Becker's Hospital Review

23 CFO / FINANCE Henry Ford Director Says Payments Aren't Truly Bundled Under BPCI Initiative By Ayla Ellison T hree of Detroit-based Henry Ford Health System's hospitals partici- pated in the first phase of the Bun- dled Payments for Care Improvement initiative in 2013. However, all three hos- pitals have dropped out of the program, according to Crain's Detroit Business. The BPCI initiative is comprised of four broadly defined models of care, which link payments for certain services Medi- care beneficiaries receive during an ep- isode of care. Under the initiative, the episode of care includes services the patient receives during a 30- or 60-day period that are anchored to a set diag- nosis-related group. Hospitals that spend less than the target price for the episode of care keep the savings achieved. A hospital is required to repay Medicare if the costs exceed the target price. Payments are recon- ciled retrospectively in the first three BPCI models and determined prospec- tively in the fourth model. Henry Ford rolled out the bundled pay- ment program for lower extremity joint replacement in 2013 at three hospitals: Henry Ford West Bloomfield (Mich.) Hospital, Henry Ford Wyandotte (Mich.) Hospital and Henry Ford Macomb Hos- pital in Clinton Township, Mich. David Nerenz, PhD, director of Hen- ry Ford's Center for Health Policy and Health Services Research, told Crain's the program was not successful be- cause one-third of total services and dol- lars under the program were controlled outside of the system. "[Hospitals] don't have good controls on people for patterns of care," said Dr. Nerenz. "There is no way to force them where to go. It is difficult to succeed in the program." Dr. Nerenz told Crain's the BPCI initia- tive is "more a shared savings program," than a bundled payment initiative. n Executives, Physicians at Dallas Hospital Indicted in Massive Kickback Scheme By Ayla Ellison P hysicians, founders, executives and investors of physician-owned Forest Park Medical Center in Dallas were charged in a federal indictment for their alleged involvement in a bribe and kickback scheme, according to the Department of Justice. e scheme, which began in 2009 and ran through 2013, involved paying surgeons, lawyers and others for referring patients to FPMC, which was an out-of-network facility with payers. "FPMC's strategy was to maximize profit for physician investors by refusing to join the networks of insurance plans for a period of time aer its formation, allowing its owners and managers to enrich themselves through out-of-network billing and reimbursement," according to the DOJ. According to the indictment, FPMC's referral coordinator owned a shell entity called Unique Healthcare that was used to funnel kickback payments to surgeons in exchange for referrals to FPMC. Most of the referred patients had insurance plans that provided high reimbursement for out-of-network care. Another FPMC employee sold Medicare and Medicaid referrals to a non-FPMC facility. ere were a total of 21 defendants charged in the scheme, including the hospital's founders and executives. ose involved paid and/or received about $40 million in bribes and kickbacks for referring patients. e fraud resulted in more than $500 million in patient charges and FPMC collecting more than $200 million. Each of the defendants is charged with one count of conspiracy to pay and receive healthcare bribes and kickbacks. If convicted, they each face up to five years in federal prison and a $250,000 fine. More than half of the defendants face various other charges, including conspiracy to commit money laundering, violations of the federal Travel Act, and offering or paying and soliciting or receiving illegal remuneration, according to the DOJ. n CHI Records $483M Operating Loss as Labor Costs Grow, Patient Volume Declines By Ayla Ellison C atholic Health Initiatives, a nonprofit 103-hospital system based in Englewood, Colo., recorded an operating loss of $483.3 million in fiscal year 2016, compared to an operating surplus of $23.9 million in the year prior. CHI reported revenue of $15.9 billion in FY 2016, up 7.4 percent from $14.8 billion in FY 2015. However, rising expenses offset the system's revenue gains. CHI said expenses in- creased 10.2 percent year-over-year to $16.1 billion in FY 2016. "Lower patient volumes, higher labor costs, increased pharmacy prices and reduced reimbursement in Medicare and Medicaid all contributed to CHI's financial perfor- mance in the 2016 fiscal year," the system said in a written statement. CHI ended FY 2016 with a net loss of $703.2 million, compared to a net gain of $113.6 million in FY 2015. CHI officials expect financial performance to improve in FY 2017. "CHI is focused on several key areas for increased efficiency and expense reduction — including labor, sup- ply chain, administrative overhead, revenue cycle and pharmacy services," the system said. "We are confident these efforts will yield substantial improvement in overall op- erating and financial performance as we progress through the current fiscal year." n

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