Becker's Hospital Review

29 CFO / FINANCE High-Volume, Low- Cost Services Reflect Most Unnecessary Medical Spending By Morgan Haefner H ealthcare services costing $538 or less were administered much more frequently than ser- vices exceeding that cost, according to a study published in Health Affairs. For the study, researchers — led by John Mafi, MD, an assistant professor of medicine at the Univer- sity of California, Los Angeles, and a natural sci- entist in health policy at the RAND Corp. — an- alyzed data for 44 low-value health services in 2014. Study authors used data from the Virginia All Payer Claims Database, which comprised ad- ministrative claims related to 5.5 million state res- idents insured under fee-for-service plans in 2014. Here are four findings from the study. 1. e healthcare services examined in the study were administered to Virginia residents 5.4 million times. Of those instances, 1.7 million were low-value ser- vices, or services providing no net health benefit in certain clinical situations. Among these unnecessary, low-value services, 93 percent were low cost and 7 per- cent were high cost. 2. In total, $586 million was spent unnecessarily on low-value services in 2014, according to the research- ers. is accounted for approximately 2.1 percent of Virginia's healthcare costs. 3. For Virginia in 2014, costs associated with the low- cost, low-value services represented 65 percent of costs, or $381 million. is is compared to high-cost and low-value services, which reflected 35 percent of expenses, or $205 million. 4. In addition, six of the 10 most expensive low-value services were low cost. "For example, low-cost pre- operative lab testing for low-risk patients undergoing low-risk surgery accounted for nearly half of unneces- sary spending," the authors noted. "Instead of pursuing a politically charged strategy to reduce the use of high-profile and higher-cost low-val- ue services, an alternative approach that initially tar- gets the reduction of high-volume and less costly items might be a more strategic way to catalyze the move- ment to tackle the problem of low-value care," the re- searchers concluded. "ese findings also suggest that in the aggregate, minor actions by all clinicians can have a sizable impact on reducing unnecessary health- care spending." n Higher Coding Productivity Linked to 25.4% Decrease in Accuracy By Morgan Haefner C entral Learning, a web-based coding assessment and educa- tion app in Center Valley, Pa., found average inpatient coder accuracy is 61 percent. Central Learning's finding stems from its second annual national ICD- 10 coding accuracy and productivity contest held in August. More than 550 medical coders registered to code 1,636 cases at the event. Here are three key findings from the contest. 1. The average outpatient coder accuracy was 41 percent. When broke down into departments, average coder accuracy measured 36 percent in the emergency department and 45 percent in ambulatory surgery centers. 2. Average coding accuracy for diagnostic-related group codes was 72 percent. This represented a net financial decrease of $753.91 per case. 3. In terms of average coding productivity, coders completed 2.5 in- patient cases per hour and 4.8 outpatient cases per hour. However, higher productivity was linked to a 25.4 percent decrease in coding accuracy. Based on its findings, Central Learning recommended health informa- tion management directors and coding managers "continue assess- ing coder knowledge in ICD-10 and CPT coding," as well as "provide targeted ICD-10 education and training to address knowledge gaps," among other recommendations. n Moody's: Proposed Cuts to Medicare 340B Payments Would Hurt Nonprofit Hospital Margins By Alia Paavola C MS' proposed changes to 340B Drug Pricing Program payments would harm nonprofit hospital margins, according to Moody's Investors Service. In July, CMS released its 2018 Medicare Outpatient Prospective Pay- ment System proposed rule. CMS proposed paying hospitals 22.5 percent less than the average sales price for drugs purchased through the 340B program. That's compared to the current payment rate of av- erage sales price plus 6 percent. Moody's says this proposed payment cut — almost 30 percent in the aggregate — would "represent another headwind for hospitals already facing pressure." "Hospitals and health systems of varying size and across the rating spectrum have noted anecdotally that they have benefited from cost savings from this discount drug program," said Diana Lee, Moody's vice president. "In some instances, the savings and income gained from this program can be meaningful relative to total operating cash flow. While about half of hospitals in the nation are 340B providers, those that have limited financial flexibility would be most exposed to possible changes to the 340B program." n

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