Becker's Hospital Review

60 Financial Management H ospitals that are forced to close their doors often have similar char- acteristics, according to the Medicare Payment Advisory Commis- sion's annual report to Congress. MedPAC outlined four common traits of poorly performing hospitals, many of which consequently have weak financial metrics. 1. low occupancy rate. Hospitals that closed in 2012 had an average oc- cupancy rate of 27 percent in 2011. Compare that to their nearby competing hospitals, which had an average occupancy rate of 57 percent. If a hospital's occupancy rate for staffed beds falls below 50 percent, MedPAC analysts said it usually leads to poor financial performance. 2. High readmissions. MedPAC found hospitals that closed or were on the brink of closure had risk-adjusted, hospitalwide readmission rates in the worst 10 percent. 3. Poor patient satisfaction scores. Poorly performing hospitals, ac- cording to MedPAC, had unfavorable HCAHPS scores, which measure pa- tient satisfaction. For example, high numbers of patients rate the hospital a "6" or lower on the 10-point scale. In addition, few patients would recom- mend the hospital to other family members and friends. 4. Urban/rural specifics. MedPAC identified 112 hospitals with a com- bination of low occupancy, high readmission rates and low patient satis- faction scores. The group broke down the poor-performing hospitals by population area. • Urban poor-performing hospitals. These hospitals had an average of 138 beds, posted an average daily census of 50 patients, are predominantly for-profit and are often situated less than five miles from another hos- pital. MedPAC said Chicago, Los Angeles and Miami all have multiple poor-performing hospitals. • Rural poor-performing hospitals. These hospitals have an average of 78 beds, posted an average daily census of 23 patients and are often at least 25 miles away from the next-closest hospital. Alabama, Arkansas, Louisiana, Mississippi, Oklahoma, Tennessee and Texas are among the states with the most low-performing rural hospitals, according to MedPAC. n M edicare is overpaying hospitals mil- lions of dollars every year due to incor- rectly coded claims for patient clinic visits, according to a report from the HHS Office of Inspector General. Hospitals receive evaluation and management payments from Medicare for three types of ser- vices: clinic visits, emergency department visits and critical care services. Physicians provide the E/M services at a physician office or some other type of outpatient/ambulatory facility. In addi- tion, payment to providers varies on whether the patient is considered "new" or "established," based on whether the patient has a medical record at the hospital. The OIG sampled Medicare payments from 2010 and 2011 for 110 random line items from an un- disclosed number of hospitals. The agency found only two of the 110 sample claims were correctly billed. Most of the errors stemmed from hospi- tals incorrectly labeling the patient as "new" when they should've used "established," as well as er- roneously using codes that did not describe the levels of services provided. Based on the sample audits, the OIG estimated more than $7.5 million in Medicare funds were incorrectly paid to hospitals in 2010 and 2011 for E/M services. Officials recommended CMS beef up compliance controls and guidance for the bill- ing of clinic visits. CMS said it has already made some of the sug- gested changes. For example, effective this past January, CMS replaced the 10 HCPCS codes for E/M services with a single HCPCS code that de- scribes all outpatient clinic visits. n 4 Characteristics of Poorly Performing Hospitals By Bob Herman OIG: Incorrect Clinic Claims Rampant at Hospitals By Bob Herman SAvE THE DATE! Becker's Hospital Review CEO Strategy Roundtable November 5, 2014 Ritz Carlton Hotel, Chicago 40 Hospital & Health System CEOs Speaking Co-chaired by Scott Becker, Publisher, Becker's Hospital Review, and Chuck Lauer, Former Publisher, Modern Healthcare To learn more visit www.BeckersHospitalReview.com To register, visit www.regonline.com/ceoroundtable2014

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