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Reasons Hospitals Acquire Medical Practices

The Charlotte Observer did a great report on the shift to hospital owned medical practices. For those not familiar with the shift, here’s the numbers the article offers:

Last year, 47 percent of U.S. physicians were employed by hospitals – roughly twice the percentage in 2002, according to surveys by the Medical Group Management Association.

One health care recruiting company predicts that hospitals could employ as many as 75 percent of U.S. doctors within two years.

I still think that some of this shift is cyclical, and independent thinking doctors will eventually leave their hospital overlords and be back on their own again. However, considering the financial side of the equation, many doctors might not be able to go back to their own practice even if they want to do so.

Here’s an example from the article that explains one of the reasons that hospitals are acquiring medical practices.

Gary Ziomek can vouch for that. The Waxhaw resident began getting physical therapy in 2011, after undergoing an unsuccessful spinal fusion surgery. He went to a therapist at Carolinas Rehabilitation on the campus of Carolinas Medical Center-Pineville hospital.

Early this year, his bill was $148 for 30 minutes of massage. But starting in May, the charge for a 30-minute massage rose sharply, to $249.30 – even though he got the same therapy from the same therapist in the same building.

Ziomek said an employee told him the higher charge came about because the office, which is owned by Carolinas HealthCare, began billing as a hospital-based setting. He said he was told that patients could go to the Ballantyne office and pay the lower amount.

Ziomek’s Aetna insurance reimburses differently based on where a service is rendered. For an office visit, Ziomek was responsible for a $20 co-pay, no matter if he had met his $250 deductible. For a hospital visit, he pays 10 percent of the bill after paying the $250 deductible.

In this case, Ziomek’s out-of-pocket expense dropped, because he had already met his deductible for the year. But he’s concerned that the overall cost went up, with no change in service or quality.

“Somewhere along the line, they realized, ‘We can charge more to the insurance company even though the patient is getting exactly the same service,’ ” said Ziomek, 70, a retired investment banker. “They could have kept the lower rate, but they chose not to. Why? Because of greed.”

I think the last line about greed is a little bit of sensationalism. In our market, healthcare is driven by revenue and profits. Many hospitals say they’re non-profit, but they certainly act like for profit entities.

What’s surprising to me is that insurance companies are putting up with this shift. I expect the loophole will be reversed again, but that often takes time. Some policy will be put in place to stop hospital owned medical practices from charging at the hospital rate. However, until that happens you can be sure that hospitals will continue their acquisition of medical practices.

January 28, 2013 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 15 blogs containing almost 5000 articles with John having written over 2000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 9.3 million times. John also recently launched two new companies: InfluentialNetworks.com and Physia.com, and is an advisor to docBeat. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and Google Plus.

HHS OIG Begins Digging Into EMR Overbilling Allegations

Well, it had to happen: The furor over the possible EMR-related Medicare overbilling has moved to its next stage.  After enduring harangues by members of Congress and a widely-read New York Times article alleging that EMRs were upcoding machines, HHS has begun to look into the matter directly.

Fraud investigators within the HHS’s Office of the Inspector General have sent a 54-question survey to hospitals who got Meaningful Use incentive payments between January 1, 2011 to March 31, 2012. The survey looks into assertions that hospitals and physicians using EMRs have been inflating Medicare claims.

The logical next step for the OIG’s office is to issue a report to Congress spelling out whether it has reason to believe EMRs are linked to Medicare overbilling. The OIG will doubtless do some chart pulling and analysis to see whether it finds suspicious-looking patterns.

As I’ve said before — and will continue to say, doubtless — this whole effort concerns me. I’m not suggesting that HHS should ignore any evidence it has that hospitals or doctors are using EMRs to engineer a billing joyride. On the other hand, “overbilling” can be in the eye of the beholder, and conducting an inquisition into EMR user behavior seems premature to me.

I find myself wondering whether the feds have seriously considered hospitals’ response to these charges — that EMRs aren’t generating overbilling schemes, but instead are merely capturing and documenting services which weren’t always captured in the days of paper records.  It’s a credible argument and deserves a closer look.

So, let’s  hope HHS takes a breath and looks at the benign possibilities providers have outlined before it accuses hospitals and practices of wrongdoing. Otherwise, we’ll have a agency simultaneously pushing for EMR adoption and hanging the sword of Damocles over the heads of doctors and hospitals.

November 5, 2012 I Written By

Anne Zieger is veteran healthcare consultant and analyst with 20 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies.

EMR Overbilling Investigations Sling Mud At Meaningful Use Program

In the wake of an expose in The New York Times claiming that upcoding and overbilling was increasing with the use of EMRs, and members of Congress riding the claim, I guess ONC had no choice but to take the allegations seriously.  So fearless leader Farzad Mostashari, M.D. has asked the advisory HIT Policy Committee to study whether providers are using EMRs to upcode Medicare bills.

I suppose you can tell from how I put that that I’m far from convinced EMRs are generating massive amounts of illegitimate bills, but the idea is “out there” now and dangerous to the future of HITECH objectives. So I suppose it’s a good thing that ONC is investigating.

Dr. Mostashari wants to find out whether EMRs tend to foster the use of higher billing codes by encouraging doctors to cut and paste information from one patient encounter to another, according to an interview with the Center for Public Integrity. He’s also asking the policy committee to determine whether some EMR functions prompt physicians to overbill.

All of this leaves me sort of uneasy.

Don’t get me wrong, I’m not suggesting that EMRs aren’t generating any upcoding issues at all. We all know that many physicians feel pressured to cut and paste text in an effort to get through their heavy workloads, particularly if they’re not otherwise comfortable with their system.

Also, I can’t deny that there are bad apples in every profession, including medicine, who could conceivably be taking advantage of the newness of the technology to reap a profit.

No, my concerns are more that countless providers will have one more thing to worry about as they use the new technology, and that policymakers will view EMRs with a level of suspicion they hadn’t before.  We’re at a tricky point in the overall EMR adoption curve, and bad vibes and publicity are the last thing we need. Meaningful Use compliance is tough enough as it is.

October 31, 2012 I Written By

Anne Zieger is veteran healthcare consultant and analyst with 20 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies.

Medicare’s New Requirement for Evidence-based Order Sets

The following is a guest post by Sean Benson. Sean Benson is co-founder of ProVation Medical and Vice President of Innovation at Wolters Kluwer Health.

In-house creation and maintenance of order sets by hospital staff just got a bit more challenging.

Without much fanfare, a small but significant change to Medicare’s Conditions of Participation (CoP) for hospitals went into effect in mid-July.  The Centers for Medicare and Medicaid Services (CMS) has decreed that Medicare-participating hospitals that use order sets, pre-printed or electronic standing orders and protocols for patient orders must ensure that they are consistent with nationally recognized and evidence-based guidelines and recommendations.

To be clear, this new CoP rule does not prohibit an individual hospital from developing its own pre-printed and electronic order sets. It does define the criteria for doing so, however.  CMS expects a hospital to look to nationally recognized guidelines, which should always be evidence-based, and to its own experiences and in-house studies and data.  CMS wants hospitals to avoid using anecdotal evidence, theories that have not been proven effective, or the old fallback of ‘that’s the way we’ve always done it’ as a basis for establishing its orders and protocols.

In-house creation of order sets has always presented challenges for hospitals.  Significant staff time must be devoted to drafting individual order sets, which can number in the hundreds at some institutions.  Subsequent review and consensus-building by the appropriate clinicians can also prove burdensome and difficult.  And then there is the need to periodically check and update existing order sets to make sure they reflect best practices.

Now CMS has added the requirement that order sets be based on the latest evidence and guidelines. The sheer volume of new medical evidence scattered across hundreds of sources that must be evaluated when creating an order set – an estimated 2 million scientific articles are published each year – means compliance will be a significant drain on internal resources. It also means that flow of evidence must be continuously monitored to determine when it necessitates a change in practice and, thus, a change in one or more existing order sets.

Compliance with the new CoP requirement can readily be achieved by “going digital”.  Electronic order set authoring tools offer pre-defined templates populated with content drawn from medical reference databases that track the latest clinical advances. This streamlines creation of new order sets and maintenance of existing ones, which remain linked to the reference databases. Alerts are generated whenever new evidence or guidelines necessitate a protocol change and, in some cases, impacted order sets can be updated with a single click.

Order Set authoring tools are already being widely deployed in many hospitals seeking to achieve the Computerized Physician Order Entry (CPOE) requirements of Meaningful Use.  Hospitals that have joined new accountable care organizations are also leveraging these solutions to help promote evidence-based medicine in their care coordination efforts.  Medicare’s new CoP rule requiring evidence-based order sets offers CIOs and CMIOs with yet one more incentive to digitize the order set creation process.

August 13, 2012 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 15 blogs containing almost 5000 articles with John having written over 2000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 9.3 million times. John also recently launched two new companies: InfluentialNetworks.com and Physia.com, and is an advisor to docBeat. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and Google Plus.

Doctors Fear EMRs Will Mess Up E&M Coding

Here’s one more example of technology clashing with habit. Apparently, even when EMRs are ready to code for doctors, Medicare physicians often hand-code anyway, according to the HHS Office of the Inspector General.

The OIG study, which was requested by ONC, looked at how Medicare docs use EMRs to assign and document codes for evaluation and management services. According to the study, 57 percent of Medicare physicians use an EMR, and of those, 90 percent use their systems to document E&M services.

The rub is that most of that 90 percent assign codes manually, rather than letting the system do the work, the report notes. That’s not surprising, however, given that doctors are on the hook if HHS finds fraudulent upcoding whether it’s the software’s fault or not.

How can the industry cope with this issue? I liked the suggestion made by Susan Fenton, PhD, assistant professor at the College of Health Professions at Texas State University.

In an interview with American Medical News, she argues that HHS and the Department of Justice should get together to certify coding capabilities of given EMRs.  She also recommends that the two agencies should agree that physicians not be held liable if something was coded wrong, as long as the practice didn’t alter the software.  (The American Medical Association has made similar recommendations.)

Honestly, I think the compulsion to do hand-coding goes deeper than a fear of getting slapped by the DoJ or HHS.  If you don’t feel comfortable with an EMR, you’re likely to do as much of your work as you can in “the old way.”  Heck, I know I would. But the very reasonable fear of government sanctions makes the situation much worse. Certifying bodies, start your engines.

July 25, 2012 I Written By

Anne Zieger is veteran healthcare consultant and analyst with 20 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies.

GAO Wants To See Tougher Meaningful Use Audits

Here’s some scary news. A new report from the Government Accountability Office (GAO), the federal government’s watchdog agency, has recommended that the MU program do more to verify that providers actually qualify for incentive payments.  Given that CMS already plans to begin auditing already-certified providers after they get their incentives, we could be looking at some disasters in the making.

The GAO, which conducted a review of the first year of Meaningful Use, looked at both the Medicare and Medicaid EMR incentive programs. It analyzed Medicare MU attestation data from last year, as well as looking at the verification processes used by Medicaid programs in four states and interviewing subject matter experts.

Along the way, the study picked up some interesting data points. For example, the agency found that 80 percent of hospitals and 72 percent of eligible professionals decided not to report on at least one mandatory MU measure, a loophole allowed by the program. (Hospitals can dodge up to three measures, and professionals six, if the measures aren’t relevant to their clinical practice or patient population.)

The bottom line is that the GAO recommends that CMS increase the number of prepayment verifications it does; set up timelines which will speed the process of evaluating audit effectiveness; offer states the option of having CMS collect MU data for both Medicare and Medicaid; and (the big one) collect additional MU verification information from providers from Medicare providers seeking the MU bucks.

As it is, CMS plans to start a “post payment audit” program this year which sounds as if it could involve clawbacks of already approved moneys.  It’s hardly a new trick for CMS, which already does this already happens when our friends the Recovery Audit Contractors think you’ve made Medicare claims mistakes.

May 18, 2012 I Written By

Anne Zieger is veteran healthcare consultant and analyst with 20 years of industry experience. Zieger formerly served as editor-in-chief of FierceHealthcare.com and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also contributed content to hundreds of healthcare and health IT organizations, including several Fortune 500 companies.

HHS To Look At How EMR/EHR Use May Violate Fraud & Abuse Laws

Thought you had your hands full merely installing a multi-million dollar EHR, bringing it up to top performance, training staff members, winning over doctors and bickering with vendors?  Well, guess again.

It seems that HHS’s Office of the Inspector General now plans to look closely at whether EHR use violates fraud and abuse laws in any way.  To me, this sounds like a bit of an institutional turf war — given how long HHS had to get Meaningful Use and other standards developed, wouldn’t someone there have thought this through already? — but it’s nothing to ignore nonetheless.

The news comes with the release of the OIG’s 2012 work plan, in which the agency promises to “identify fraud and abuse vulnerabilities” in EHRs, as well as finding out how certified EHR systems address such vulnerabilities. The OIG also plans to review Medicare and Medicaid EHR incentive payments to make sure they were doled out only to providers meeting Meaningful Use criteria.

One detail worth noting is that the OIG will be looking to find EHR documentation practices that might be associated with improper payments, something the HHS agency had targeted last year as well.

It seems the OIG has noticed, as have many doctors, a growing number of medical records with “identical documentation across services,” rather than documentation specific to the service provided. That is a definite no-no, the OIG reminds one and all.

October 17, 2011 I Written By

Katherine Rourke is a healthcare journalist who has written about the industry for 30 years. Her work has appeared in all of the leading healthcare industry publications, and she's served as editor in chief of several healthcare B2B sites.

Which Health IT and EHR Vendors Should Critical Access Hospitals Consider?

The number of health IT and EHR enterprise options available to critical access hospitals is increasing as competition for new hospital contracts moves downstream to smaller facilities. The following is a brief (not all-inclusive) list of health IT and EHR vendors that could be ideal fits for critical access and small, rural hospitals:

  • CPSI: Has done a good job of proving clinical adoption and leads with the most critical access hospital clients doing CPOE.
  • Healthland: Solid system with proven operational capability. Clients give the EMR high marks for usability.
  • HMS: Reinvesting heavily in improving clinical functionality and UI, including a partnership with MEDHOST for strong ED capability.
  • McKesson: Paragon is being considered more often in the critical access space. Has significant sales momentum in larger community hospitals, with some IDN wins.
  • Meditech: Already has a huge client base in larger community hospitals. Small organizations with resources are considering v.6.
  • NextGen: Gets little notice despite having an inpatient offering that is completely integrated with their successful outpatient EMR. Already have a number of clients. Has solid functionality.
  • Prognosis: Exciting new entrant. Applies remote-hosting technology to a single-database inpatient solution for small, rural facilities and critical access hospitals. Already has several clients.

These health IT and EMR vendors represent a mix of those who have caught the attention of smaller facilities, those who represent a new and intriguing competitive advantage, and those who have proven able to deliver products in a small hospital environment.

See also our list of hospital EMR and EHR vendors.

Chris O’Neal is Managing Partner at KATALUS Advisors. KATALUS Advisors is a strategic consulting firm focused on the healthcare vertical. We serve healthcare technology vendors, hospitals, and private equity groups in North America, Europe, and the Middle East. Our services span growth strategies in new and existing markets, M&A due diligence, market analysis, and advisory services. www.KATALUSadvisors.com

September 27, 2011 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 15 blogs containing almost 5000 articles with John having written over 2000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 9.3 million times. John also recently launched two new companies: InfluentialNetworks.com and Physia.com, and is an advisor to docBeat. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and Google Plus.

Pressures on Critical Access Hospitals – IT Budgets, Competition and IT Talent Retention

The acquisition and implementation of enterprise solutions is a daunting process for any healthcare provider. Critical access hospitals usually find the task even more nuanced given unique pressures, some of which include:

  • Constrained budgets: Compared to other facilities, critical access hospitals typically have the smallest IT budget, as a percentage of overall hospital budget and in gross numbers. Budget constraints are also exacerbated by low volumes, rising number of uninsured, recession related unemployment, and a patient mix with a high Medicare/Medicaid presence typically found in rural geographies.
  • Increased competition from larger IDNs: Competition can come in the form of IDNs opening/acquiring rural clinics, as well as from Federally Qualified Health Centers (FQHC) which often have greater access to grant funding and better medical liability coverage. This makes future growth plans hazy given that critical access hospitals can be challenged in projecting consistent market share given the changing competitive landscape.
  • IT talent retention: Attracting and retaining talented IT personnel is one of the prime concerns for critical access facilities. Some have turned to IT outsourcing, but this also carries its own risks and costs.

In effect, critical access hospitals are feeling fiscal pressures from all sides – in changes to federal reimbursements, a patient population hit hard by recession, rising labor and structural costs, as well as from legislation which requires a higher level of IT adoption within an arbitrary timeline.

In our next post, we’ll look at which Health IT trends working in favor of small hospitals

Chris O’Neal is Managing Partner at KATALUS Advisors. KATALUS Advisors is a strategic consulting firm focused on the healthcare vertical. We serve healthcare technology vendors, hospitals, and private equity groups in North America, Europe, and the Middle East. Our services span growth strategies in new and existing markets, M&A due diligence, market analysis, and advisory services. www.KATALUSadvisors.com

September 15, 2011 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 15 blogs containing almost 5000 articles with John having written over 2000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 9.3 million times. John also recently launched two new companies: InfluentialNetworks.com and Physia.com, and is an advisor to docBeat. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and Google Plus.

How Big is the Health IT Market for Critical Access Hospitals?

Critical access hospitals are an essential vehicle for delivering patient care to local residents of rural, outlying areas. Their importance was in legislation that Congress passed in 1997 which established a payment system specific to critical access hospitals (25 beds or less in a rural location). The purpose of this bill was to ensure residents of rural areas would have adequate access to hospital care by improving Medicare reimbursements to those facilities.

Slightly over a quarter of all U.S. hospitals are designated critical access hospitals. About 60% of hospitals classified as “rural” are also designated critical access*. The four states with the highest number of these facilities are Iowa, Kansas, Minnesota, and Texas. This is a sizable market where a tremendous amount of care is delivered. Yet given the size of this market, many of these institutions feel under-resourced and underfunded, for a variety of reasons.

In our next post we’ll take a look at the pressures that critical access hospitals are experiencing when it comes to implementing health IT in their hospitals.

*Assuming a total of 5,000 U.S. hospitals

Chris O’Neal is Managing Partner at KATALUS Advisors. KATALUS Advisors is a strategic consulting firm focused on the healthcare vertical. We serve healthcare technology vendors, hospitals, and private equity groups in North America, Europe, and the Middle East. Our services span growth strategies in new and existing markets, M&A due diligence, market analysis, and advisory services. www.KATALUSadvisors.com

September 13, 2011 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 15 blogs containing almost 5000 articles with John having written over 2000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 9.3 million times. John also recently launched two new companies: InfluentialNetworks.com and Physia.com, and is an advisor to docBeat. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and Google Plus.