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The Edge - Northern California Chapter’s Newsletter 1 President’s Message Mary Ackley, FHFMA Chapter President 2014-2015 We just completed our first few months of the 2014-2015 HFMA calendar year and have much to celebrate and be thankful for. Our Fall Conference, “Building on the Pillars of Healthcare” provided us with ideas about how to inspire others in the work- force and why thought leadership is the very best career insurance; it gave us insight into the current and future trends of our frag- mented and fragile physician workforce, and allowed us to hear from others regarding their experience post-ACA implementation. We had over 300 of our members attend and they had the opportu- nity to choose from 25 different educational tracks, including Finance, Compliance, Reimbursement and Contracting, Patient Access and Revenue Cycle. In short, it touched on very salient issues as we move into the future. But it wasn’t all work and no play. There was continuous networking during our breaks, and I would venture to say a lot of work was done at the bar and in the restaurant. The Roman Gladia- tor themed dinner and social event hailed gladiators and goddesses alike giving us all a good laugh, with each other and more impor- tantly, at ourselves. I want to step back for a minute and look a little closer at the title, “Building the Pillars of Healthcare.” What are pillars, and how are we building them in healthcare? The dictionary describes pillars as: (1)A large post that holds something up (2)A basic fact, idea, or principle of something…yes, we will be talking a lot about basic facts over the next couple of days (3) “Someone who is an important member of a group” The third definition is the one I want to spend a few minutes on because to me, it exemplifies HFMA. Based upon the definition, every single member is a pillar. Every one of you is important to the success of this organization. Every one of you is important to every other person in this organization. We are all facing uncharted waters; no one in healthcare today has faced the complexity of the challenges that we face today; no one. It would be easy to succumb to the pressure and be a chicken little, claiming the sky is falling and that healthcare is doomed. I talk with people almost every day in which that is indeed the case. But not in HFMA. In HFMA, and particularly in this chapter, we look to and rely on each other; not to survive, but to find ways to thrive, ways to drive positive change. We are fortunate that our chapter has many thought leaders; thought leaders that are con- tinually reaching out to others, encouraging them to step up and out, and to be thought leaders themselves. Most are hesitant at first, assuming that those they see running our meetings or our chapter have some unique qualification; they are surprised to find out that it isn’t that difficult to create change and that HFMA pro- vides an unparalleled venue to be heard, to be a thought leader. To make a difference in today’s healthcare can be as simple as joining a committee and making a suggestion for content; expressing a con- cern that perhaps no one else has brought up; or writing articles for our newsletters. Another point of recognition was the success of the chapter’s flagship Early Careerist event that was held on October 21, 2014. This series is designed to provide professional education and broad coaching, as well as the opportunity to network with others in healthcare. Historically, Early Careerist applied to those just enter- ing the workforce, and more specifically those under 40 years of age and less than 10 years work experience. As the Northern California HFMA President, it is my intention to expand the historical defini- tion in order to offer this series to all affected by the volatile health- care market of the past few years. I have seen first-hand friends and colleagues, having spent multiple years developing skills specific to a healthcare niche, suddenly in a position that none had thought to prepare for. I would like to provide those in the beginning of their health careers, whether new to the job market, transitioning from other fields, or returning to the job market after an absence, with a wealth of information regarding the varied opportunities within the healthcare field, along with how to get there. We had over 40 attendees, and the response was resoundingly positive. Our speakers addressed topics including executive level information regarding Building the New Healthcare Workforce; Com- munication Power (didn’t we just hear that thought leadership relied heavily on communication?), and concluded with a re-presentation of the HFMA National Leadership presentation, Your Career in the Era of Healthcare Reform, by our very own Aubrey Straub. You will find specific feedback from some of the attendees in this edition of the newsletter. I would like to extend a thank you to John Muir Health for hosting the event and encourage you to stay tuned for information regarding the next Early Careerist event in April 2015. We will focus on mentoring, networking, building connections and the power of social networking. The Edge November 2014 Second Issue - FY2014-15

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The Edge - Northern California Chapter’s Newsletter 1

President’s MessageMary Ackley, FHFMAChapter President2014-2015

We just completed our first few months of the 2014-2015 HFMA calendar year and have much to celebrate and be thankful for.  Our Fall Conference,

“Building on the Pillars of Healthcare” provided us with ideas about how to inspire others in the work-force and why thought leadership is the very best career insurance; it gave us insight into the current and future trends of our frag-mented and fragile physician workforce, and allowed us to hear from others regarding their experience post-ACA implementation.  We had over 300 of our members attend and they had the opportu-nity to choose from 25 different educational tracks, including Finance, Compliance, Reimbursement and Contracting, Patient Access and Revenue Cycle.  In short, it touched on very salient issues as we move into the future.

But it wasn’t all work and no play.  There was continuous networking during our breaks, and I would venture to say a lot of work was done at the bar and in the restaurant.  The Roman Gladia-tor themed dinner and social event hailed gladiators and goddesses alike giving us all a good laugh, with each other and more impor-tantly, at ourselves.

I want to step back for a minute and look a little closer at the title, “Building the Pillars of Healthcare.”  What are pillars, and how are we building them in healthcare? The dictionary describes pillars as:

(1)A large post that holds something up(2)A basic fact, idea, or principle of something…yes, we will be

talking a lot about basic facts over the next couple of days (3) “Someone who is an important member of a group”

The third definition is the one I want to spend a few minutes on because to me, it exemplifies HFMA. Based upon the definition, every single member is a pillar.  Every one of you is important to the success of this organization.  Every one of you is important to every other person in this organization. We are all facing uncharted waters; no one in healthcare today has faced the complexity of the challenges that we face today; no one.  It would be easy to succumb to the pressure and be a chicken little, claiming the sky is falling and that healthcare is doomed.  I talk with people almost every day in which that is indeed the case.

But not in HFMA. In HFMA, and particularly in this chapter, we look to and rely on each other; not to survive, but to find ways to thrive, ways to drive positive change. We are fortunate that our chapter has many thought leaders; thought leaders that are con-tinually reaching out to others, encouraging them to step up and out, and to be thought leaders themselves.  Most are hesitant at first, assuming that those they see running our meetings or our chapter have some unique qualification; they are surprised to find out that it isn’t that difficult to create change and that HFMA pro-vides an unparalleled venue to be heard, to be a thought leader.  To make a difference in today’s healthcare can be as simple as joining a committee and making a suggestion for content; expressing a con-cern that perhaps no one else has brought up; or writing articles for our newsletters.

Another point of recognition was the success of the chapter’s flagship Early Careerist event that was held on October 21, 2014.  This series is designed to provide professional education and broad coaching, as well as the opportunity to network with others in healthcare.  Historically, Early Careerist applied to those just enter-ing the workforce, and more specifically those under 40 years of age and less than 10 years work experience.  As the Northern California HFMA President, it is my intention to expand the historical defini-tion in order to offer this series to all affected by the volatile health-care market of the past few years. I have seen first-hand friends and colleagues, having spent multiple years developing skills specific to a healthcare niche, suddenly in a position that none had thought to prepare for.  I would like to provide those in the beginning of their health careers, whether new to the job market, transitioning from other fields, or returning to the job market after an absence, with  a wealth of information regarding the varied opportunities within the healthcare field, along with how to get there.

We had over 40 attendees, and the response was resoundingly positive. Our speakers addressed topics including executive level information regarding Building the New  Healthcare Workforce; Com-munication Power (didn’t we just hear that thought leadership relied heavily on communication?), and concluded with a re-presentation of the HFMA National Leadership presentation, Your Career in the Era of Healthcare Reform, by our very own Aubrey Straub.  You will find specific feedback from some of the attendees in this edition of the newsletter.  I would like to extend a thank you to John Muir Health for hosting the event and encourage you to stay tuned for information regarding the next Early Careerist event in April 2015.  We will focus on mentoring, networking, building connections and the power of social networking.

The EdgeNovember 2014Second Issue - FY2014-15

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T H E E D G E

2 The Edge - Northern California Chapter’s Newsletter

Our membership continues to grow, with 95 new members since May of 2014, thanks to the chapter’s ongoing good work and the work of our never-tiring Membership Team.  Our teams provid-ing educational content continue to reach out to various experts in order to bring you relevant, up-to-date information, such as ongo-ing updates from the OIG and CMS, HIPAA standards for social media, ACA updates and many other topics.  Our upcoming Spring Conference Team is preparing for topics such as discussions on Retail Healthcare as well as a panel discussion between hospital executives and physicians regarding how finance can better serve the physicians’ routine and strategic needs.  Through various channels, be it webinar, on-site meetings, phone calls or confer-ences, your HFMA Northern California Chapter strives to be your resource to understanding the industry’s complex issues and that you are positioned for success.  Please let the Chapter know of educational topics and ideas for seminars or networking in order to ensure that we are developing programs to address both your educational and interest needs. Drop me an email at [email protected] or our Program Chair, Ramona Hernandez at [email protected].

In other news, the National membership survey was mailed to random members around Oct 21, 2014.  I highly encourage those of you that received the survey to complete it, as it is part of the met-rics that HFMA National uses to determine how successfully we are meeting our members’ needs. In addition, your Executive Commit-tee and the Chapter Board pore through the surveys to glean in-formation regarding areas of success and opportunity. Our chapter will be raffling four $100 gift cards to those that respond to the survey, so be sure to get your responses in for your chance to win!

In closing, I will say to each of you, that you are one of our pillars; you are an important member of this group and that we need your input, your voice, your talent, and your experience to continue the trajectory of this chapter. You will be our future board members, our future Executive Committee.  Your volunteerism is what supports the Northern California chapter in meeting our mission to Lead the Change.

Nominations for Chapter Board Members and New Secretary for FY2015-2016Terry PaffImmediate Past President and Chairperson of the Nominating Committee

As the chairperson of the Nominating Committee, it is my duty to reach out and have the chapter members nominate fellow members to fill four board positions for next year. We are looking for volunteers who will serve our chapter well. The following are some of the expectations of a Board Member:

• Attend four board meetings per fiscal year• Be prepared for board meetings and have a willingness

to contribute to a thoughtful discussion• Either lead a committee or serve as a board liaison to a

committee or two• Support marketing efforts for Spring and Fall

Conferences, and other events• Actively contribute to the work of the organization

• Look for new members within your organization or with other professionals you work with

• Be a good mentor• Please be aware that your nomination and acceptance

brings with it your personal commitment to serve the chapter in an active and involved role as required by the needs of the chapter and the Executive Committee

This is typically where you receive the experience and recogni-tion you need to be nominated to move up in the organization and join the Executive Committee. We are also looking for the best can-didates to join the executive team and become the next Secretary of our chapter. Once you are nominated to be on the Executive Committee as the Secretary, you will then ascend automatically and move up to be the Treasurer, President-Elect and then President of our Chapter. Board Members and the Executive Committee are the lifeblood of our Chapter.

Please send your nominations for: 1. Board Positions2. Secretary of our Chapter

Please keep in mind you can nominate any member you want, including yourself. Please send your nominations to [email protected] and [email protected] by November 15, 2014.

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The Edge - Northern California Chapter’s Newsletter 1

Editor’s NoteRosanne Wassom, RNHFMA Northern California Board Member; Chairperson, Newsletter Team and Outreach Team

I was just beginning to get more involved with HFMA (and golf) about the time of the first Vincent Acquisto Golf Tournament. With few HFMA contacts and no golf skills to speak of, I was reluctant to par-ticipate, but was invited by a veteran member, Ramona Hernandez, and decided to risk looking like an idiot on the course. I have to admit that when I drove into the parking lot of the golf course and saw all of the cars, and then all of the people milling around the registration table and elsewhere, I got a knot in my stomach. I didn’t know these people and they obviously knew each other. I felt like an outsider and was way out of my comfort zone.

A long time ago a mentor of mine told me that one of the keys to success was to “Act as If”. So, in this case I got out of my car deter-mined to “Act as If” I belonged and that I was comfortable around all of these people who obviously knew a lot more than I did. As usual, my fear of not fitting in was unfounded and, once the light rain ended, enjoyed a beautiful day on the course. Once in awhile we had some good shots, but whether or not we played well wasn’t the point.

That evening we had dinner in the caves at Wente, an intimate venue, and I had my first exposure to how tightly knit this HFMA group was. I remember Vince’s wife, Sue, talking to us about hepato-biliary cancers and how rare they are, the need for research and the foundation she had started, the very foundation that this tournament was contributing to. Chuck Acquisto, Vince’s son, also deeply in-volved with HFMA, spoke about his father and how much he loved his HFMA family and how proud he would be of the day’s events. It was an emotional moment, rarely seen at business events. Matt Mor-gan was the host for the balance of the evening and had everyone in stitches as he raffled prizes (and there were some substantial prizes), announced the silent auction winners and the winners of the golf competition. There was a lot of laughter and ribbing of each other and I remember feeling that there was something special about this group; that beyond the day-to-day work of running their businesses, and even beyond HFMA, there were ties that bound them in both the jovial times, such as that day and evening, and in the painful times, as in the death of a loved one. They laughed together and they seemed to cry together.

I didn’t win any competitions or raffles, but I did want to know more about this group of people. Ramona asked me to co-chair a committee with her which I happily did. Together with many other talented and committed women in this organization we put together the first Women’s Luncheon in April of 2012. Many other chapters have followed suit and later this year Ramona will be going to HFMA National to work with a team there on a national women’s program.

I helped out with other teams, too, and today I am on the Board of Directors and chair the Newsletter and Outreach Teams. Today I am a part of the group I was introduced to in October of 2012. It didn’t happen all at once, but in baby steps. I joined committees and listened to what other volunteers had to say and offer; I watched what they were doing and before I knew it I, too, had a voice within the group. A valuable voice. I experienced first-hand what I had known in my head for years, that valuable relationships are the result of shared experiences and accomplishments.

I am sharing my experience with you because HFMA needs you. If you are watching and listening from afar, perhaps unsure of how you can be a part of this group of people, I encourage you to pick up the phone and call anyone listed on our website, and discuss which committee you would like to sit in on for a while; take us for a test drive. Reach out to one of us at a conference and ask us about how we got started. I may not know you personally, yet, but I do know that HFMA needs volunteers like you and me in order to continue with our mission.

Today Ramona is a close and valuable friend, along with many other valuable friends discovered through HFMA. In the spirit of paying-it-forward, I have reached out to others within HFMA and asked them to join committees, sit in on board meetings and become more involved. I have watched them continue to take incremental steps, their comfort level and confidence growing with each one. Today I am proud to call them my friend. As nerve racking as it can be to reach out, I encourage you all to challenge yourself beyond your comfort level and take that first step to be a bigger part of this organi-zation. It truly epitomizes the adage that it is in giving that we receive, that in losing ourselves we find ourselves.

The EdgeNovember 2014Second Issue - FY2014-15

Rosanne Wassom (third from left) with Ramona Hernandez (left) and Cindy Rudow (middle)

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The Edge - Northern California Chapter’s Newsletter 1

FY2015 Policy and Payment Changes for Inpatient Stays in Acute-Care Hospitals Gloryanne Bryant, RHIA, CCS, CDIP, CCDSAHIMA Approved ICD-10-CM/PCS TrainerCompliance [email protected]

OverviewOn August 1, 2014 the Centers for

Medicare & Medicaid Services (CMS) issued a final rule that will update fiscal year (FY) 2015 Medicare payment policies and rates under the Inpatient Prospective Payment System (IPPS) and the Long-Term Care Hos-pital Prospective Payment System (LTCH PPS); this overview is directed towards IPPS.

The final rule, which applies to ap-proximately 3,400 acute care hospitals, will generally be effective for discharges occur-ring on or after October 1, 2014.  Under the final rule, the operating payment rates for inpatient stays in general acute care hospi-tals paid under the IPPS that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaning-ful electronic health record (EHR) users will be increased by 1.4 percent. The market bas-ket update is 2.9 percent (up from the pro-jected 2.7 percent that was included in the proposed rule) for FY 2015, but is reduced as described in detail below.  Beginning with FY 2015, those hospitals that do not success-fully participate in the Hospital IQR Pro-gram and do not submit the required quality data will be subject to a one-fourth reduction of the market basket update (previously these hospitals received a 2 percentage point reduction). Also, the law requires that the update for any hospital that is not a mean-ingful EHR user will be reduced by one-quarter of the market basket update in FY

2015, one-half of the market basket update in FY 2016, and three-fourths of the market basket update in FY 2017 and later years.  Total IPPS payments are projected to de-crease by $756 million.  Medicare payments to LTCHs in FY 2015 are projected to increase by approximately 1.1 percent.  

BackgroundCMS pays acute care hospitals (with a

few exceptions specified in the law) for inpa-tient stays under the IPPS and long-term care hospitals under the LTCH PPS.  Under these two payment systems, CMS generally sets payment rates prospectively for inpatient stays based on the patient’s diagnosis and severity of illness.  A hospital receives a sin-gle payment for the case based on the pay-ment classification – MS-DRGs under the IPPS and MS-LTC-DRGs under the LTCH PPS – assigned at discharge.

Under Medicare law, CMS is required to update payment rates for IPPS hospitals annually, and to account for changes in the costs of goods and services used by these hospitals in treating Medicare patients, as well as for other factors.  This is known as the hospital “market basket.”  LTCHs are paid according to a separate market basket based on LTCH-specific goods and services.

Changes in Policies Affecting Acute-Care Hospitals

Changes to Payment Rates under IPPS.  The final rule will increase IPPS operating payment rates by 1.4 percent.  This reflects the projected hospital market basket update of 2.9 percent adjusted by -0.5 percentage point for multi-factor productivity and an additional adjustment of -0.2 percentage point in accordance with the Affordable Care Act; like last year, the rate is further decreased by 0.8 percent for a documenta-tion and coding recoupment adjustment required by the American Taxpayer Relief Act of 2012. CMS projects that the rate in-crease, together with reductions under the Hospital Readmissions Reduction Program, changes to Medicare disproportionate share hospital payments, the expiration of certain statutory provisions that provided special

temporary increases in payments to hospi-tals, and other changes to IPPS payment policies will decrease IPPS operating pay-ments by approximately 0.6 percent. CMS projects that total Medicare spending on inpatient hospital services will decrease by about $756 million in FY 2015.

Documentation and Coding Adjust-ment.  Section 631 of the American Taxpayer Relief Act of 2012 requires CMS to recover $11 billion by 2017 to fully recoup documen-tation and coding overpayments related to the transition to the MS-DRGs that began in FY 2008.  For FY 2015, CMS will continue the approach begun in FY 2014 by making another -0.8 percent adjustment to continue the recovery process.  A positive adjustment will be made to remove these one-time re-coupment adjustments once the recovery is complete.

Hospital-Acquired Condition Reduction Program.  Section 3008 of the ACA estab-lished the Hospital Acquired Condition (HAC) Reduction Program.  Beginning in FY 2015, the applicable hospitals in the top quartile for the rate of HACs (i.e., those with the poorest performance) will have their Medicare IPPS payments reduced by 1 per-cent.  

Other Affordable Care Act Quality-Related Provisions. The final rule updates the measures and financial incentives in the Hospital Value-Based Purchasing (VBP) and Readmissions Reduction programs. It also revises measures for the Hospital Inpatient Quality Reporting, Long-Term Care Hospital (LTCH) Quality Reporting and PPS-Exempt Cancer Hospital Quality Reporting Pro-grams.

For more information on these and other proposed quality-related provisions, please see the quality fact sheet at: http://www.cms.gov/Newsroom/Search-Results/index.html?filter=Fact%20Sheets.

Updated Labor Market Areas.   The law requires that Medicare adjust its inpatient hospital payment for area differences in the cost of labor—an adjustment

The EdgeNovember 2014Second Issue - FY2014-15

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The Edge - Northern California Chapter’s Newsletter 1

Putting on Your HIPAA HatMelissa Searle, CHC, CHPCVice President, Regulatory, Risk, Compliance Specialists, [email protected]

It’s not a secret that in many successful organizations, our hardworking staff wear multiple hats in order to effectively keep the wheels of the business turning. So the task of implementing and managing an effective HIPAA program is often just one of the many tasks lumped on top of the hardwork-ing staff members’ real job. Fortunately, there are many HIPAA resources available online to assist in creating and managing a success-ful HIPAA program, but unfortunately those resources don’t come with extra hours in the already-filled 24-hour day, so finding time to utilize or even track down these resources is almost impossible when individuals have their full-time job in addition to the HIPAA role to fulfill.

The time constraints to create and man-age an effective HIPAA Program often get even tighter when you are a business associ-ate since business associates are notorious for having entire ‘hat’ collections that they wear in order to manage their business suc-cessfully.

But somehow, all covered entities and business associates need to carve out some time in their busy schedules to implement and maintain an effective HIPAA program because HIPAA enforcement is here to stay, and it might even find its way into your organization.

When the Final Omnibus Rule became effective in 2013, it mandated that not only covered entities, but also business associates, comply with its provisions, one of which outlines the penalty structure that will be applied to both covered entities and business associates for HIPAA violations. Covered entities and business associates can face up

to a maximum of $50,000 for each HIPAA violation with a cap of $1,500,000 for viola-tions of an identical provision in a calendar year. This is no small change for any organi-zation, let alone a small business owner, and in fact the highest penalty on record for a HIPAA violation was issued in early 2014 when the Puerto Rican government hit insurer Triple-S Salud with a $6.8 million fine for a HIPAA Breach. The largest Civil Monetary Penalty issued by the Office of Civil Rights (OCR) at the U.S. Department of Health and Human Services was a whop-ping $4.3 million fine issued in 2011 to Cignet Health.

While these enormous fines aren’t levied daily, HHS/OCR has reported that since April 2003, they have received over 99,957 HIPAA complaints and have resolved 96% of these complaints through (1) investigation and enforcement (over 22,927 cases); (2) through investigation and finding no viola-tion (10,390 cases); and (3) through closure of cases that were not eligible for enforcement (63,424 cases).2 There have been no fines issued to business associates yet; however, the OCR is beginning business associate audits in the near future, which will open the door for investigations and possible penal-ties down the road for noncompliance.

So now is the time, more than ever, to dig that HIPAA hat out of the closet, dust it off and put it on.

Even when organizations undergo an investigation that results in no violation or non-eligibility for enforcement, the time and resources expended by the organization to comply with the investigation are costly. Therefore, a little strategizing on the front-end will save a lot of time and resources on the backend, regardless of the size of your organization.

Become AwareEnsure your organization is aware that

HIPAA is here, and it’s here to stay. Even the smallest, single-employee, covered enti-ties and business associates are susceptible to HIPAA audits and held accountable for HIPAA compliance. So while you may fulfill

the role of the CEO, CFO, HR Manager, Compliance Officer and Administrative Assistant of your company, it’s just as impor-tant to become aware of HIPAA or even become your organization’s Privacy and Security Officer (or else hire someone to fulfill that role). This first simple step of informing your workforce (whether that’s 1 person or 100,000 people) that both the organization and the responsible individual can be held accountable, endure penalties or possible jail time for a breach in the state of California should be enough to at least jumpstart interest in HIPAA.

Conduct an Impact AnalysisTake a look at your organizational in-

ventory to see what you already have in place in your organization. Do you have any HIPAA Policies and Procedures? If so, are they current? If you’re a small organiza-tion or business associate, some HIPAA poli-cies and procedures might not be applicable to your scope of work, so ensure that your policies and procedures are relevant and appropriate for your organization.

Identify the specific gaps between your organization’s current environment and where it needs to be in order to comply with HIPAA regulations. The security rule mandates that a risk analysis be conducted to determine the organization’s security vulnerabilities. This risk analysis must be conducted in both covered entities and busi-ness associates’ organizations. What safe-guards do you already have in place? What are you missing? Be sure to identify the ‘holes’ in your security program and ensure your risk analysis covers all aspects of the security rule.

Implementation PlanningBased on the findings in your impact

analysis, choose your highest risk areas and begin tackling those first. Create an imple-mentation schedule and stick to it. Decide with whom you will need to coordinate efforts to fix the gaps in your privacy and security program. Perhaps you need to contract an IT specialist to install a

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2 The Edge - Northern California Chapter’s Newsletter

secure server to store electronic Protected Health Informa-tion (ePHI); or if you work out of your home office, you might need someone to come in to ensure appropriate locks are on all office doors and file cabinet drawers where Protected Health Information (PHI) is stored. What about those individuals who transport paper medical records for one reason or another? Does your administrative assistant need to go out and purchase lock-boxes for medical record transport? It would be extremely unfortunate to break down while driving, open your trunk to access your spare tire, only to have the wind take those medical records that you thought would be secure in your trunk and wisp them across the freeway into oncoming traffic.

Additionally, and importantly, work within your budget. HIPAA is not meant to bankrupt organizations. Do what is reasonable for your organization. For example, if you can’t afford to secure every single network then only secure those networks through which PHI passes, then ensure PHI does not pass through any other unsecure networks. That means PHI transmission from your unse-cure personal email address is prohibited. Even though it might be more convenient, it’s a HIPAA violation, and if investigated, could be anything but convenient.

ImplementationExecute your implementation plan, and remember to

stick to your implementation calendar and start with your highest risk areas first.

Train your staffThe security rule mandates that all workforce mem-

bers of covered entities and business associate organiza-tions attend security training. Some important items to cover in your training include: give some background on HIPAA and why it’s important; define PHI and ePHI, and provide examples of what each might include; ensure your workforce knows what a HIPAA breach is and how/when to report a potential, suspected or actual breach; provide some tips for compliance, such as using Fax Cover Sheets with a confidentiality statement or reminding staff not to put a post-it note on their monitor with their username and password used to access PHI; cover the topic of social media and what is permissible versus prohibited; outline sanctions for noncompliance; and provide a resource for future questions or guidance.

Ongoing Compliance and MonitoringSchedule ongoing audits to assess whether or not your organization is achieving HIPAA compliance. Monitor new State and Federal HIPAA

regulations. If you implement a successful HIPAA program in the first place, or revise your current program to become effective, then ongoing compliance and monitoring will be much easier to maintain.

The HIPAA program is a living program, so once it’s implemented, it doesn’t mean that it’s time to put your HIPAA hat back in storage. Keep it out and make sure it fits snuggly; we wouldn’t want it blowing off with a simple gust of wind.

Use these HIPAA Resources to jumpstart your HIPAA ProgramGeneral information on HIPAA and Links to Trainings: http://www.hhs.gov/ocr/privacy/

Summary of the HIPAA Privacy Rule: http://www.hhs.gov/ocr/privacy/hipaa/understanding/summary/index.html

Security Rule Guidance Material: http://www.hhs.gov/ocr/privacy/hipaa/administrative/securityrule/securityruleguidance.html

HIPAA Guidance for Small Providers, Small Health Plans, and other Small Businesses: http://www.hhs.gov/ocr/privacy/hipaa/understanding/coveredentities/smallbusiness.html

HHS HIPAA Training Materials (including links to videos and slides):

http://www.hhs.gov/ocr/privacy/hipaa/understanding/training/index.html

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2 The Edge - Northern California Chapter’s Newsletter

known as the wage index.  CMS is revising the labor market areas used for the wage index based on the most recent core-based statistical area delineations issued by the Office of Management and Budget (OMB) based on 2010 Census data.

In order to mitigate potential negative payment impacts due to the adoption of the new OMB delineations, CMS is adopting a one-year transition during FY2015 that will be based on a 50/50 blend of the former wage index and the new wage index. The new wage index will take effect in full in FY 2016.  This will be for all hospitals that would have experienced a decrease in their wage index exclusively due to the imple-mentation of the new OMB delineations, and a three-year transition for the relatively few hospitals currently located in an urban county that would have become rural under the new OMB delineations.

Low-Volume Hospitals. Section 105 of the Protecting Access to Medicare Act of 2014 extended the temporary changes to the low-volume hospital payment adjustment for an additional year (through March 31, 2015).  In the FY 2015 IPPS/LTCH final rule, we are making conforming changes to the regulations.

Medicare Dependent Hospitals. Section 106 of the Protecting Access to Medicare Act of 2014 extended the Medicare Dependent Hospital program for an additional year (through March 31, 2015).  In the FY 2015 IPPS/LTCH final rule, CMS is making con-forming changes to the regulations.

Graduate Medical Education (GME)IPPS hospitals receive payment for their

indirect medical education costs and direct GME costs based on the number of interns and residents they train.  The statute caps the number of residents a hospital may count for Medicare payment purposes but allows for special adjustments in specific situations.  

Rural Teaching Hospitals. Under exist-ing regulations, a rural teaching hospital receives a permanent cap adjustment any time it starts training residents in a brand new program.  CMS adopted a policy that, effective October 1, 2014, a rural hospital that has been redesignated as urban (as a result of the implementation of new OMB delinea-tions), can receive a permanent cap adjust-ment for a new program, if it received a let-ter of accreditation for the new program, and/or started training residents in the new program, prior to being redesignated as urban.  In addition, CMS finalized changes to the participation of redesignated hospitals in rural training tracks.

Change in the Effective Date of the FTE Cap, Rolling Average, and IRB Ratio Cap for New Programs. New teaching hospitals currently have a 5-year window to establish new residency programs, before the full-time equivalent (FTE) resident caps take effect. FTE residents in new programs are also exempt from the application of the 3-year rolling average and the IME intern-and-resident-to-bed (IRB) ratio cap, based on the length of the particular new program.  We are simplifying and streamlining the timing of these policies by making the FTE resident caps, rolling average, and IRB ratio cap effec-tive simultaneously.  In response to public comment, CMS finalized a modified version of its proposal so that these policies will be effective beginning with the applicable hos-pital’s cost reporting period that coincides with or follows the start of the 6th program year of the first new program started.

Other PoliciesHospital Price Transparency. One of the

Affordable Care Act’s provision to improve the transparency of hospital charges requires that each hospital establish and make public a list of its standard charges for items and services. In this final rule, CMS reminds hospitals of their obligation to comply with the statutory requirements.  CMS guidelines for implementing the provision are that hos-pitals either make public a list of their stan-dard charges or their policies for allowing the public to view a list of those charges in response to an inquiry.  CMS continues to encourage hospitals to undertake efforts to engage in consumer friendly communication of their charges to help patients understand what their potential financial liability might be for services they obtain at the hospital, and to enable patients to compare charges for similar services across hospitals.  

Critical Access Hospitals (CAHs) Af-fected by OMB Redesignations. CAHs are small rural hospitals that are generally paid 101 percent of their reasonable costs.  In light of the recent change to the OMB metropoli-tan area delineations, some CAHs that were previously located in rural areas may now be located in urban areas effective October 1, 2014.  CMS finalized its proposal to provide affected CAHs with a two-year transition period that begins from the date the redesig-nation becomes effective.  During this transi-tion period, the affected CAHs must reclas-sify as rural in order to retain their CAH status.  

Requirements for Physician Certifica-tion of Critical Access Hospital (CAH) Inpa-tient Services.  Current law requires that for payment of inpatient CAH services under Part A, a physician must certify that the in-

dividual may reasonably be expected to be discharged or transferred to a hospital within 96 hours of admission to a CAH.  Regulations adopted in FY 2014 require that the certification must be completed prior to discharge.  In order to provide CAHs with greater flexibility in meeting the statutory physician certification requirement, CMS finalized its proposal to amend the regula-tions for FY 2015 and subsequent years to allow CAHs until no later than 1 day before the date on which the claim for payment for the inpatient CAH service is submitted, to complete all certification requirements ex-cept the admission order.  The requirements for the admission order are unchanged from current policy.  

Alternative Payment Approaches for Short Hospital Stays.  Some members of the hospital community have expressed support for the general concept of an alternative payment methodology under the Medicare program for short inpatient hospital stays.  In the proposed rule, CMS sought comment on how such an alternative payment meth-odology might be designed and will con-sider the comments received in future rule-making as we continue to work with stake-holders on this issue.  

Reimbursement Appeals Regulations.  CMS is implementing a technical correction to the Provider Reimbursement Review Board (PRRB) appeals regulations by elimi-nating the provider dissatisfaction require-ment as a condition for PRRB jurisdiction for untimely contractor determinations.  

Medicare Disproportionate Share Hospitals (DSH).  In accordance with the Affordable Care Act, beginning in FY 2014, hospitals receive 25 percent of the amount they previously would have received under the former statutory formula for Medicare DSH.  The remainder, equal to an estimate of 75 percent of what otherwise would have been paid as Medicare DSH, will be aggre-gated nationally and adjusted for decreases in the rate of uninsured individuals and a statutory factor of 0.2 percent and distrib-uted to hospitals based on their relative share of the total amount of  uncompensated care.  In the FY 2015 rule, CMS will distrib-ute $7.65 billion in uncompensated care payments, a decrease from the $8.56 billion estimate in the proposed rule. This decrease is due to changes in the Office of the Actu-ary’s estimate of payments that would oth-erwise be made for Medicare DSH in FY 2015 (due to lower projected hospital inpa-tient spending) and also the change in the percentage of individuals that are uninsured as estimated by the CBO.  Ad-ditionally, CMS is adopting a �

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The Edge - Northern California Chapter’s Newsletter 3

process to identify hospitals that have merged such that data from all hospitals involved in the merger may be taken into consideration for purposes of determining the remaining provider’s uncompen-sated care payment. In response to public comment, CMS is also providing hospitals with 30 days from display of the final rule to submit corrections to our list of mergers.

Working together within Revenue Cycle, Finance, Quality, HIM Coding and Analytics is going to be needed to be successful with IPPS and the future. The final rule is in the Federal Register and can be downloaded from the Federal Register at http://ofr.gov/inspection.aspx.  

Deadline set for October 1, 2015On July 31, HHS issued a rule finalizing

October 1, 2015 as the new compliance date for healthcare providers, health plans, and healthcare clearinghouses to transition to ICD-10. This deadline allows providers, in-surance companies, and others in the health-care industry time to ramp up their opera-tions to ensure their systems and business processes are ready to go on October 1, 2015.

The ICD-10 codes on a claim are used to classify diagnoses and procedures on claims submitted to Medicare and private insurance payers. By enabling more detailed patient history coding, ICD-10 can help to better coordinate a patient’s care across providers and over time. ICD-10 improves quality measurement and reporting, facilitates the detection and prevention of fraud, waste, and abuse, and leads to greater accuracy of reimbursement for medical services. The code set’s granularity will improve data capture and analytics of public health sur-veillance and reporting, national quality reporting, research and data analysis, and provide detailed data to enhance healthcare delivery. Healthcare providers and specialty groups in the United States provided exten-sive input into the development of ICD-10, which includes more detailed codes for the conditions they treat and reflects advances in medicine and medical technology.

"ICD-10 codes will provide better sup-port for patient care, and improve disease management, quality measurement, and analytics,” said Marilyn Tavenner, Adminis-trator of CMS. “For patients under the care of multiple providers, ICD-10 can help pro-mote care coordination.”

Using ICD-10, doctors can capture much more information, meaning they can better understand important details about the pa-tient’s health than with ICD-9-CM. Moreo-ver, the level of detail that is provided for by ICD-10 means researchers and public health officials can better track diseases and health outcomes. ICD-10 reflects improved diagno-sis of chronic illness and identifies underly-

ing causes, complications of disease, and conditions that contribute to the complexity of a disease. Additionally, ICD-10 captures the severity and stage of diseases such as chronic kidney disease, diabetes, and asthma.

The previous revision, ICD-9-CM, con-tains outdated, obsolete terms that are incon-sistent with current medical practice, new technology, and preventive services.

ICD-10 represents a significant change that impacts the entire healthcare commu-nity. As such, much of the industry has already invested resources toward the implementation of ICD-10. CMS has imple-mented a comprehensive testing approach, including end-to-end testing in 2015, to help ensure providers are ready. While many providers, including physicians, hospitals, and health plans, have completed the neces-sary system changes to transition to ICD-10, the time offered by Congress and this rule ensure all providers are ready.

For additional information about ICD-10, please visit the ICD-10 website.

ICD-10 Testing Opportunities for Medicare FFS Providers

On July 31, HHS issued a rule (CMS-0043-F) finalizing October 1, 2015 as the new compliance date for healthcare providers and health plans to transition to ICD-10. ICD-10 represents a significant code set change that impacts the entire healthcare community.

CMS is taking a comprehensive four-pronged approach to preparedness and test-ing for ICD-10 to ensure that CMS, as well as the Medicare Fee-For-Service (FFS) provider community, is ready:• CMS internal testing of its claims

processing systems• CMS Beta testing tools available for

download• Acknowledgement testing• End-to-end testing

For more information, see MLN Mat-ters® Special Edition Article #SE1409, “Medicare FFS ICD-10 Testing Approach.”

Acknowledgement TestingThis past March, CMS conducted a

successful ICD-10 acknowledgement testing week. Providers, suppliers, billing compa-nies, and clearinghouses are welcome to submit acknowledgement test claims any-time up to the October 1, 2015 implementa-tion date. In addition, special acknowledge-ment testing weeks in November, March, and June of 2015 will give submitters access to real-time help desk support and allows CMS to analyze testing data. Registration is not required for these virtual events. Contact your Medicare Administrative Contractor (MAC) for more information about acknowl-edgment testing.

End-to-End TestingCMS plans to offer providers and other

Medicare submitters the opportunity to participate in end-to-end testing with MACs and the Common Electronic Data Inter-change (CEDI) contractor in January, April, and July of 2015. As planned, approximately 2,550 volunteer submitters will have the op-portunity to participate over the course of three testing periods. The goals of this test-ing are to demonstrate that:• Providers and submitters are able to

successfully submit claims containing ICD-10 codes to the Medicare FFS claims systems

• CMS software changes made to support ICD-10 result in appropriately adjudicated claims

• Accurate Remittance Advices are produced

Additional details about end-to-end testing will be available soon.

Check the ICD-10 Medicare FFS Pro-vider Resources web page for the latest information and educational resources to implement and transition to ICD-10 medical coding.

Deadline for ICD-10 Allows Healthcare Industry Ample Time to Prepare for Change (Reprint from MLN Connects)

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The Edge - Northern California Chapter’s Newsletter 1

HPE Stewardship: Doing Your Part to Keep the Funds FlowingSherman “Sonny” GardnerPrincipal, Eligibility [email protected]

The Hospital Presumptive Eligibility Program (HPE) has been a blessing for patients and providers. As an Eligibility Vendor work-ing with our hospital partners, we have successfully enrolled an enormous amount of self-pay patients into the HPE program. Our patients and clients have enjoyed the benefits of this program ten-fold. Patients previously not eligible for assistance are now getting the medical treatment that they’ve held off seeking for years due to not being insured. The success stories are adding up.

And so are the financial deficits! What do you mean? While we are having a tremendous success in converting HPE eligible patients to full scope ongoing Medi-Cal beneficiaries for our clients, I know that there are some patients that are falling through the cracks and hospitals that are not proactively assisting those patients secure on-going Medi-Cal or other available government and non-government programs.

Felix Su, a Medi-Cal legislative analyst with California’s Legis-lative Analyst’s Office, related that while federal funding is available at 100% under the Federal Medical Assistance Percentage (FAMP) rates for those patients that are granted ongoing Medicaid/Medi-Cal, federal subsidies to California’s HPE program are only at 50%. What this simply means is that we are accruing a state based deficit within in our HPE/Medi-Cal program. So while we bask in the glow of HPE, we could eventually bankrupt this program.

Well, how do we help?

We should all become stewards for our patients and the HPE/Medi-Cal program by fostering proactive efforts to secure Medi-Cal for our eligible patients. Here’s how to help.

Develop a process to:• Diligently and thoroughly conduct financial assistance

screening of all self-pay and HPE patients • Assist and/or complete funding applications while

patients are in-house rather than leaving it up to the patient (Create an appointment or walk-in based financial counselor to assist patients with this process)

• Routinely submit completed funding applications and verifications to the funding agency (or, if you have an on-site Department of Human Services worker coordinate submissions)

• Develop a process to follow up with patients whom have applied for Medi-Cal or other funding programs and to remind them of important appointments, verification deadlines and to follow up with funding agencies

• Develop a process to help patients obtain required verification (this is where most patients fail)

• If you have an eligibility vendor ensure they understand the importance of stewardship. If you don’t have the internal resources to develop a proactive assistance program, seek out an eligibility vendor to assist you.

While HPE and Medi-Cal are important funding programs, don’t allow yourself or staff to become single focused. There are a host of other governmental and non-governmental programs avail-able to patients that will cover their hospital visits while elevating some of the pressure on HPE and the state coffers. Don’t forget to be a HPE Steward and keep the funding flowing.

The EdgeNovember 2014Second Issue - FY2014-15

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The Edge - Northern California Chapter’s Newsletter 1

The EdgeNovember 2014Second Issue - FY2014-15

How did you end up in Healthcare? Did you choose it or did it choose you?I began working as a file clerk in an orthopedic office when I was 17 years old as an after school job. Once I graduated from High School, I started working full time. I progressed to the front desk answering patient phone calls, scheduling appointments and procedures, and obtaining authorizations. I then took a position in a neuropsychology physician office as front office staff and started entering charges and billing. From there I worked in a podiatry office and finally landed a position in the billing office at Barton Memorial Hospital. I progressed from a billing assistant doing follow-up, to biller, to lead biller and finally the billing supervisor. I’m also an Epic HB credentialed trainer and Epic Certified in Resolute Hospital Billing Claims Administration.

Tell us about yourself:I love billing and follow-up work. I am recently married. I am getting ready to go back to school. When I’m not at work I love to cook, bowl, scrapbook, read, hike, swim, ride my bike and spend time with my two dogs.

There’s no right or wrong answer, but if you could be anywhere in the world right now, where would you be?I feel like I am right where I want to be in life at the moment, but if I could physically be anywhere I’d say on my honeymoon in Maui.

What’s the last book you read?“The Best of Me” by Nicholas Sparks

What would you do if you won the lottery?Depending on how much I won I would pay off my car, purchase a house, start a college fund for my future children and pay off my parent’s house.

What is your greatest achievement outside of work? As of today my greatest achievement outside of work is beginning a life with my best friend.

If you could be a superhero, who would you be and why?I would be the Flash because I feel like I could get so much done in one day.

What’s the best movie you’ve seen in the last three years?Pitch Perfect. I can watch that movie over and over.

The best advice I ever had wasYour employer is in control of your job, but you are in control of your career.

The best part of my job isEncouraging my employees to exceed goals and being able to help patients understand their insurance coverage so they aren’t confused.

My favorite food isChicken Parmesan

My first car wasSubaru Legacy

My favorite caris my Toyota Rav4

Favorite Quote“Happiness is a Choice”

Spotlight on a MemberKrystal RussellHospital Billing Supervisor, Barton Memorial HospitalYears in HFMA: Less than 1 yearYears in Healthcare: 11 years

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The Edge - Northern California Chapter’s Newsletter 1

The Vincent Acquisto Memorial Golf TournamentRosanne Wassom, RNHFMA Northern California Board Member; Chairperson, Newsletter Team and Outreach Team

So what happens when a beloved member of our HFMA Northern California chapter passes away suddenly from a disease, the name of which very few can pronounce even fewer have ever heard of? While a painful loss, it was no riddle for our chapter; we take action.

When Vincent Acquisto was diag-nosed with Cholangiocarcinoma (bile duct cancer) in early November of 2011, he made it his primary goal to make it through the holidays with his family.

As a senior partner at the Law Offices of Stephenson, Acquisto & Colman, a healthcare litigation law firm representing patients and the healthcare provider com-munity within the states of California, Nevada and Arizona, Vince was a very active member in HFMA for many years. He served on the board and as President of HFMA’s Northern California and built strong, meaningful relationships.

A lover of travel, golf and family, Vince received a clean bill of health during a rou-tine physical exam in June 2011. During this exam, Vince's lab work came back completely normal, and he showed to be in great health.  To celebrate, Vince and his wife Sue, took their entire family on an unforgettable Cape Cod family vacation in August of that year. Little did Vince or his family know that would be his last family vacation.

In mid-October 2011 (four months later) Vince developed a dull stomach ache, and when it didn't subside, Vince made a doc-tor's appointment to be seen in early-

November 2011. It was at this time that Vince was diagnosed with Cholangiocarcinoma (bile duct cancer), which had spread to all surrounding organs.  Cholangiocarcinoma is part of the Hepatobiliary cancers, cancers that include malignant or cancerous tumors originating in the cells of the liver, bile ducts, and gallbladder. These cancers are fast act-ing, silent, underfunded and understudied diseases, leaving Vince with no treatment options.  The doctors at the University of California San Francisco (UCSF) were able to keep him alive with tubes and drains long enough to make it through the holidays with his family, even the doctors could see how important that was to him, but Vince passed away on January 19, 2012 (2 months after diagnosis).

In October 2012, just 10 months after Vince’s passing, HFMA’s Northern Califor-nia Chapter took action and hosted the inaugural Vincent Acquisto Memorial Golf Tournament at Wente Vineyards and Golf in Livermore; our second was also at Wente in October or 2103. In partnership with The Bili Project Foundation we have raised roughly $10,000 each year from the Vincent Acquisto Memorial Golf Tournament for Hepatobiliary Cancer Research. The Bili Project Foundation was founded by Vince’s wife, Sue Acquisto, and his law partner, Joy Stephenson-Laws. Their mission is to reduce the incidence and improve the out-comes of  Hepatobiliary cancers, and to the promote research to identify early signs and symptoms as well as treatment options for this silent, fast acting group of cancers.

This year the event was held in Danville at the Blackhawk Country Club. Partici-pants arrived early for a hearty breakfast and a chance to work on the golf skills at the driving range or on the putting green.

There were several volunteers to help with registration and other logistics, and some of our sponsors provided good eats and fun along the way. Emdeon sponsored Fahren-heit Wood Fired Pizza which served up deli-cious dessert pizza on the first hole; on the fourth hole Arcadia Recovery Bu-reau provided jello shots for those

The EdgeNovember 2014Second Issue - FY2014-15

➠http://thebiliproject.org/

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2 The Edge - Northern California Chapter’s Newsletter

inclined and BBQ was served up on the 9th hole, with HFMA volunteers Steve Thompson and King Bechtel as Grill Masters.

Regardless of the time we staggered in off of the course, the cocktail hour at the Lakeside Clubhouse, provided us with beauti-ful views overlooking the lakeside golf course.  Attendees enjoyed their drinks and hors d’oeuvres on the patio or inside where the silent auction took place.  When doors to dinner opened, guests were ushered into the clubhouse ballroom where they enjoyed a wonderful Italian themed buffet, live auction and raffle, award ceremony, an update from one of the research physicians for The Bili Project Foundation, and a message from one of the Founda-tion’s co-founders, Sue Acquisto.

An unexpected but welcomed heart-felt address came from Debbie Lax, the wife of Mike Lax, a Bile Duct Cancer patient. Having shared similar paths, Mike and Debbie have become close with Sue and her team during their family’s journey through his treatment. In addition to manning the Bili Tee hole during the tournament, Debbie gave us a glimpse into how important the Bili Project Foundation has been to their family, and how grateful they are for organizations such as HFMA Northern California that provide research support. It was truly inspirational to have Mike there with his family, to hear first-hand the benefits of the research that HFMA is championing and to show his strength and deter-mination to fight this disease.

I would be remiss if I didn’t share with you the award win-ners for this year.

• Straightest Shot: Andrew Ray, Stanford Children’s Health• Marshmallow Drive: Donna Emrich, Community

Medical Centers Fresno (women) and Peter Tripp (men)• Closest to the Pin: Joy Stephenson-Laws, The Law Offices

of Stephenson, Acquisto & Colman• Longest Drive: Men’s Winner was Chuck Acquisto, The

Law Offies of Stephenson, Acquisto & Colman and Women’s Winner was Lisa Morphis, John Muir Health

• Putting contest: Rob Perez, Executive Health Resources• Winning Foursome: Jason Gambonini, Barney & Barney;

Matt Free; Vince Avila and Rodney Simmons, both from J&L Teamworks

If you are competitive, it is worth the price of admission to witness the auction. Bidders vied for top prizes such as Giants Lexus Dugout tickets, two nights lodging and a cooking class for two at Ramekins Culinary School Experience in Sonoma and golf for two at the Boulder Ridge course in San Jose. The raffle yielded prizes such as a large flat screen television and a game for four at Blackhawk (in the spirit of transparency, I have to say that I won that prize which was awesome because I don’t win things).

Over the past three years, HFMA has helped the Foundation raise a combined total of approximately $30,000 during the golf tournaments (approximately $10,000 each year).  The Bili Project Foundation is extremely grateful for the support that HFMA has shown.  One hundred percent of all money raised goes towards Hepatobiliary Cancer research. I would like to challenge all of you to join us next year for this fun and worthwhile event. It doesn’t matter if you can golf or not; find three other people that are about your skill level, create a foursome and come out and have some fun for a good cause. Let’s see if we can raise $15,000 in 2015 while serving others and making new friends.

In closing, I leave you with these words from our Golf Committee Chair and Bili Project Foundation President, Chuck Acquisto. "The amazing success of this event is a direct result of the army of volunteers, from the Golf Committee meeting for nine months of planning to the tournament crew working from sun up to long after sun down. These incredible people dedicate their time and hard work not only for HFMA and The Bili Project, but in memory of my Dad who just

wanted a great excuse to bring people together for a good time." ❖

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The Edge - Northern California Chapter’s Newsletter 1

Obligated GroupsWhen Breaking Up Is Right For Your NonprofitKyle Hemminger, Vice President ([email protected]) and Kevin Laidlaw, Vice President ([email protected]) Lancaster Pollard

Unlike the Neil Sadaka classic ‘50s do-wop ditty, breaking up could be just the thing for a hospital’s or senior living provider’s obligated group.

For nonprofits, forming an obligated group allows organiza-tions to combine multiple business lines or assets to create a single entity. In this way the subordinate units’ revenue, payor mix, cash and assets can be used in aggregate as collateral for obligations. The obligated group becomes jointly and severally liable for the organi-zation’s debt. In doing so, the newly-combined entity can be stronger financially than the sum of its individual components. An improved credit profile for an organization generally leads to lower borrowing costs and greater capacity for future borrowing.

A common legal agreement for an obligated group is a master trust indenture (MTI), which places collateral (revenues, assets, reserves, etc.) under the control of a master trustee for the benefit of lenders and bondholders. The obligated group can then issue multi-ple notes (called supplements) to debtors granting security on parity with other debtors. Collectively, the debtors are secured by all of the collateral held by the master trustee. 

When to Consider Splitting Up?There are times, however, when it may make sense strategically

for an obligated group to carve off assets or exclude assets. For example, an organization with several hospitals and a few senior living facilities (independent, assisted and/or skilled nursing) could combine its hospitals into one obligated group in order to isolate the senior living facilities’ risk profile from the hospital groups’ profile. Alternatively, a borrower may seek to isolate a legacy asset in a remote location that does not meet the future needs and geographic growth pattern of the larger organization. Carving this entity out of the obligated group may enable the organization greater financial flexibility while retaining control of the independent entity. 

Frequently, MTIs include specific carve-outs for nonrecourse financing. However, some nonrecourse lending options require a security interest in an asset’s revenue stream which cannot be a

parity obligation. Granting a security interest in the revenues would trigger the need for the supplemental note and increase the obli-gated group’s total indebtedness which defeats the purpose of the carve-out. Assuming the entity severed from the obligated group is cash flowing, numerous recourse and non-recourse funding options exist. 

Benefits of Breaking Up The healthcare landscape is continually changing, so organiza-

tions must be able to adapt to these changes or risk falling behind the competition. Breaking up an obligated group may unlock greater flexibility and financial capacity for the larger organization.

The perfect candidate to be carved out of an obligated group is a cash flowing, stand-alone property. This entity has a stream of revenues and property that could be used to secure financing, either recourse or non-recourse. The obligated group benefits from the carve-out in that its overall indebtedness decreases. Additionally, excess cash flow from the excluded entity can be directed to the obligated group increasing its liquidity and credit profile. 

The most common ways to divert cash flow from the assets excluded from the obligated group are management fees or operat-ing leases. With a management fee, the obligated group provides management oversight of the carved-out project and charges a fee which is typically a percentage of the revenue generated by the excluded asset. With an operating lease, the obligated group will carve off an asset as a standalone legal entity to own real estate. A typical example is an organization carving out and creating an oper-ating lease for a nursing facility. The obligated group then will oper-ate the facility and make a lease payment to the real estate company. The lease payment is generally equal to the debt service payment plus any impounds like insurance and possibly real estate taxes. Any cash flow above and beyond the lease payment is then captured by the obligated group. In general, the management fee is typically easier to establish and also yields an additional benefit of isolating the obligated group from litigation since it is not acting as the opera-tor of the facility. 

Funding OptionsWhen considering breaking up an obligated group, one should

also assess how the group has accessed debt in the past and financ-ing vehicles that will be considered in the future. There are multiple funding options to the parent that exist for healthcare providers depending on their lines of service and geographic locations that provide great benefits to borrowers, but these options have different rules and regulations which must be considered.  

Agency and GSE FinancingA summary of potential non-recourse funding

options is included below. It is noteworthy that agency (HUD/FHA and USDA) financing options

The EdgeNovember 2014Second Issue - FY2014-15

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The Edge - Northern California Chapter’s Newsletter 1

State Standards for Access to Care in Medicaid Managed CareTimothy S. Brady, Ph.D., FACHE, FHFMARegional Inspector General, US Department of Health and Human [email protected]

The OIG recently released an inspection titled: STATE STANDARDS FOR ACCESS TO CARE IN MEDICAID MANAGED CARE OEI-02-11-00320 and reported the following: 

Why We Did This StudyExamining access to care takes on

heightened importance as enrollment grows in Medicaid managed care pro-grams. Under the Patient Protection and Affordable Care Act, States can opt to expand Medicaid eligibility, and even States that have not expanded eligibility have seen increases in enrollment. Most States provide some of their Medicaid

services—if not all of them—through managed care. The Office of Inspector General received a congressional request to evaluate the adequacy of access to care for enrollees in Medicaid managed care. This report describes the standards that States establish for access to care in their Medicaid managed care programs and how States determine compliance with these standards. A companion report de-termines the extent to which providers offer appointments to enrollees and the timeliness of these appointments.

How We Did This StudyWe surveyed State Medicaid agency

officials in the 33 States with comprehen-sive, “full risk” Medicaid managed care and collected documentation from each State on its standards for access to care. We also conducted structured interviews with external quality review organizations and the Centers for Medicare & Medicaid Serv-ices (CMS).

What We FoundState standards for access to care vary

widely. For example, standards range from requiring 1 primary care provider for every 100 enrollees to 1 primary care pro-vider for every 2,500 enrollees. Addition-ally, standards are often not specific to

certain types of providers or to areas of the State. States have different strategies to assess compliance with access standards, but they do not commonly use what are called “direct tests,” such as making calls to providers. Further, most States did not identify any violations of their access standards over a 5-year period. The States that found the most violations were those that conducted direct tests of compliance. Among the States that identified viola-tions, most relied on corrective action plans to address the violations; six im-posed sanctions. Finally, our review found that CMS provides limited oversight of State access standards.

What We RecommendWe recommend that CMS (1)

strengthen its oversight of State standards and ensure that States develop standards for key providers, (2) strengthen its oversight of States’ methods to assess plan compliance and ensure that States conduct direct tests of access standards, (3) improve States’ efforts to identify and address violations of access standards, and (4) provide technical assistance and share effective practices. CMS concurred with all four of our recommendations.

The EdgeNovember 2014Second Issue - FY2014-15

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T H E E D G E

2 The Edge - Northern California Chapter’s Newsletter

feature non risk-based pricing. This means that all borrowers, re-gardless of their individual credit profile, access capital at compara-ble pricing levels. Additionally, all borrowers are subject to the same, published underwriting requirements. • HUD/FHA—The U.S Department of Housing and Urban

Development/Federal Housing Administration offers mortgage insurance programs for construction, substantial rehabilitation, expansion, acquisition and refinance of senior living faciliti-es (with limited independent living components) and hospitals. These mortgage insurance programs offer borrowers the oppor-tunity to issue debt at an AAA-equivalent rating with fixed inter-est rates. The term and amortization of the loans match, thereby eliminating refinance risk.  HUD financing requires the creation of a single asset mortgagor entity that will have ongoing limitations to distributions of surplus cash as well as regulatory restrictions, which will need to be considered when modifying the structure of an obligated group.

• USDA—The U.S. Department of Agriculture’s Business and Industry (B&I) and Community Facilities (CF) loan programs offer construction, rehabilitation and limited refinance fund-ing for senior living and hospitals in rural communities sub-ject to certain population thresholds. The programs offer long-term financing at very competitive rates and are fully-amortizing. The CF program is limited to public and non-profit entities and the B&I program gives preference to non-profit entities; therefore, the tax status of various components should be considered when pursuing USDA financing. 

• Fannie Mae and Freddie Mac—These government-sponsored enterprise (GSE) programs provide funding for the acquisition and refinance of senior living facilities with limited skilled nursing beds. Both feature risk-based pricing. Unlike HUD/FHA, the term and amortization period are not coterminous, so a refinance event will occur. However, both Fannie Mae and Freddie Mac allow owners to extract equity that could be used to further the organization’s mis-sion elsewhere. It’s important to note that neither program offers funding for hospitals and both have limited appetite for skilled nursing facilities.

Bank Loans, Private Placements, Unenhanced Bonds and Bank-Qualified Bonds

Unlike agency financing, bondholder and/or lender acceptance is entirely based upon the credit profile of the borrowing entity.

Additionally, these funding options will be recourse to the borrowing entity. The financial health of an organization is the most important factor in determining the cost of capital, whether for a stand-alone asset or an obligated group. Bondholders and/or lenders are typically provided collateral in the form of a first mortgage and lien on property assets and a pledge of the borrower’s revenues. The stronger a borrower’s credit profile is, the lower the interest rate on the financing. Considering banks usually have less regulatory limitations in regards to asset types and ongoing covenants, the structure of a financing can be negotiated and possibly provide more flexibility.

Putting it All TogetherFor an obligated group subject to a MTI, the rules and

requirements governing the withdrawal of an obligated group member are established in the covenants of the obligated group. In the case of a carve-out, the member being withdrawn secures alternative financing in order to generate the proceeds necessary to retire its outstanding obligations. Then, the MTI generally requires calculation of various financial covenants like debt service coverage and debt-to-capitalization. Upon the withdrawal of a member from the obligated group, all liability of the withdrawn entity to the obligated group ceases to exist. Likewise, the obligated group is no longer beholden to the endeavors of the withdrawn member. 

Careful review of the MTI is required. In fact, some forms of financing, like non-recourse agency financing, may not require the MTI to be dismantled. Bond counsel is particularly helpful in successfully navigating the intricacies of the MTI and should be consulted early and often when contemplating a withdrawal of a member.

Given the pace of change in healthcare delivery and other state-specific challenges, the decision to break up an obligated group should not be made hastily. Leadership needs to think strategically about the organization’s mission, now and in the future, and how best to deliver upon its mission. In certain circumstances, breaking up an obligated group may yield beneficial outcomes. Thankfully, for organizations facing this difficult decision, there are financing alternatives and guidelines to follow to help determine if the outcomes will be beneficial.

Better Science. Better People. Better Results. Better World.

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The Edge - Northern California Chapter’s Newsletter 1

Patient Portals - Helping your Patients Keep Secure Records They AccessJim Sheldon-DeanPrincipal, Director of Compliance ServicesLewis Creek Systems, [email protected]

So you’ve got your EHR, and you’ve been good about meeting your Meaningful Use targets, and that means you’re starting to see some use of your Patient Portal, thank goodness. Are your percentages where you want them yet? A great idea, if your office can spare the time, is to ask your patients to access the portal before they leave the office, while you know who they are and have some influence over them. But what if you do get people to use your portal? Have you done what is necessary to provide the proper security precautions and protect your patients’ privacy? Your Patient Portal provides powerful access to detailed information – are they ready to handle it?

Just to be clear, it is typical for the usual privacy and security precautions to fail when a new technology is introduced. When something new comes along, people are ready to jump in and take advantage of it, but they may not have considered all the risks, whether they’re a patient or a healthcare provider. Rules that may be well ingrained in one circumstance can be forgotten, and there may be risks that the person has never even encountered before. Understanding of risks is often communicated through stories, and if there is no experience, there are no stories.

Even if all the proper technical precautions are taken, and let’s presume in today’s increasingly hostile environment

that they have been (or else your chances of an expensive breach are skyrocketing), people are likely to be a point of failure. But when you’ve done your part, put in your policies, and provided your training, events may still be out of your hands. It’s important to make sure when new technologies are adopted, such as introducing the use of a patient portal, that a risk analysis properly considers the issues, and updated policies, procedures, and training follow.

As to your Patient Portal, have you fully considered all the information coming in and going out, and its security? Patients may be submitting various kinds of information through the portal. Are you prepared to process all of that and make it part of the record where appropriate? And what about the information going out? Once it’s out of your hands, it’s not your problem, right? Well, that’s where it can get tricky. You need to have thought through the entire information handling process and understand where the responsibilities lie.

What happens if a patient downloads a lot of sensitive information onto their unencrypted smart phone and they lose it? What happens if a patient uses a public terminal to download their health information and the data remains accessible to the next user, due to settings you have no control over? What happens is sensitive information is prominently displayed and easily seen by others? Who is responsible in these scenarios? It’s easy to say that the patient is obviously responsible in these cases, but is that the complete answer?

Not entirely. You have put in a great deal of effort to provide security and privacy for your patients, and you don’t want it all to go to waste. You need to warn your patients that the information they download may be sensitive and they may not want to let it be exposed to others. And not just in some lengthy legal document that ends with an “I Agree” button – you should have reminders for your patients whenever they get close to particularly sensitive

information about drug and alcohol abuse or reproductive health, if your systems will support it (and if they don’t, ask for it in the next version).

Tell them, in clear bullets, not long-winded paragraphs, that:

• The information may be very sensitive

• They are responsible for the security of the information they keep

• They should be aware of anyone else who may be viewing their screen

• If they keep any information they should secure it (and how to get more information)

• If they use a public terminal they should clear their information (and how to get more information)

Do the HIPAA Regulations require you to do this? Not specifically, but you are required to do an accurate and thorough enterprise-wide risk analysis and manage the risks you find, and a thorough risk analysis follows the data out to the edges of the enterprise, which includes contact with your patients. Where you see opportunities to support their privacy, do so. Explain the issues and help them understand the risks, known and unknown. And do what you can to help prevent some of the issues by forcing data to be cleared after a session on a public terminal, and reminding patients to keep only what they need, and secure what they do keep.

You don’t want one of your patients to complain if their information is compromised, even if it’s because of their own action, and not your fault. Help your patients understand the scope and sensitivity of their information, and the importance of treating their health information respectfully, and you will have done your part.

The EdgeNovember 2014Second Issue - FY2014-15