at the picture in the window, I couldn’t help but think of my own children, also waiting for their father to come home from the hospital to celebrate the holidays.

As I turned to leave, my mind lost in thoughts of untimely illness, ill-fated outcomes, and financial devastation, I realized that in America today, nothing more than circumstances kept me from seeing my own children’s eyes staring back at me from that window. TH

Dr. Glasheen is associate professor of medicine at the University of Colorado Denver, where he serves as director of the Hospital Medicine Program and the Hospitalist Training Program, and as associate program director of the Internal Medicine Residency Program.

Jeff Glasheen, MD, FHM

Four eyes staring, boring through me, unblinking. Locked in a pose holding a hand-scrawled sign commanding their father to ♥♥GET WELL NOW♥♥, the photo of the 14-month-old twin girls was reproduced off a cheap color printer and taped to the window, backlit by the Christmas Eve morning sun. Both the sun and the daughters demanded my attention—the former a brilliant reminder of the glories of the day, the latter the sobering reality of a family rocked by illness.

Mr. Jasper, an otherwise healthy 36-year-old male who recently was diagnosed with a rare, life-threatening disease, would not be spending this holiday with his daughters. In fact, because of our hospital’s flu precautions, he hadn’t seen them in the six weeks he’d been an inpatient. In that time, one of his girls had learned to talk; the other had learned to walk. Mr. Jasper was a distant bystander. He was upset but understanding of his situation—even optimistic, remarkably. However, those girls’ eyes told a different story. What weeks ago shone as the cute countenances of toddlers—silly, carefree, cheerful—now articulated a different tone. “Let my father come home!” they beseeched.

Staring into those eyes on rounds that morning, I was haunted by a thought that had gnawed at my subconscious for weeks. It was likely, albeit not guaranteed, that we’d get Mr. Jasper home to his wife and daughters. However, it would be at a cost. Of course, there would be psychological costs, but I was more acutely concerned with the financial costs. Mr. Jasper, you see, is uninsured.

Healthcare Reform: Too Late for Many

Thousands of miles away, the U.S. Senate was, at that exact time, voting for legislation to greatly reform and expand the U.S. healthcare system. Passed along partisan lines, the bill now awaits reconciliation with the House of Representatives’ bill. From there, it will go before President Obama for signature into law. If passed, this legislation promises to give healthcare coverage to another 30 million Americans.

For Mr. Jasper, this new law will come too late.

It’ll also be too late for Mrs. Anderson, a middle-aged asthmatic now intubated in our ICU, wheezing against constricted bronchioles. Three days earlier, she was seen in the ED for worsening dyspnea, cough, and sputum production. Her symptoms resolved after a few courses of nebulized albuterol and IV steroids, and she was sent home with a prescription for prednisone and inhalers. Unable to afford to fill those prescriptions, her disease progressed, eventually strangling her breathing and tangling her in a healthcare system more willing to pay for the care of disease complications than disease prevention.

Face-to-Face with Catastrophe

Later that morning, I was asked by one of our ED physicians to see Mr. Reynolds and “persuade” him to be admitted to the hospital. Mr. Reynolds has insurance. In fact, of the 11 patients I saw that day, he was one of only three who did. One had Medicaid, the other Medicare.

Mr. Reynolds had a high-deductible, catastrophic-insurance policy. As such, he was wrestling with the decision of whether to come into the hospital to treat his severe cellulitis with IV antibiotics (our formal recommendation), or treat this at home with oral antibiotics. His face wore the torment of the trade-offs. The former surely would cost him his entire $5,000 deductible; the latter, perhaps his life, or at least a limb. As the erythema glared at me, I struggled to recollect a medical school lecture applicable to this situation.

My last patient of the day was Mr. Ramon. He, too, was uninsured. Felled by diabetic ketoacidosis, he was admitted and, as 19-year-olds are wont to do, rebounded quickly. New-onset diabetes, however, was the least of his concerns. With a girlfriend and young child at home, he had to get out of the hospital and return to his job as soon as possible: mouths to feed. Having seen his father lose limbs, kidneys, eyes, and ultimately his life to diabetes, he was motivated to do the right thing.

Unfortunately, motivation doesn’t pay for insulin. I wondered what would come of him in the next 30 years. Would he be able to care for his disease and live a long and prosperous life, or would this admission be just one in a long series of hospital stays?

Broken System

Every hospitalist is aware of these issues and could no doubt fill pages with similarly horrific stories of a healthcare system long broken. It’s remarkable how much of my time I spend trying to figure out a way to cobble together a passable (the notion of “gold standard” therapy long gone) therapeutic plan for my patients—the Walmart list of $4 drugs has taken white-coat prominence over my “Pocket Pharmacopoeia.”

This isn’t to say the U.S. healthcare system doesn’t do a lot of great things. It does, and that cannot be discounted. It’s also not to say that the bill before Congress is the answer. Still, the fact that medical costs limit many Americans from accessing needed care and have become the leading cause of bankruptcy in the U.S. should arouse concern in even the most ardent opponents of healthcare reform. Regardless of one’s political leanings and feelings about the current attempts at healthcare reform, it’s difficult to stand by and helplessly watch our patients struggle to maneuver within a system that so often seems to work against so many of them.

What’s easy to lose in the D.C. rhetoric and town-hall warfare is that every day, we delay healthcare reform results in undue patient suffering, both physical and financial. It is a system that is broken and needs, in the words of Mr. Jasper’s daughters, to “get well now.”

Before leaving to celebrate the holiday with my family, I was compelled to return to Mr. Jasper’s room. Unfortunately, the patient was off getting a treatment. But his daughters were still there, faces unchanged. Again, drawn to those eyes, I wondered what would become of this situation.

Would he make it home?

How would his family pay the bills?

What would this mean for his daughters’ future?

Would he and his family be forced to declare bankruptcy?

Would the family ever truly recover?

Staring at the picture in the window, I couldn’t help but think of my own children, also waiting for their father to come home from the hospital to celebrate the holidays.

As I turned to leave, my mind lost in thoughts of untimely illness, ill-fated outcomes, and financial devastation, I realized that in America today, nothing more than circumstances kept me from seeing my own children’s eyes staring back at me from that window. TH

Dr. Glasheen is associate professor of medicine at the University of Colorado Denver, where he serves as director of the Hospital Medicine Program and the Hospitalist Training Program, and as associate program director of the Internal Medicine Residency Program.

Rising pressure to contain healthcare costs, increasing demands for safety and quality improvement, more focus on institutional accountability: In 2010, healthcare experts expect several dominant themes to continue converging and moving hospitalists even more to the center of key policy debates.

Peter Pronovost, MD, PhD, medical director of the Center for Innovation in Quality Patient Care and director of the Quality and Safety Research Group at Johns Hopkins University in Baltimore, sees three big themes moving to the fore. One is a greater focus on outcome measurements and accountability for performance, and he expects both carrots and sticks to be wielded. “So, both payment reform and social humiliation, or making things public,” Dr. Pronovost says. “Two, I see a lot more focus on measures that are population-based rather than hospital-based, so looking more at episodes of care.” The shift will force hospitalists to expand their purview beyond the hospital and, he says, partner more with community physicians to develop and monitor performance in such areas as transitions of care and general benchmarks of care.

Dr. Pronovost also expects “significant pressure on both the provider organization and individual clinician being paid less for what they do.” Finding ways to minimize costs will be a priority as payors increase scrutiny on expenses like unnecessary hospital readmissions. But hospitalists, he says, are better positioned than many other physicians to play a key role in the drive toward efficiency while also improving healthcare quality and safety. “I think hospitalists’ roles are going to go up dramatically,” Dr. Pronovost adds, “and I hope the field responds by making sure they put out people who have the skills to lead.”

End-of-Life Issues

Nancy Berlinger, PhD, deputy director and research scholar at The Hastings Center in Garrison, N.Y., cites end-of-life care as another theme likely to gain traction in 2010. As project director of the center’s revised ethical guidelines for end-of-life care, Dr. Berlinger notes how often clinicians in her working group have invoked the hospitalist profession. It’s no accident. “Hospitalists are increasingly associated with the care of patients on Medicare,” she says, adding Medicare beneficiaries are far more likely to be nearing the end of life.

Demographics suggest that connection will continue to grow in 2010 and beyond. Dr. Berlinger points to a 2009 New England Journal of Medicine study showing that the odds of a hospitalized Medicare patient receiving care from a hospitalist increased at a brisk 29.2% annual clip from 1997 through 2006.1 And while the U.S. faces a shortage of geriatricians, HM is growing rapidly as a medical profession. “By default, whether or not hospitalists self-identify as caring for older Americans,” Dr. Berlinger says, “this is their area of practical specialization.”

With that specialization comes added responsibility to assist with advanced-care planning and helping patients to document their wishes. Similarly, she says, it means acknowledging that these patients are more likely to have comorbid conditions and identify with goals of care. “I don’t think there’s any way around this,” she says. “Medicare and hospitalists, whether by accident or design, are increasingly joined at the hip. That is something that hospitalists, as a profession, will always need to keep their eye on.”

A parallel trend is that other doctors increasingly view hospitalists as hospital specialists. “The hospitalist’s responsibilities are not just in terms of the patients they care for, but also in terms of the institution itself,” Dr. Berlinger says. Non-staff physicians, for example, expect hospitalists to know how a hospital’s in-patient care system works. Practically speaking, as electronic medical records (EMR) become more commonplace, hospitalists will be increasingly relied upon to understand a hospital’s information technology.

New Economy, New Hospital Landscape

Douglas Wood, MD, chair of the Division of Health Care Policy and Research at the Mayo Clinic in Rochester, Minn., points to language in the federal healthcare reform legislation as evidence that hospitals and hospitalists will need to be in sync in other ways to avoid future penalties. One provision, for example, would increase the penalties for hospital-acquired infections. Other language seeks to reduce unnecessary readmissions.

Likewise, Dr. Wood says, addressing geographical variations in healthcare payments driven largely by unnecessary overutilization—including excessive use of ICU care, in-patient care, imaging, and specialist services—might mean asking hospitalists to take on more aspects of patient care.

Meanwhile, increased interest in demonstration projects that might achieve savings (e.g., accountable care organizations and bundled payments) suggests that proactive hospitals should again look to hospitalists. The flurry of new proposals won’t fundamentally change hospitalists’ responsibilities to provide effective and efficient care, “but it will put more emphasis on what they’re doing,” Dr. Wood says, “to the degree that hospitalists could take a lead in demonstrating how you can provide better outcomes at a lower overall utilization of resources.”

Regardless of how slowly or quickly these initiatives proceed at the national level, he says, hospitalists should be mindful that several states are well ahead of the curve and are likely to be more aggressive in instituting policy changes.

The Bottom Line

If there’s a single, overriding theme for 2010, Bradley Flansbaum, DO, MPH, FACP, FHM, director of hospitalist services at Lenox Hill Hospital in New York City and a member of SHM’s Public Policy Committee, says it might be that of dealing with the unknown. Squeezing healthcare costs and more tightly regulating inflation will have a greater effect on a hospital’s bottom line and thus impact what’s required of hospitalists. Even so, the profession will have to wait and see whether and how various proposals are codified and implemented. “We don’t know exactly what things are going to look like,” he says.

Nor is there a good sense of how new standards for transparency, quality, and accountability might be measured. “While people want more measurement and they want more report-card-type information, the data that we can acquire right now and how we analyze that data are still fairly primitive,” Dr. Flansbaum says. Even current benchmarks are lacking in how to determine who’s doing a good job and who isn’t, he says.

One big question that must be answered, then: Are we even looking at the right measurements? “Or, do the right measurements exist, or do we have the databases, the registries, the sources, to make the decisions we need to make?” he says.

Any new proposals will require another round of such questions and filling-in of blanks to add workable details to vague and potentially confusing language.

“I think we know that change is afoot, and most smart hospitalists know that the system needs to run leaner,” Dr. Flansbaum says. “But how each one of us is going to function in our hospital, and the kinds of demands that will be placed on us, and what we’re going to need to do with the doctors in the community and the other nonphysician colleagues that we work with, is all really unknown.” TH

Bryn Nelson is a freelance medical writer based in Seattle.

Reference

1. Kuo YF, Sharma G, Freeman JL, Goodwin JS. Growth in the care of older patients by hospitalists in the United States. N Engl J Med. 2009;360(11): 1102-1112.

Image Source: PAGADESIGN, OVERSNAP/ISTOCKPHOTO.COM

Rising pressure to contain healthcare costs, increasing demands for safety and quality improvement, more focus on institutional accountability: In 2010, healthcare experts expect several dominant themes to continue converging and moving hospitalists even more to the center of key policy debates.

Peter Pronovost, MD, PhD, medical director of the Center for Innovation in Quality Patient Care and director of the Quality and Safety Research Group at Johns Hopkins University in Baltimore, sees three big themes moving to the fore. One is a greater focus on outcome measurements and accountability for performance, and he expects both carrots and sticks to be wielded. “So, both payment reform and social humiliation, or making things public,” Dr. Pronovost says. “Two, I see a lot more focus on measures that are population-based rather than hospital-based, so looking more at episodes of care.” The shift will force hospitalists to expand their purview beyond the hospital and, he says, partner more with community physicians to develop and monitor performance in such areas as transitions of care and general benchmarks of care.

Dr. Pronovost also expects “significant pressure on both the provider organization and individual clinician being paid less for what they do.” Finding ways to minimize costs will be a priority as payors increase scrutiny on expenses like unnecessary hospital readmissions. But hospitalists, he says, are better positioned than many other physicians to play a key role in the drive toward efficiency while also improving healthcare quality and safety. “I think hospitalists’ roles are going to go up dramatically,” Dr. Pronovost adds, “and I hope the field responds by making sure they put out people who have the skills to lead.”

End-of-Life Issues

Nancy Berlinger, PhD, deputy director and research scholar at The Hastings Center in Garrison, N.Y., cites end-of-life care as another theme likely to gain traction in 2010. As project director of the center’s revised ethical guidelines for end-of-life care, Dr. Berlinger notes how often clinicians in her working group have invoked the hospitalist profession. It’s no accident. “Hospitalists are increasingly associated with the care of patients on Medicare,” she says, adding Medicare beneficiaries are far more likely to be nearing the end of life.

Demographics suggest that connection will continue to grow in 2010 and beyond. Dr. Berlinger points to a 2009 New England Journal of Medicine study showing that the odds of a hospitalized Medicare patient receiving care from a hospitalist increased at a brisk 29.2% annual clip from 1997 through 2006.1 And while the U.S. faces a shortage of geriatricians, HM is growing rapidly as a medical profession. “By default, whether or not hospitalists self-identify as caring for older Americans,” Dr. Berlinger says, “this is their area of practical specialization.”

With that specialization comes added responsibility to assist with advanced-care planning and helping patients to document their wishes. Similarly, she says, it means acknowledging that these patients are more likely to have comorbid conditions and identify with goals of care. “I don’t think there’s any way around this,” she says. “Medicare and hospitalists, whether by accident or design, are increasingly joined at the hip. That is something that hospitalists, as a profession, will always need to keep their eye on.”

A parallel trend is that other doctors increasingly view hospitalists as hospital specialists. “The hospitalist’s responsibilities are not just in terms of the patients they care for, but also in terms of the institution itself,” Dr. Berlinger says. Non-staff physicians, for example, expect hospitalists to know how a hospital’s in-patient care system works. Practically speaking, as electronic medical records (EMR) become more commonplace, hospitalists will be increasingly relied upon to understand a hospital’s information technology.

New Economy, New Hospital Landscape

Douglas Wood, MD, chair of the Division of Health Care Policy and Research at the Mayo Clinic in Rochester, Minn., points to language in the federal healthcare reform legislation as evidence that hospitals and hospitalists will need to be in sync in other ways to avoid future penalties. One provision, for example, would increase the penalties for hospital-acquired infections. Other language seeks to reduce unnecessary readmissions.

Likewise, Dr. Wood says, addressing geographical variations in healthcare payments driven largely by unnecessary overutilization—including excessive use of ICU care, in-patient care, imaging, and specialist services—might mean asking hospitalists to take on more aspects of patient care.

Meanwhile, increased interest in demonstration projects that might achieve savings (e.g., accountable care organizations and bundled payments) suggests that proactive hospitals should again look to hospitalists. The flurry of new proposals won’t fundamentally change hospitalists’ responsibilities to provide effective and efficient care, “but it will put more emphasis on what they’re doing,” Dr. Wood says, “to the degree that hospitalists could take a lead in demonstrating how you can provide better outcomes at a lower overall utilization of resources.”

Regardless of how slowly or quickly these initiatives proceed at the national level, he says, hospitalists should be mindful that several states are well ahead of the curve and are likely to be more aggressive in instituting policy changes.

The Bottom Line

If there’s a single, overriding theme for 2010, Bradley Flansbaum, DO, MPH, FACP, FHM, director of hospitalist services at Lenox Hill Hospital in New York City and a member of SHM’s Public Policy Committee, says it might be that of dealing with the unknown. Squeezing healthcare costs and more tightly regulating inflation will have a greater effect on a hospital’s bottom line and thus impact what’s required of hospitalists. Even so, the profession will have to wait and see whether and how various proposals are codified and implemented. “We don’t know exactly what things are going to look like,” he says.

Nor is there a good sense of how new standards for transparency, quality, and accountability might be measured. “While people want more measurement and they want more report-card-type information, the data that we can acquire right now and how we analyze that data are still fairly primitive,” Dr. Flansbaum says. Even current benchmarks are lacking in how to determine who’s doing a good job and who isn’t, he says.

One big question that must be answered, then: Are we even looking at the right measurements? “Or, do the right measurements exist, or do we have the databases, the registries, the sources, to make the decisions we need to make?” he says.

Any new proposals will require another round of such questions and filling-in of blanks to add workable details to vague and potentially confusing language.

“I think we know that change is afoot, and most smart hospitalists know that the system needs to run leaner,” Dr. Flansbaum says. “But how each one of us is going to function in our hospital, and the kinds of demands that will be placed on us, and what we’re going to need to do with the doctors in the community and the other nonphysician colleagues that we work with, is all really unknown.” TH

Bryn Nelson is a freelance medical writer based in Seattle.

Reference

1. Kuo YF, Sharma G, Freeman JL, Goodwin JS. Growth in the care of older patients by hospitalists in the United States. N Engl J Med. 2009;360(11): 1102-1112.

Image Source: PAGADESIGN, OVERSNAP/ISTOCKPHOTO.COM

Rising pressure to contain healthcare costs, increasing demands for safety and quality improvement, more focus on institutional accountability: In 2010, healthcare experts expect several dominant themes to continue converging and moving hospitalists even more to the center of key policy debates.

Peter Pronovost, MD, PhD, medical director of the Center for Innovation in Quality Patient Care and director of the Quality and Safety Research Group at Johns Hopkins University in Baltimore, sees three big themes moving to the fore. One is a greater focus on outcome measurements and accountability for performance, and he expects both carrots and sticks to be wielded. “So, both payment reform and social humiliation, or making things public,” Dr. Pronovost says. “Two, I see a lot more focus on measures that are population-based rather than hospital-based, so looking more at episodes of care.” The shift will force hospitalists to expand their purview beyond the hospital and, he says, partner more with community physicians to develop and monitor performance in such areas as transitions of care and general benchmarks of care.

Dr. Pronovost also expects “significant pressure on both the provider organization and individual clinician being paid less for what they do.” Finding ways to minimize costs will be a priority as payors increase scrutiny on expenses like unnecessary hospital readmissions. But hospitalists, he says, are better positioned than many other physicians to play a key role in the drive toward efficiency while also improving healthcare quality and safety. “I think hospitalists’ roles are going to go up dramatically,” Dr. Pronovost adds, “and I hope the field responds by making sure they put out people who have the skills to lead.”

End-of-Life Issues

Nancy Berlinger, PhD, deputy director and research scholar at The Hastings Center in Garrison, N.Y., cites end-of-life care as another theme likely to gain traction in 2010. As project director of the center’s revised ethical guidelines for end-of-life care, Dr. Berlinger notes how often clinicians in her working group have invoked the hospitalist profession. It’s no accident. “Hospitalists are increasingly associated with the care of patients on Medicare,” she says, adding Medicare beneficiaries are far more likely to be nearing the end of life.

Demographics suggest that connection will continue to grow in 2010 and beyond. Dr. Berlinger points to a 2009 New England Journal of Medicine study showing that the odds of a hospitalized Medicare patient receiving care from a hospitalist increased at a brisk 29.2% annual clip from 1997 through 2006.1 And while the U.S. faces a shortage of geriatricians, HM is growing rapidly as a medical profession. “By default, whether or not hospitalists self-identify as caring for older Americans,” Dr. Berlinger says, “this is their area of practical specialization.”

With that specialization comes added responsibility to assist with advanced-care planning and helping patients to document their wishes. Similarly, she says, it means acknowledging that these patients are more likely to have comorbid conditions and identify with goals of care. “I don’t think there’s any way around this,” she says. “Medicare and hospitalists, whether by accident or design, are increasingly joined at the hip. That is something that hospitalists, as a profession, will always need to keep their eye on.”

A parallel trend is that other doctors increasingly view hospitalists as hospital specialists. “The hospitalist’s responsibilities are not just in terms of the patients they care for, but also in terms of the institution itself,” Dr. Berlinger says. Non-staff physicians, for example, expect hospitalists to know how a hospital’s in-patient care system works. Practically speaking, as electronic medical records (EMR) become more commonplace, hospitalists will be increasingly relied upon to understand a hospital’s information technology.

New Economy, New Hospital Landscape

Douglas Wood, MD, chair of the Division of Health Care Policy and Research at the Mayo Clinic in Rochester, Minn., points to language in the federal healthcare reform legislation as evidence that hospitals and hospitalists will need to be in sync in other ways to avoid future penalties. One provision, for example, would increase the penalties for hospital-acquired infections. Other language seeks to reduce unnecessary readmissions.

Likewise, Dr. Wood says, addressing geographical variations in healthcare payments driven largely by unnecessary overutilization—including excessive use of ICU care, in-patient care, imaging, and specialist services—might mean asking hospitalists to take on more aspects of patient care.

Meanwhile, increased interest in demonstration projects that might achieve savings (e.g., accountable care organizations and bundled payments) suggests that proactive hospitals should again look to hospitalists. The flurry of new proposals won’t fundamentally change hospitalists’ responsibilities to provide effective and efficient care, “but it will put more emphasis on what they’re doing,” Dr. Wood says, “to the degree that hospitalists could take a lead in demonstrating how you can provide better outcomes at a lower overall utilization of resources.”

Regardless of how slowly or quickly these initiatives proceed at the national level, he says, hospitalists should be mindful that several states are well ahead of the curve and are likely to be more aggressive in instituting policy changes.

The Bottom Line

If there’s a single, overriding theme for 2010, Bradley Flansbaum, DO, MPH, FACP, FHM, director of hospitalist services at Lenox Hill Hospital in New York City and a member of SHM’s Public Policy Committee, says it might be that of dealing with the unknown. Squeezing healthcare costs and more tightly regulating inflation will have a greater effect on a hospital’s bottom line and thus impact what’s required of hospitalists. Even so, the profession will have to wait and see whether and how various proposals are codified and implemented. “We don’t know exactly what things are going to look like,” he says.

Nor is there a good sense of how new standards for transparency, quality, and accountability might be measured. “While people want more measurement and they want more report-card-type information, the data that we can acquire right now and how we analyze that data are still fairly primitive,” Dr. Flansbaum says. Even current benchmarks are lacking in how to determine who’s doing a good job and who isn’t, he says.

One big question that must be answered, then: Are we even looking at the right measurements? “Or, do the right measurements exist, or do we have the databases, the registries, the sources, to make the decisions we need to make?” he says.

Any new proposals will require another round of such questions and filling-in of blanks to add workable details to vague and potentially confusing language.

“I think we know that change is afoot, and most smart hospitalists know that the system needs to run leaner,” Dr. Flansbaum says. “But how each one of us is going to function in our hospital, and the kinds of demands that will be placed on us, and what we’re going to need to do with the doctors in the community and the other nonphysician colleagues that we work with, is all really unknown.” TH

Bryn Nelson is a freelance medical writer based in Seattle.

Reference

1. Kuo YF, Sharma G, Freeman JL, Goodwin JS. Growth in the care of older patients by hospitalists in the United States. N Engl J Med. 2009;360(11): 1102-1112.

Image Source: PAGADESIGN, OVERSNAP/ISTOCKPHOTO.COM

The amount and complexity of medical knowledge we need to keep up with is changing and growing at a remarkable rate. I was trained in an era in which it was taken as a given that congestive heart failure patients should not receive beta-blockers; now it is a big mistake if we don’t prescribe them in most cases. But even before starting medical school, most of us realize that things will change a lot, and many of us see that as a good thing. It keeps our work interesting. Just recently, our hospital had a guest speaker who talked about potential medical applications of nanotechnology. It was way over my head, but it sounded pretty cool.

While I was prepared for ongoing changes in medical knowledge, I failed to anticipate how quickly the business of medicine would change during my career. I think the need to keep up with ever-increasing financial and regulatory issues siphons a lot of time and energy that could be used to keep up with the medical knowledge base. I wasn’t prepared for this when I started my career.

Because it is the start of a new year, I thought I would highlight one issue related to CPT coding: Medicare stopped recognizing consult codes as of Jan. 1 (see “Consultation Elimination,” p. 31).

What It Means for Hospitalists

The good news is that we can just use initial hospital visit codes, inpatient or observation, for all new visits. For example, it won’t matter anymore whether I’m admitting and serving as attending for a patient, or whether a surgeon admitted the patient and asked me to consult for preoperative medical evaluation (“clearance”). I should use the same CPT code in either situation, simply appending a modifier if I’m the admitting physician. And for billing purposes, we won’t have to worry about documenting which doctor requested that we see the patient, though it is a good idea to document it as part of the clinical record anyway.

But it gets a little more complicated. The codes aren’t going away or being removed from the CPT “bible” published by the American Medical Association (AMA). Instead, Medicare simply won’t recognize them anymore. Other payors probably will follow suit within a few months, but that isn’t certain. So it is possible that when asked by a surgeon to provide a preoperative evaluation, you will need to bill an initial hospital (or office or nursing facility) care visit if the patient is on Medicare but bill a consult code if the patient has other insurance. You should check with your billers to ensure you’re doing this correctly.

Medicare-paid consults are at a slightly higher rate than the equivalent service billed as initial hospital care (e.g., when the hospitalist is attending). So a higher reimbursing code has been replaced with one that pays a little less. For example, a 99253 consultation code requires a detailed history, detailed examination, and medical decision-making of low complexity; last year, 99253 was reimbursed by Medicare at an average rate of $114.69. The equivalent admission code for a detailed history, detailed examination, and low-complexity medical decision-making is a 99221 code, for which Medicare pays about $99.90. This represents a difference of about 14%.

However, the net financial impact of this change probably will be positive for most HM groups because you probably bill very few initial consult codes, and instead were stuck billing a follow-up visit code when seeing co-management “consults” (i.e., a patient admitted by a surgeon who asks you to follow and manage diabetes and other medical issues). Now, at least in the case of Medicare, it is appropriate for us to bill an initial hospital visit code, which provides significantly higher reimbursement than follow-up codes.

In addition, there is a modest (about 0.3%) proposed increase in work relative value units attached to the initial hospital visit codes, which will benefit us not only when we’re consulting, but also when we admit and serve as a patient’s attending.

Some specialists may be less interested in consulting on our patients because the initial visit codes will reimburse a little less than similar consultation codes. I don’t anticipate this will be a significant problem for most of us, particularly since many specialists bill the highest level of consultation code (99255), which pays about the same as the equivalent admission code (99223).

Although I think elimination of the use of consultation codes seems like a reasonable step toward simplifying how hospitalists bill for our services, keeping up with these frequent coding changes requires a high level of diligence on our part, and on the part of our administrative and clerical staffs. And it consumes time and resources that I—and my team—could better spend keeping up with changes in clinical practice.

Perhaps when all the dust settles around the healthcare reform debate, we will begin to move toward new, more creative payment models that will allow us to focus on what we do best. TH

Dr. Nelson has been a practicing hospitalist since 1988 and is cofounder and past president of SHM. He is a principal in Nelson Flores Hospital Medicine Consultants, a national hospitalist practice management consulting firm (www.nelsonflores.com). He is also course co-director and faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official position of SHM.

The amount and complexity of medical knowledge we need to keep up with is changing and growing at a remarkable rate. I was trained in an era in which it was taken as a given that congestive heart failure patients should not receive beta-blockers; now it is a big mistake if we don’t prescribe them in most cases. But even before starting medical school, most of us realize that things will change a lot, and many of us see that as a good thing. It keeps our work interesting. Just recently, our hospital had a guest speaker who talked about potential medical applications of nanotechnology. It was way over my head, but it sounded pretty cool.

While I was prepared for ongoing changes in medical knowledge, I failed to anticipate how quickly the business of medicine would change during my career. I think the need to keep up with ever-increasing financial and regulatory issues siphons a lot of time and energy that could be used to keep up with the medical knowledge base. I wasn’t prepared for this when I started my career.

Because it is the start of a new year, I thought I would highlight one issue related to CPT coding: Medicare stopped recognizing consult codes as of Jan. 1 (see “Consultation Elimination,” p. 31).

What It Means for Hospitalists

The good news is that we can just use initial hospital visit codes, inpatient or observation, for all new visits. For example, it won’t matter anymore whether I’m admitting and serving as attending for a patient, or whether a surgeon admitted the patient and asked me to consult for preoperative medical evaluation (“clearance”). I should use the same CPT code in either situation, simply appending a modifier if I’m the admitting physician. And for billing purposes, we won’t have to worry about documenting which doctor requested that we see the patient, though it is a good idea to document it as part of the clinical record anyway.

But it gets a little more complicated. The codes aren’t going away or being removed from the CPT “bible” published by the American Medical Association (AMA). Instead, Medicare simply won’t recognize them anymore. Other payors probably will follow suit within a few months, but that isn’t certain. So it is possible that when asked by a surgeon to provide a preoperative evaluation, you will need to bill an initial hospital (or office or nursing facility) care visit if the patient is on Medicare but bill a consult code if the patient has other insurance. You should check with your billers to ensure you’re doing this correctly.

Medicare-paid consults are at a slightly higher rate than the equivalent service billed as initial hospital care (e.g., when the hospitalist is attending). So a higher reimbursing code has been replaced with one that pays a little less. For example, a 99253 consultation code requires a detailed history, detailed examination, and medical decision-making of low complexity; last year, 99253 was reimbursed by Medicare at an average rate of $114.69. The equivalent admission code for a detailed history, detailed examination, and low-complexity medical decision-making is a 99221 code, for which Medicare pays about $99.90. This represents a difference of about 14%.

However, the net financial impact of this change probably will be positive for most HM groups because you probably bill very few initial consult codes, and instead were stuck billing a follow-up visit code when seeing co-management “consults” (i.e., a patient admitted by a surgeon who asks you to follow and manage diabetes and other medical issues). Now, at least in the case of Medicare, it is appropriate for us to bill an initial hospital visit code, which provides significantly higher reimbursement than follow-up codes.

In addition, there is a modest (about 0.3%) proposed increase in work relative value units attached to the initial hospital visit codes, which will benefit us not only when we’re consulting, but also when we admit and serve as a patient’s attending.

Some specialists may be less interested in consulting on our patients because the initial visit codes will reimburse a little less than similar consultation codes. I don’t anticipate this will be a significant problem for most of us, particularly since many specialists bill the highest level of consultation code (99255), which pays about the same as the equivalent admission code (99223).

Although I think elimination of the use of consultation codes seems like a reasonable step toward simplifying how hospitalists bill for our services, keeping up with these frequent coding changes requires a high level of diligence on our part, and on the part of our administrative and clerical staffs. And it consumes time and resources that I—and my team—could better spend keeping up with changes in clinical practice.

Perhaps when all the dust settles around the healthcare reform debate, we will begin to move toward new, more creative payment models that will allow us to focus on what we do best. TH

Dr. Nelson has been a practicing hospitalist since 1988 and is cofounder and past president of SHM. He is a principal in Nelson Flores Hospital Medicine Consultants, a national hospitalist practice management consulting firm (www.nelsonflores.com). He is also course co-director and faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official position of SHM.

The amount and complexity of medical knowledge we need to keep up with is changing and growing at a remarkable rate. I was trained in an era in which it was taken as a given that congestive heart failure patients should not receive beta-blockers; now it is a big mistake if we don’t prescribe them in most cases. But even before starting medical school, most of us realize that things will change a lot, and many of us see that as a good thing. It keeps our work interesting. Just recently, our hospital had a guest speaker who talked about potential medical applications of nanotechnology. It was way over my head, but it sounded pretty cool.

While I was prepared for ongoing changes in medical knowledge, I failed to anticipate how quickly the business of medicine would change during my career. I think the need to keep up with ever-increasing financial and regulatory issues siphons a lot of time and energy that could be used to keep up with the medical knowledge base. I wasn’t prepared for this when I started my career.

Because it is the start of a new year, I thought I would highlight one issue related to CPT coding: Medicare stopped recognizing consult codes as of Jan. 1 (see “Consultation Elimination,” p. 31).

What It Means for Hospitalists

The good news is that we can just use initial hospital visit codes, inpatient or observation, for all new visits. For example, it won’t matter anymore whether I’m admitting and serving as attending for a patient, or whether a surgeon admitted the patient and asked me to consult for preoperative medical evaluation (“clearance”). I should use the same CPT code in either situation, simply appending a modifier if I’m the admitting physician. And for billing purposes, we won’t have to worry about documenting which doctor requested that we see the patient, though it is a good idea to document it as part of the clinical record anyway.

But it gets a little more complicated. The codes aren’t going away or being removed from the CPT “bible” published by the American Medical Association (AMA). Instead, Medicare simply won’t recognize them anymore. Other payors probably will follow suit within a few months, but that isn’t certain. So it is possible that when asked by a surgeon to provide a preoperative evaluation, you will need to bill an initial hospital (or office or nursing facility) care visit if the patient is on Medicare but bill a consult code if the patient has other insurance. You should check with your billers to ensure you’re doing this correctly.

Medicare-paid consults are at a slightly higher rate than the equivalent service billed as initial hospital care (e.g., when the hospitalist is attending). So a higher reimbursing code has been replaced with one that pays a little less. For example, a 99253 consultation code requires a detailed history, detailed examination, and medical decision-making of low complexity; last year, 99253 was reimbursed by Medicare at an average rate of $114.69. The equivalent admission code for a detailed history, detailed examination, and low-complexity medical decision-making is a 99221 code, for which Medicare pays about $99.90. This represents a difference of about 14%.

However, the net financial impact of this change probably will be positive for most HM groups because you probably bill very few initial consult codes, and instead were stuck billing a follow-up visit code when seeing co-management “consults” (i.e., a patient admitted by a surgeon who asks you to follow and manage diabetes and other medical issues). Now, at least in the case of Medicare, it is appropriate for us to bill an initial hospital visit code, which provides significantly higher reimbursement than follow-up codes.

In addition, there is a modest (about 0.3%) proposed increase in work relative value units attached to the initial hospital visit codes, which will benefit us not only when we’re consulting, but also when we admit and serve as a patient’s attending.

Some specialists may be less interested in consulting on our patients because the initial visit codes will reimburse a little less than similar consultation codes. I don’t anticipate this will be a significant problem for most of us, particularly since many specialists bill the highest level of consultation code (99255), which pays about the same as the equivalent admission code (99223).

Although I think elimination of the use of consultation codes seems like a reasonable step toward simplifying how hospitalists bill for our services, keeping up with these frequent coding changes requires a high level of diligence on our part, and on the part of our administrative and clerical staffs. And it consumes time and resources that I—and my team—could better spend keeping up with changes in clinical practice.

Perhaps when all the dust settles around the healthcare reform debate, we will begin to move toward new, more creative payment models that will allow us to focus on what we do best. TH

Dr. Nelson has been a practicing hospitalist since 1988 and is cofounder and past president of SHM. He is a principal in Nelson Flores Hospital Medicine Consultants, a national hospitalist practice management consulting firm (www.nelsonflores.com). He is also course co-director and faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official position of SHM.

There is no doubt we are getting healthcare reform, and in the end, Democrats will declare victory for the first meaningful progress since the 1960s, when Medicare and Medicaid were passed. Of course, in the interim, we have had legislation facilitating the development of HMOs under President Nixon and a senior pharmacy benefit under President George W. Bush, but many presidents have flailed at taking a crack at making major changes.

Republicans will declare victory, too, for stopping many bad ideas and trying to hold the line on costs. And everyone will complain about all the things that are not in the bill President Obama will sign this year.

And everyone will be right.

One Out of Three

To oversimplify things, all of the talk about healthcare reform has focused on three main areas:

• Increasing access for the uninsured and underinsured;
• Reigning in healthcare costs; and
• Designing a new system that rewards performance and safety.

At best, all we are getting is a down payment on access—and it will come with a substantial cost.

But what we are more likely beginning is an unraveling of business as usual and a reshuffling of the deck—and some key stakeholders won’t like the cards they will be dealt. The best way to think of what is happening in 2010 is that this is the first step toward having the healthcare system we will have in 2020.

Civic Obligation

It is a national embarrassment for the U.S. to be the only developed country that has not come up with a solution that offers most of its citizens access to healthcare. As a culture, we have decided that every child deserves a free education, that all families should have access to fire and police protection, and that we all should have access to due process and “an attorney who will be appointed to you if you cannot afford one.”

But right now in our country, about 47 million people live sicker and die quicker because of a healthcare system that doesn’t include them. A more sorry aspect is the “underinsured,” the constantly employed person with “good” insurance who is unfortunate enough to be diagnosed with cancer only to find out that their $1 million lifetime benefit runs out in year two or three. Those families face the tough choices between bankruptcy and foreclosure, or allowing Mom or Dad to give up another year or two or three of life. Is this the America we are living in?

Reform, Part I

To get this partial loaf of healthcare reform, Obama and Congressional leaders had to be creative. What has torpedoed previous efforts has been the vast power and reach of large, well-funded stakeholders who see any change as a threat and take a “what’s in it for me” approach. These industries have not been shy about using power and money to influence Congress and the White House, and even more insidiously have gone “direct” with advertisements and commentators who use “Harry and Louise” tactics to frighten an underinformed public about this complex process.

But this time, Obama promised the doctors, the insurance industry, the pharmaceutical companies, the hospitals, the device-makers, and just about anybody who would listen that “they” would not be hurt by these reforms. In fact, in the access discussion for many of these stakeholders, the initial result would be 47 million more customers paying for healthcare products and services. Is it any wonder that the price tag must go up, and by trillions of dollars?

It is the price of admission, at least to get the ball rolling. Now we all are in the box. With a price tag approaching $3 trillion a year, and an aging population and a taxpaying workforce shrinking relative to those they must support with entitlements (think Medicare and Social Security), the die is cast for “Healthcare Reform: The Sequel.”

Trust me—the next round of change will be more cataclysmic. In the aggregate, physicians will make less than the nearly $500 billion we make now. Sure, the primary-care physicians (PCPs) and lower-paid specialties might not be hit (and could even move up), but some physicians will see a marked change in their compensation.

Hospitals will need to adapt as well. They must become more efficient. We saw this in California, Washington, Oregon, Massachusetts, and elsewhere, as capitation and managed care ratcheted down on the old “cost-plus” payment method and moved the industry to reward value and efficiency. Those who are efficient and effective will do very well. Those who have lived by just doing more and more without demonstrating their performance or achieving standards will suffer and be dissatisfied.

More Reforms Possible

The future of the insurance industry will be very different as well, maybe because of government’s more intrusive role (think Medicare for most people) or by evolving to a model like Germany’s, where 200 nonprofit insurance companies compete for business. We will demand that insurance companies return $0.95 on the dollar for patient care, not $0.75 or less, as is common practice today.

Device-makers and Big Pharma might start to see a glimpse into the future as comparative-effectiveness research looks at the value of new, expensive technology and advances in treatments. As medications become “included” in the standard benefits bundle, just like physician fees and hospitalizations, we will see a relentless push downward on pricing. Drugs will become just one more line item to be budgeted for, especially if MedPAC and Congress are involved. We will get what we can afford, not everything that is possible or available.

Because this is 21st-century America, under the cacophony of Glenn Beck and Keith Olbermann and Rush Limbaugh and Rachel Maddow, the potential losers will be loud. They will trumpet any fact or pseudo-fact to alarm the populace. Phrases like “government takeover” and “you will lose the great healthcare you have,” and “death squads” and “illegal immigrants” and “back to 19th-century healthcare,” will bounce around the 24-hour news cycle. They will make real, positive change difficult.

But the beauty of what we are passing now, in 2010, is that the train is leaving the station. We are burning the boats. The healthcare system shakeup officially is under way. There is no turning back.

HM was not borne of a new law or mandate. We are an innovation of a system that must change and evolve. And while HM is not all it eventually will be, there are hints of what we can become. For a new healthcare system that offers greater access and is grounded in documented performance and efficiency, HM will be a solution for hospitals with hospitalist groups.

A lot of uncertainty remains out there, and the next decade promises to be even more turbulent, but hospitalists are as well positioned as any stakeholder in healthcare.

We are ready to be an active, contributing, and solution-oriented profession that will add value to our patients and our healthcare communities.

Stay tuned. TH

Dr. Wellikson is CEO of SHM.

There is no doubt we are getting healthcare reform, and in the end, Democrats will declare victory for the first meaningful progress since the 1960s, when Medicare and Medicaid were passed. Of course, in the interim, we have had legislation facilitating the development of HMOs under President Nixon and a senior pharmacy benefit under President George W. Bush, but many presidents have flailed at taking a crack at making major changes.

Republicans will declare victory, too, for stopping many bad ideas and trying to hold the line on costs. And everyone will complain about all the things that are not in the bill President Obama will sign this year.

And everyone will be right.

One Out of Three

To oversimplify things, all of the talk about healthcare reform has focused on three main areas:

• Increasing access for the uninsured and underinsured;
• Reigning in healthcare costs; and
• Designing a new system that rewards performance and safety.

At best, all we are getting is a down payment on access—and it will come with a substantial cost.

But what we are more likely beginning is an unraveling of business as usual and a reshuffling of the deck—and some key stakeholders won’t like the cards they will be dealt. The best way to think of what is happening in 2010 is that this is the first step toward having the healthcare system we will have in 2020.

Civic Obligation

It is a national embarrassment for the U.S. to be the only developed country that has not come up with a solution that offers most of its citizens access to healthcare. As a culture, we have decided that every child deserves a free education, that all families should have access to fire and police protection, and that we all should have access to due process and “an attorney who will be appointed to you if you cannot afford one.”

But right now in our country, about 47 million people live sicker and die quicker because of a healthcare system that doesn’t include them. A more sorry aspect is the “underinsured,” the constantly employed person with “good” insurance who is unfortunate enough to be diagnosed with cancer only to find out that their $1 million lifetime benefit runs out in year two or three. Those families face the tough choices between bankruptcy and foreclosure, or allowing Mom or Dad to give up another year or two or three of life. Is this the America we are living in?

Reform, Part I

To get this partial loaf of healthcare reform, Obama and Congressional leaders had to be creative. What has torpedoed previous efforts has been the vast power and reach of large, well-funded stakeholders who see any change as a threat and take a “what’s in it for me” approach. These industries have not been shy about using power and money to influence Congress and the White House, and even more insidiously have gone “direct” with advertisements and commentators who use “Harry and Louise” tactics to frighten an underinformed public about this complex process.

But this time, Obama promised the doctors, the insurance industry, the pharmaceutical companies, the hospitals, the device-makers, and just about anybody who would listen that “they” would not be hurt by these reforms. In fact, in the access discussion for many of these stakeholders, the initial result would be 47 million more customers paying for healthcare products and services. Is it any wonder that the price tag must go up, and by trillions of dollars?

It is the price of admission, at least to get the ball rolling. Now we all are in the box. With a price tag approaching $3 trillion a year, and an aging population and a taxpaying workforce shrinking relative to those they must support with entitlements (think Medicare and Social Security), the die is cast for “Healthcare Reform: The Sequel.”

Trust me—the next round of change will be more cataclysmic. In the aggregate, physicians will make less than the nearly $500 billion we make now. Sure, the primary-care physicians (PCPs) and lower-paid specialties might not be hit (and could even move up), but some physicians will see a marked change in their compensation.

Hospitals will need to adapt as well. They must become more efficient. We saw this in California, Washington, Oregon, Massachusetts, and elsewhere, as capitation and managed care ratcheted down on the old “cost-plus” payment method and moved the industry to reward value and efficiency. Those who are efficient and effective will do very well. Those who have lived by just doing more and more without demonstrating their performance or achieving standards will suffer and be dissatisfied.

More Reforms Possible

The future of the insurance industry will be very different as well, maybe because of government’s more intrusive role (think Medicare for most people) or by evolving to a model like Germany’s, where 200 nonprofit insurance companies compete for business. We will demand that insurance companies return $0.95 on the dollar for patient care, not $0.75 or less, as is common practice today.

Device-makers and Big Pharma might start to see a glimpse into the future as comparative-effectiveness research looks at the value of new, expensive technology and advances in treatments. As medications become “included” in the standard benefits bundle, just like physician fees and hospitalizations, we will see a relentless push downward on pricing. Drugs will become just one more line item to be budgeted for, especially if MedPAC and Congress are involved. We will get what we can afford, not everything that is possible or available.

Because this is 21st-century America, under the cacophony of Glenn Beck and Keith Olbermann and Rush Limbaugh and Rachel Maddow, the potential losers will be loud. They will trumpet any fact or pseudo-fact to alarm the populace. Phrases like “government takeover” and “you will lose the great healthcare you have,” and “death squads” and “illegal immigrants” and “back to 19th-century healthcare,” will bounce around the 24-hour news cycle. They will make real, positive change difficult.

But the beauty of what we are passing now, in 2010, is that the train is leaving the station. We are burning the boats. The healthcare system shakeup officially is under way. There is no turning back.

HM was not borne of a new law or mandate. We are an innovation of a system that must change and evolve. And while HM is not all it eventually will be, there are hints of what we can become. For a new healthcare system that offers greater access and is grounded in documented performance and efficiency, HM will be a solution for hospitals with hospitalist groups.

A lot of uncertainty remains out there, and the next decade promises to be even more turbulent, but hospitalists are as well positioned as any stakeholder in healthcare.

We are ready to be an active, contributing, and solution-oriented profession that will add value to our patients and our healthcare communities.

Stay tuned. TH

Dr. Wellikson is CEO of SHM.

There is no doubt we are getting healthcare reform, and in the end, Democrats will declare victory for the first meaningful progress since the 1960s, when Medicare and Medicaid were passed. Of course, in the interim, we have had legislation facilitating the development of HMOs under President Nixon and a senior pharmacy benefit under President George W. Bush, but many presidents have flailed at taking a crack at making major changes.

Republicans will declare victory, too, for stopping many bad ideas and trying to hold the line on costs. And everyone will complain about all the things that are not in the bill President Obama will sign this year.

And everyone will be right.

One Out of Three

To oversimplify things, all of the talk about healthcare reform has focused on three main areas:

• Increasing access for the uninsured and underinsured;
• Reigning in healthcare costs; and
• Designing a new system that rewards performance and safety.

At best, all we are getting is a down payment on access—and it will come with a substantial cost.

But what we are more likely beginning is an unraveling of business as usual and a reshuffling of the deck—and some key stakeholders won’t like the cards they will be dealt. The best way to think of what is happening in 2010 is that this is the first step toward having the healthcare system we will have in 2020.

Civic Obligation

It is a national embarrassment for the U.S. to be the only developed country that has not come up with a solution that offers most of its citizens access to healthcare. As a culture, we have decided that every child deserves a free education, that all families should have access to fire and police protection, and that we all should have access to due process and “an attorney who will be appointed to you if you cannot afford one.”

But right now in our country, about 47 million people live sicker and die quicker because of a healthcare system that doesn’t include them. A more sorry aspect is the “underinsured,” the constantly employed person with “good” insurance who is unfortunate enough to be diagnosed with cancer only to find out that their $1 million lifetime benefit runs out in year two or three. Those families face the tough choices between bankruptcy and foreclosure, or allowing Mom or Dad to give up another year or two or three of life. Is this the America we are living in?

Reform, Part I

To get this partial loaf of healthcare reform, Obama and Congressional leaders had to be creative. What has torpedoed previous efforts has been the vast power and reach of large, well-funded stakeholders who see any change as a threat and take a “what’s in it for me” approach. These industries have not been shy about using power and money to influence Congress and the White House, and even more insidiously have gone “direct” with advertisements and commentators who use “Harry and Louise” tactics to frighten an underinformed public about this complex process.

But this time, Obama promised the doctors, the insurance industry, the pharmaceutical companies, the hospitals, the device-makers, and just about anybody who would listen that “they” would not be hurt by these reforms. In fact, in the access discussion for many of these stakeholders, the initial result would be 47 million more customers paying for healthcare products and services. Is it any wonder that the price tag must go up, and by trillions of dollars?

It is the price of admission, at least to get the ball rolling. Now we all are in the box. With a price tag approaching $3 trillion a year, and an aging population and a taxpaying workforce shrinking relative to those they must support with entitlements (think Medicare and Social Security), the die is cast for “Healthcare Reform: The Sequel.”

Trust me—the next round of change will be more cataclysmic. In the aggregate, physicians will make less than the nearly $500 billion we make now. Sure, the primary-care physicians (PCPs) and lower-paid specialties might not be hit (and could even move up), but some physicians will see a marked change in their compensation.

Hospitals will need to adapt as well. They must become more efficient. We saw this in California, Washington, Oregon, Massachusetts, and elsewhere, as capitation and managed care ratcheted down on the old “cost-plus” payment method and moved the industry to reward value and efficiency. Those who are efficient and effective will do very well. Those who have lived by just doing more and more without demonstrating their performance or achieving standards will suffer and be dissatisfied.

More Reforms Possible

The future of the insurance industry will be very different as well, maybe because of government’s more intrusive role (think Medicare for most people) or by evolving to a model like Germany’s, where 200 nonprofit insurance companies compete for business. We will demand that insurance companies return $0.95 on the dollar for patient care, not $0.75 or less, as is common practice today.

Device-makers and Big Pharma might start to see a glimpse into the future as comparative-effectiveness research looks at the value of new, expensive technology and advances in treatments. As medications become “included” in the standard benefits bundle, just like physician fees and hospitalizations, we will see a relentless push downward on pricing. Drugs will become just one more line item to be budgeted for, especially if MedPAC and Congress are involved. We will get what we can afford, not everything that is possible or available.

Because this is 21st-century America, under the cacophony of Glenn Beck and Keith Olbermann and Rush Limbaugh and Rachel Maddow, the potential losers will be loud. They will trumpet any fact or pseudo-fact to alarm the populace. Phrases like “government takeover” and “you will lose the great healthcare you have,” and “death squads” and “illegal immigrants” and “back to 19th-century healthcare,” will bounce around the 24-hour news cycle. They will make real, positive change difficult.

But the beauty of what we are passing now, in 2010, is that the train is leaving the station. We are burning the boats. The healthcare system shakeup officially is under way. There is no turning back.

HM was not borne of a new law or mandate. We are an innovation of a system that must change and evolve. And while HM is not all it eventually will be, there are hints of what we can become. For a new healthcare system that offers greater access and is grounded in documented performance and efficiency, HM will be a solution for hospitals with hospitalist groups.

A lot of uncertainty remains out there, and the next decade promises to be even more turbulent, but hospitalists are as well positioned as any stakeholder in healthcare.

We are ready to be an active, contributing, and solution-oriented profession that will add value to our patients and our healthcare communities.

Stay tuned. TH

Dr. Wellikson is CEO of SHM.