At the Margins

Our latest insight into health care margin improvement efforts

3 trends we're following as our 2017 Revenue Cycle Survey kicks off

Eric Fontana March 20, 2017

Since 2006, Advisory Board has compiled and published data on revenue cycle performance from hospitals across the country. Our revenue cycle benchmarking data collection for 2017 is now live.

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What Medicaid reform would mean for you: Answers to 4 key questions

by Eric Fontana and Trevor Goldsmith March 9, 2017

Medicaid reform occupies a critical place in the continuing debate over the repeal and replacement of the Affordable Care Act (ACA). GOP lawmakers must decide the fate of the roughly 11 million individuals who have gained health coverage through the Medicaid expansion, and they're also hoping to use momentum behind ACA repeal to drive deeper, permanent reforms to how the federal government funds the Medicaid program.

The most recent Republican bill would use per capita spending caps as a mechanism to limit federal spending, but the final details are far from settled. With more than 70 million Americans receiving coverage through Medicaid, hospital finance leaders are understandably concerned about how funding reform would affect their organizations.

Here are answers to several key questions about Medicaid funding reform.

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Your top 12 questions on CMS's first big move toward site-neutral payments—answered

Kenna Hawes February 23, 2017

On January 1, 2017, Medicare started paying a subset of off-campus hospital outpatient departments (HOPDs) at a new rate equal to 50% of the Hospital Outpatient Prospective Payment System (HOPPS) rate.

Although the vast majority of HOPDs have been excepted from this new payment provision, this change is CMS's first significant move toward "site-neutral payments," which reduce or eliminate the existing payment differentials for the same services based on the site of care.

Since CMS announced its plans in November 2016 to institute new payment rates for some HOPDs, the Financial Leadership Council has received many questions from hospitals wondering how they will be impacted by this change. Below we have compiled your most frequently asked questions, and our answers to them.

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3 ways to make 2017 the year of financial-clinical integration

John Johnston, CPA, MHA February 9, 2017

While there is a big question mark around the future of health care reform, hospitals can be sure of one thing: We must prepare to live with further cuts to payment.

In this environment, hospitals must be prepared to undertake more radical efforts to control costs, and many health care finance professionals acknowledge there are major dollars tangled up in clinical care from inappropriate admissions, inefficiencies, and duplicative services. 

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With so much uncertainty, how do you build your hospital's budget?

John Johnston, CPA, MHA January 17, 2017

Many hospital CFOs have been in the planning mode going into the new year, putting the finishing touches on their budgets. And some are hoping 2017 will be different from recent years. Despite average margins being up overall, some hospitals have found it harder to hit their annual budgets.

For example, one midwestern health system recently ended its first quarter with a $10 million negative variance to budget. The system has enough cash flow to maintain overall profitability for now, but certainly cannot withstand that same deficit over multiple quarters. This reflects a recent and precarious trend we are seeing: hospitals that are profitable yet are missing budget targets.

One of my colleagues, Sean Angert, recently shared with me his perspective on this trend, which he has gained during his years working with hospitals on efforts to balance revenues with expenses. Angert's insights speak to the concerns of today's health care CFO regarding margin sustainability and planning for 2017.

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What finance leaders need to know about the Episode Payment Models final rule

Megan Tooley January 11, 2017

On December 20, 2016, CMS released the Advancing Care Coordination through Episode Payment Models final rule, establishing mandatory bundles for coronary artery bypass graft (CABG) and acute myocardial infarction (AMI) in 98 metropolitan service areas, a cardiac rehab incentive payment model, and expanding the Comprehensive Care for Joint Replacement Model (CJR) to include surgical hip/femur fracture treatment (SHFFT).

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Overall Hospital Quality Star Ratings: Answers to your frequently asked questions

by Jordan Kreke December 16, 2016

The release earlier this year of Overall Hospital Quality Star Ratings for 3,662 providers sparked numerous questions from hospitals across the country: Which metrics affect overall star ratings? How are overall star ratings related to other CMS initiatives? Do overall star ratings impact reimbursement?

While detailed information is available online from CMS itself, we thought we would answer some common questions here.

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Experiencing MS-DRG volatility post ICD-10? You're probably not alone.

by Jordan Kreke December 7, 2016

While the ICD-10 transition is in the rearview mirror for most organizations, several of our members have reached out to us asking if we have heard instances of year-over-year volatility in certain MS-DRG volumes—and whether any fluctuations in certain DRG volumes could be related to post ICD-10 transition issues.

In response, we sifted through the recent CMS final inpatient regulations, along with some recently available claims data to try and answer the question. While our analysis did reveal some instances of MS-DRG volatility, the picture is not fully conclusive without a full set of FY 2016 claims detail. If your organization suspects any seemingly inexplicable shifts in volume that may be related to coding changes under ICD-10, we would love to hear about where you are seeing such impacts.

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