At the Margins

Our latest insight into health care margin improvement efforts

How to win the upper hand in your next contract negotiation

Braden Decker July 7, 2015

Rapidly changing reimbursement terms make it extremely difficult to know whether a new—or proposed—payer contract is good, bad, or ugly. Hospital executives often tell us they worry managed care teams don’t have easy access to the right data to negotiate on equal footing with payers.

Even with the right data, evaluating the financial impact of new contracts is a complex exercise given the multiple variables that may come into play: changing from "percent of charge" to "fee schedule," incorporating a complex (and often proprietary) grouper, or accounting for shifting patient populations and chargemaster changes.

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The good and bad news with severity tier (CC/MCC) changes in ICD-10

by Natalie McGarry and Eric Fontana June 26, 2015

This is part one of a blog post series analyzing a large, proprietary dual-coded claims dataset for potential changes in reimbursement under ICD-10. Make sure you're subscribed to our blog to get the next post where we examine which secondary diagnosis codes are most commonly associated with reduced payments.

For the past year, providers and industry experts have been closely watching Congress for signs that the ICD-10 transition will be delayed. But with no congressional action, and not one, but two successful end-to-end ICD-10 tests, it appears that the October 1 conversion will hold.

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Why price transparency is failing your patients

Bethany Black June 23, 2015

For many, the new era of price transparency remains maddeningly opaque.

When patients search for the cost of an upcoming procedure, they typically find the average price for the service. Unfortunately, this information fails to reflect the actual patient obligation. This type of inaccurate estimate can decrease volumes and patient satisfaction.

So what do hospitals and health systems need to do to attract increasingly price-sensitive patients? I sat down with the Advisory Board's patient access experts, Cassie Wolfe and Chris Samples, to hear their thoughts on shifting to a truly patient-centric perception of price transparency.

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MedPAC recommendation: Withdraw the two-midnight rule

Eric Fontana June 16, 2015

MedPAC just released its June 2015 Report to Congress. As usual, it's loaded with details and we're currently working our way through them. However, one thing caught my eye almost immediately: MedPAC recommended that CMS "withdraw" the two-midnight rule.

Along with this recommendation, MedPAC suggested that CMS should direct RACs to focus on hospitals with high rates of one-day stays, and even evaluate establishing a penalty for hospitals with "excess" rates of short inpatient stays.

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Why your supply cost savings aren't enough

by Natalie McGarry May 1, 2015

Traditionally, providers have contained supply costs by promising suppliers larger orders in exchange for lower unit prices.

Not only is this price-for-volume strategy insufficient under current margin pressures, it comes with significant downsides.

To achieve higher volume orders, physicians are required to limit their purchase options, which can damage physician engagement. In addition, the extreme focus on volume often comes at the expense of considering the long-term costs associated with a product.

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Tackling variation one DRG at a time? Two reasons DRG teams fail.

John Johnston April 28, 2015

Reducing variation in care delivery can be a significant cost savings opportunity in most hospitals, regardless of the payment model. That means it should be on the top of the CFO's priority list and for many of our members, it is.

One of the latest trends we're seeing is the deployment of "DRG teams"—teams that work with providers to effect change in care processes for individual Diagnosis Related Groups (DRGs).

While everyone's approach to assembling and deploying a DRG team is a little different, we are finding one common aspect—none are really making an impact on cost reduction.

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Why price transparency isn't as scary as you think

Patrick Kelley April 23, 2015

It's no secret that price is an increasingly important factor in patients' health care decisions.

But you might be surprised to learn that some progressive organizations are using this change to their advantage.

A recent Financial Leadership Council survey shows that 55% of insured patients report paying more attention to their health care costs and 34% of patients believe keeping out-of-pocket insurance costs down is more important than retaining their doctors.

With one-third of patients willing to consider other options to reduce health care costs, organizations around the country are racing to improve their patient access processes.

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Shades of transparency: Pick the right approach for your price point

by Natalie McGarry April 10, 2015

For decades, the prices negotiated between commercial payers and providers have been closely guarded.

But as the health care market evolves and consumers more commonly make health decisions based on price, a host of factors—including state regulations, technology, and providers and payers sharing their own prices—have increased the supply of price information.

Competing on price is becoming a requirement for consumer business. Our 2014 Primary Care Consumer Choice Survey revealed that if a patient doesn't know the price of a primary care visit, 92% of them would rather go to a different clinic for lab tests, X-rays, or pharmacy.

Clearly, price uncertainty is almost certain to drive consumers away. To compete in the health care retail revolution, providers will have to offer pricing information to patients.

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