SUNY BOARD MEETING

AUGUST 3, 2015

CONCERNS/ISSUES TO BE ADDRESSED

Provide an explanation of why the Downstate CMI is low compared to Upstate and Stony Brook

Clarify, specifically, what has been accomplished (with Pitts guidance and assistance) to correct coding and billing problems and highlight that the problems identified a few years ago are not the same as UHB is faced with today

Effort/status to fill key leadership vacancies in the organization

Transition plan prior to PMA’s departure

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Case mix index (CMI) is a relative value assigned to a diagnosis-related group of patients in a medical care environment. The CMI value is used in determining the allocation of hospital resources to care for and/or treat the patients in the group plus to determine relative weights by government payors for payment rates.

Case Mix can be quoted differently for two reasons: First, all payors do not use the same weighting system Second, all patients are not included in some CMI reporting requirements;

in particular, case mix is often reported without newborn nursery

Patient 1 Patient 2

Patient Diagnosis Heart Failure and Shock Artificial Lung/Trach

Code in ICD-9 System 428.33 440.24

Medicare DRG 291 003

Medicare Weight 1.5031 17.6369

CASE MIX BACKGROUND

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CORRECTION OF UHB CASE MIX INDEX NUMBER PRESENTED ON

JUNE 15, 2015

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FY12Actual

FY13Actual

FY14Actual

FY14Projected

FY15 FY15 Budget

As DisclosedJune 15, 2015

1.4175 1.2435 1.2853 1.2264 1.2300(Projected)

1.2264

As CorrectedAnd Updated

1.2478 1.2435 1.2853 1.2264 1.2347(Actual)

1.2264

Medicare weights with Nursery

Overall Hospital Case Mix Index

Mean 1.745

Minimum 1.259

25th 1.602

Median 1.753

75th 1.907

Maximum 2.430

SUNY Downstate 1.259*

SUNY Stony Brook 1.774*

SUNY Upstate 1.619*

* Case Mix Index has been calculated using Medicare DRG weights

Source: COTH Annual Survey of Operations & Financial Performance – Autumn, 2014

COMPARISON WITH OTHER ACADEMIC MEDICAL CENTERS

HOSPITAL CASE MIX INDICES BY PRIMARY PAYOR

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UHB has the lowest CMI among all AMCs

Function of patient population and competitors:• Stony Brook and Upstate

are Level I Trauma Centers and UHB is not

• UHB has a Level I Trauma Center competitor across the street

WHILE THE CMI HAS REMAINED STABLE, OTHER CHANGES IN UHB’S

SERVICE MIX OF PATIENTS HAVE HAD A NEGATIVE IMPACT ON CMI

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The service mix has shifted away from higher-CMI services such as Surgery and Neonatal to lower-CMI services such as Medicine

WHILE THE CMI HAS REMAINED STABLE, OTHER CHANGES IN UHB’S

SERVICE MIX OF PATIENTS HAVE HAD A NEGATIVE IMPACT ON CMI

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Similarly, the intensity of inpatient surgeries has moved from higher-CMI specialties such as Cardiothoracic to lower-CMI specialties such as Otolaryngology

UHB CASE MIX SUMMARY

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Negative Influencing Factors

• More discharges with lower resource utilization

• More surgical discharges with lower resource utilization

• Continuing Medicare weighting reductions

UHB’s Counteracting Initiatives

• Improved clinical documentation by faculty physicians and residents

• Improved coding quantity and quality

• Improved billing policies, procedures, monitoring and staff productivity

CLINICAL DOCUMENTATION IMPROVEMENTS IN TWO PHASES

Phase I The UHB documentation improvement program was completed in February

2013 with a focus on acute Medicare cases only and included physician and CDI staff education.

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CDI FINANCIAL IMPROVEMENT

(12/1/12 TO 11/30/14)

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Exceeded plan by over $2M

(millions)

CLINICAL DOCUMENTATION IMPROVEMENTS IN TWO PHASES

Phase II Documentation improvement expanded to include not only Medicare cases,

but also other acute cases paid on a DRG basis; targeted are about 1/3 of total cases; full implementation is expected in September 2015

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6.3% actual improvement

3.5% targeted

3.1% actual improvement

3.5% targeted

Excludes psyc, rehab, OB/newborns, one-day stays, Medicaid and Medicaid HMO.

Phase II Continuing Plan includes improving clinical documentation to increase the CMI by 3.5%

Financial impact on RAP2 of CDI on CMI projected to be $1.28 to 1.45M

UHB CDI issues to achieve these improvements

CLINICAL DOCUMENTATION IMPROVEMENTS IN TWO PHASES

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Number of trained and effective clinical documentation specialists

Extending contract with outside CDI vendor for additional interim experienced staff

Physician and Resident education and training

Additional follow-up training this fall for Physicians and Residents

Number of cases reviewed Improving processes for expanded case review

IMPROVING CLINICAL DOCUMENTATION IS NOT THE END

Coding – checking a variety of sources within the patient’s medical record to verify the services provided, abstracting the information from the clinical documentation, assigning the appropriate codes, and creating a claim to be paid

Billing (and collecting) – getting an accurate and timely claim out the door, following up on unpaid claims, resubmitting claims when necessary to ultimately get cash in the door

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CODING PROBLEMS OF A FEW YEARS AGO

Staff - Difficulty in securing services of a sufficient number of coders

Training - Lack of initial and ongoing training for coders

Inefficiencies within the HIM Department - Tracking and working unbilled accounts were not structured, resulting in unbilled accounts exceeding the allowable billing timeframe

Inefficiencies outside the HIM Department - High number of unbilled accounts due to delays, i.e., missing medical records, delayed physician query responses, and decision on patient types from Case Management

Lack of accountability within and outside the HIM Department

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CONTINUING ACTIONS RELATED TO CODING ISSUES

Executed two outside vendor contracts to augment coding staff remotely

Achieved HealthBridge (EMR) access for remote coders and made access more efficient

The current coding turnaround time blended for Inpatient, Ambulatory Surgery, and ED cases is 2.5 days (uncoded total/average daily gross revenue)

Average days in DNFB was 12.1 in March 2013; in May 2015, average days in DNFB was 8.7

Established managerial policy to assign daily tasks to each employee

A daily tracking tool was established allowing close monitoring of coded account volume by employee as compared to the newly established productivity goals

Medical record receipt by the HIM Department is monitored; UHB is experiencing 100% compliance

Paper inpatient and ambulatory surgery records are scanned and available for review within 24-48 hours of discharge

In-house coders are receiving training via the American Health Information Management Association’s on-line training program

An in-house quality control program to review denials is on-going resulting in substantial decline in denials

Recently engaged an outside vendor to perform a medical record review for coding quality

On June 12, the pure uncoded backlog for Inpatient, Ambulatory Surgery and ED was $4.2M, the lowest it has ever been.

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TODAY’S CODING ISSUES

Maintaining the number of coding staff necessary to perform timely coding of medical records, while at the same time training the same staff on ICD-10 effective October 1, 2015

Maintaining the extensive process and efficiency improvements

Hiring and training permanent coding staff (a new inpatient coder was hired the week of 7/6/15)

Assessing the quality of coding being performed and developing plans for improvement

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BILLING PROBLEMS OF A FEW YEARS AGO

Decentralized management structure for Revenue Cycle, in which several components affect “billing”

Minimal information technology to automate processes and monitoring of patient accounts operations; most existing reports were manual

Inefficient processes for working patient accounts did not conform to industry standards and was not efficient

Minimal attention paid to the maintenance of the Charge Description Master

No structured denial management program

No standards established for late charges, denials, account follow-up, queries, underpayments, and insurance verification

No point of service cash collections

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CONTINUING ACTIONS RELATED TO BILLING ISSUES

Restructured the billing department and cross-trained staff so they can efficiently work both inpatient and outpatient accounts

Implemented workflow software to enable the billing department to better organize, prioritize, assign, and monitor charge capture, billing, and collection efforts

Contracted with specialized collection agencies to which Downstate can refer accounts to reduce bad debt write-off and improve cash collections

In process of establishing a formal denial management program Reduced bill lag days from 7 to 5 as of 7/1/15 Reduced net days in AR from 83.1 to 57.2 Improved edit first pass rate from 84% to 92.7% Implemented RelayAnalytics Acuity to identify and reduce denied claims Implemented RelayClearance to verify insurance eligibility and reduce denied

claims; trained billers on using RelayClearance to correct eligibility rejections Implemented electronic payments for 15 payers Currently training Billing Manager to develop analytical skills to identify trends

and billing issues and how to escalate for resolution

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TODAY’S BILLING ISSUES

Instilling in patient accounts staff buy-in on the use of recently implemented technology versus reverting to past manual practices; holding staff accountable for production standards

Re-staffing and providing leadership to the managed care department; making sure that UHB is receiving the correct reimbursement from managed care companies

Transitioning to ICD-10 Keeping current on information systems releases given the competition for IT

capital

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STATUS TO FILL KEY UHB LEADERSHIP VACANCIES

POSITION STATUS

• Senior Vice President of Hospital Affairs and Managing Director

Search underway by KornFerry withrecommended candidate to be selected by

8/1/15

• Assistant Vice President of Ambulatory Care

Hired and will start in August

• Assistant Vice President Hospital Finance/Controller

Hired and will start in August

• Director UHB Clinical Practice Physician Compensation

In Process

• Data Analyst UHB Clinical Practice Physician Compensation

Hired and will start in August

• Assistant Vice President Managed CarePosition vacant since February 2015; search

underway by Cejka with recommended candidates to be presented in July

• Teaching Hospital Associate Administrator – Perioperative Services

Position filled July 2015

PMA/UHB TRANSITION PLAN

Pitts Management’s contract with Downstate concludes on 12/2/15; transitioning of two subject matter experts (HIM and Patient Access) has already occurred since the UHB leaders of these areas are in place

As additional Downstate leadership positions are filled (Ambulatory Care, Physician Compensation), transitioning of work will begin as soon as practical

Each PMA consultant will review work to-date and ongoing with his/her Downstate “counterpart”

Documentation will be given to and discussed with the Downstate “counterpart”; a copy of all of documentation will also be delivered to the UHB CEO

Bi-weekly progress reporting continues to be transitioned to Downstate staff as staff are identified to assume this responsibility

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