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NEWSLETTER

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Surviving the Disaster - Key Take Aways By: Shelly Hunter

Shelly Hunter, FHFMA, MBA

INSIDE THIS ISSUE: President’s Message

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The President’s Cruise

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Professional Development

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Region 8 Connection

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Career

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Opportunities Vendor Spotlight

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Vendor Article

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Sponsors

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Conference Highlights

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gency procedures, so that they can On May 22, 2011 St. John‘s Rereact intuitively in the time of disaster. gional Medical Center in Joplin Missouri, took a direct hit from an F5 tornado. The winds were calcu- In preparing for a disaster there are key takeaways from this event that can lated to be at 212 mph at the time be shared. One key component is of impact. The tornado hit one side, filled the building and blew out record retention and recovery. In your disaster plan make sure you have all the remaining windows, devasa documented list of record storage, tating the entire campus. Even legal responsibility of record retention with extensive disaster training, and where the records are located. In there is no way to be prepared for this type of impact. The co-workers at St. John ‗s were prepared, when Execute Condition Gray was announced they prepared with flashlights, plans of action and disaster preparedness. Within 90 minutes, nine floors and 183 patients were completely evacuated from the severely damaged hospital in conditions Exterior of St. John’s Regional Medithat are difficult to imagine. cal Center following the deadly tor-

nado. There is no substitute for Joplin, records were damaged and drills. The fact that everyone was so well trained speaks to why more water-soaked. They had to be recovered, freeze dried, cleaned and stored. people were not injured in the It saves a lot of time and money if, 1) evacuation, and why everyone was able to reach safety so quickly. It is you know where your records are located, 2) what needs to be recovimperative that all staff be trained ered and 3)how you would like to in disaster drills and know emer-

have the records stored. It is also a good idea to do research now and determine a company that you want to use for record restoration and retention. Communication was key in a disaster such as Joplin. Phone lines and cell towers were destroyed, radios didn‘t work and the only way to communicate was through texting. Make sure you have all important co-worker, city, and area hospital contacts stored in your phone. This was imperative as we navigated a city-wide disaster. We were able to communicate primarily through texting for a first week after the disaster. Another path to communication for us was through use of social networking. This was a great source for the city to update information and emergency response needs. Make sure someone on your team is connected through social networking. In a disaster of this magnitude you will need assistance from insurance experts. FEMA experts and asset and debris recovery experts are primary resources. To ensure you

Continued on page 13.

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2011-2012 HFMA Show–Me Officers President Kory Stout Business Director for Surgical and Intravascular Services St. Anthony‘s Medical Center President-Elect Janet C. Taylor Chief Financial Officer Ozark Community Hospital Vice-President Kyle W. Lee Principal MedTrack, Inc Secretary Donna Epperly Senior Management Analyst University Physicians Treasurer Jennifer Ogden, FHFMA Director of Accounting Audrain Medical Center

President’s Greeting Show-Me Chapter Members, Hard to believe we are half way through the HFMA fiscal year. We have experienced great attendance at both of our on-site meetings (Kansas City and Lake Ozark) and I would like to thank our members for that! We have continued to look for opportunities to enhance your educational opportunities and have more to come… By this time you should have received your HFMA survey and I would ask that you take a few minutes to ―tell us how we are doing‖. Surveys are one component that HFMA National uses to evaluate our chapter. Mark your calendars for the third HFMA Virtual Healthcare Finance Conference beginning with live sessions on December 13-14, 2011. It's back by popular demand with all new content and it's free to HFMA members! New this year – We will be partnering with Missouri Hospital Association and providing two financial tracks at their 89th Annual Convention and Trade Show, November 9 – 11th at Tan-Tar-A, Osage Beach, Mo! Kory Stout President, Show-Me Chapter Business Director, Surgical & Intravascular Services St. Anthony's Medical Center

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The President’s Cruise By: Janet Taylor, President –Elect Kory and I, seven other Presidents and Presidentelects, two regional executives, two national representatives, along with spouses, friends and relatives, traveled from various parts of the country to arrive in Orlando on Saturday, September 20th. Our Regional Executive, Teri Reger, organized a dinner that evening at Bonefish. We got reacquainted with the HFMA officers we met at LTC last April and we met their spouses and friends. We had a great time—though we did lose the contingent from Nebraska and the Dakotas when the Nebraska game started on TV!

once that day! Following our stop at Castaway Cay, we were at sea all day, and we had our meeting. We met from 8 am to 4:30 pm—proof positive that we DID actually work during this trip! Ironically, the weather was beautiful while we were in the meeting all day: by far the best weather of the entire trip! It was a very good meeting. All of the Presidents and President -elects, our Regional Exec and RE-elect, as well as a representative from National and a National Board member, participated in the meeting.

We boarded a chartered motor coach about noon the next day for the ride to our ship, The Disney Dream. During the cruise, we were seated together or relatively close for evening dining. It was a great chance to get to know our group. There was a good mix of time alone and with the group.

We all had a great time. I feel better prepared to move into the position of President next year. It was great to hear about the experiences of the current Presidents, regional and national representatives and to soak up their knowledge of HFMA. Getting to know the other regional leaders will be a definite advantage in the current and coming year.

Our stops were at Nassau and Disney's private island, Castaway Cay. Unfortunately, the weather during our day at the Cay was not very good. I don't think we saw the sun

Kory and I appreciate the chapter sending us to the Region 8 Fall Presidents' Meeting, and we hope to utilize the knowledge gained to enhance the operation of the chapter.

NEWSLETTER

From Left: President Kory Stout, Hillary Stout, Paul Taylor, President-Elect Janet Taylor.

Region 8 Leaders

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HFMA Professional Development By: Kyle Lee We hope you have found the opportunity to take advantage of the HFMA Show Me Chapter‘s wide range of educational and networking opportunities! Our chapter delivers a wide variety of events via statewide conferences, regional workshops and webinars held throughout the year. Please note that these on-site and webinar opportunities are open to both HFMA as well as non HFMA members! If there are non HFMA members of your organization which can benefit from any of our programming, please encourage them to attend! We will be sending e-mail reminders on these opportunities as well as posting them on the Show Me Chapter‘s website – www.hfmashowme.org . If you have questions or suggestions on future topics, please contact the Show-Me Vice President/Program Chair, Kyle Lee at [email protected] Kyle Lee

For the next few months we have many great programs planned! Here’s a glimpse of what’s coming up:

Upcoming Educational Programs Date

Program

Location

November 8

Current Trends in the 340B Program

Webinar

November 9 - 11

MHA 89th Annual Convention & Trade Show Show-Me/Greater St. Louis HFMA Financial Leaders Symposium Winning Under Reform

Tan-Tar-A Resort, Osage Beach Millennium Hotel, St. Louis

3rd HFMA Virtual Healthcare Finance Conference Financial Planning in a Reform Environment

Webinar

November 17 December 13 December 13-14 January 10

NEWSLETTER

Webinar

Webinar

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Region 8 Connection Submitted By: Teri Reger Greetings HFMA Region 8 Friends and Colleagues! I hope you all have had a wonderful summer. It‘s hard to believe we‘re already looking toward the fall with its beautiful colors, many football and baseball games to watch and kids back in school! In addition, the fall months bring you as HFMA members so many opportunities to enjoy outstanding programming and networking experiences. Be sure to watch for upcoming events available to you at the local and national level that will help you keep up to date on the latest in healthcare finance as well as to allow you to network with other HFMA members. The monthly Region 8 webinars are again in full swing. This year they are scheduled for the third Tuesday of each month from 12:00 noon – 1:30 pm through April 2012. Be sure to put a placeholder on your calendar for these great webinars. They are an excellent way for you and your staff to participate in an outstanding educational event with minimal expense. The Region 8 chapter leaders have committed to providing these webinars at a cost of $50 or less per con-

nection. The fall is also a perfect time for you to begin to work toward achieving certification in HFMA. There are two levels of certification. The first level is the Certified Healthcare Financial Professional, CHFP. This is achieved with three to five years of healthcare financial management experience, a current and active HFMA membership, and through the successful completion of a standard examination. The second level of certification is FHFMA, a Fellow of the Healthcare Financial Management Association. After successful achievement of CHFP status, the FHFMA can be earned with five years of HFMA membership, a bachelor‘s degree and by volunteering your time in the healthcare finance field and/or in HFMA. The reasons to believe you can and should achieve certification in HFMA: It will demonstrate that you are a proven leader in your organization. It will demonstrate your commitment to healthcare industry.

Employers tend to look for the HFMA certification when evaluating potential employees. Survey results show a strong link between HFMA certification and career advancement. Please contact your chapter‘s Certification Chairperson for additional information about becoming certified, as well as whether your chapter offers any form of financial assistance to chapter members for the study materials and/or the exam. Thank you again for the opportunity to serve Region 8. In the winter edition of the Region 8 Connection, I will provide an update on recent meetings with the chapter Presidents and Presidents Elect. When you see your chapter leaders at meetings and networking events, please thank them for their tireless efforts leading the chapters on to what is sure to be an exceptional year! I welcome your questions and comments, any time! My telephone number is 314-5238771 and my email address is [email protected]

Teri Reger, FHFMA

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NEWSLETTER

MSCB.

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Welcome to New Members New Members Benjamin May CFO Ripley County Memorial Hospital Rhonda Pfister Controller Iron County Hospital Mike Ireland Senior VP Business Banking Commerce Bank Michael Delaney Kansas City, MO Douglas M. Culver CFO McCune-Brooks Hospital

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Career Opportunities

Tami L. Kadrlik Implementation Specialist Secure Bill Pay John T Schwent, Jr. CEO Iron County Hospital Shari L. Riley Department Administrator University of Missouri

Accounting Director Atchison Hospital Atchison, Kansas

Director of Financial Planning & Analysis MidWest Behavioral Healthcare Management Missouri & Louisiana

Krista Dozier Financial Analyst Southeast Health

Transfer Members Melissa Reiber Cox Health Springfield, MO

For more information: http://www.hfmashowme.org/jobbank.shtml.

Sponsor Spotlight: LarsonAllen PAGE 7

NEWSLETTER

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Structuring Value-Based Payment Arrangements: A Primer for Hospitals and Physicians Article Provided by LaronAllen LLP OVERVIEW Health care providers need to respond strategically now that health care purchasers and payers are adopting ―pay for performance‖ arrangements. These arrangements are already maturing into more sophisticated value -based payment (VBP) models that provide incentives to redesign the delivery and payment of health care services. In the near future, a myriad of such payment incentives will be available as the market evolves into a model that pays for value, as measured by quality, efficiency, and patient experience. Providers across the spectrum of care will need to collaborate to ensure financial success. Providers need to develop a strategy regarding VBP in order to strengthen their position in this evolving market. While elements of fee-for-service will remain, they will be more closely tied to value-based payment in the future. For a significant period of time, there will be multiple payment systems, ranging from fee-for-service to a form of capitation (a set fee per patient regardless of the services provided). VBP arrangements will continue to grow in importance, complexity, and financial impact. THE FUTURE OF VBP The current elements of VBP fall into four categories:

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• Quality (outcomes and process) • Systems/data reporting capabilities • Care coordination/management • Financial results (total cost of care) As VBP matures, some of the basic elements will be phased out, in particular, those related to process, data reporting, and systems development. After that, payers will focus on care coordination through health care (medical) homes, chronic care management, and management of costs through global payments or targets. By fully participating in the currently available VBP arrangements, providers can position themselves for success as this payment system evolves. ACCOUNTABLE CARE ORGANIZATIONS (ACOS) One evolving form of VBP is accountable care organizations (ACOs), which are providersponsored entities responsible for improving quality and financial outcomes for a defined population. Much of the focus has been on Medicare ACOs, but the commercial market, led by the major health plans and acute care systems, has already been experimenting with similar models. Though lagging behind, state Medicaid programs will probably pursue ACOlike models as well. Given this widespread interest in ACOs, provider shared-savings and risk-sharing models are likely to emerge in nearly all health care markets. The full spectrum of global payment models is shown in the graph below.

The Centers for Medicare and Medicaid Services (CMS) intends to deliver on the legislative directive to make ACOs available to Medicare beneficiaries by 2012. The ―interim final‖ rules have been issued but are expected to change significantly before being finalized. Though it is unlikely providers will develop a Medicare-only ACO, they may consider a Medicare element as a complement to their commercial ACO business model. In addition to the creation of ACOs, the Patient Protection and Affordable Care Act (PPACA) creates VBP provisions for hospitals, physicians, and other providers. In this environment, providers across the spectrum of care will need to collaborate to ensure financial success. The initial provisions apply to hospitals, with penalties for high 30-day readmission rates and a disproportional number of hospital-acquired conditions. There are incentives for achieving quality and patient experience measures, as well as options to develop bundled payments for episodes of care. Furthermore, the PPACA directs CMS to develop a Medicare physician payment system that is based on quality and cost of care measures by 2015. KEY ELEMENTS OF VBP CONTRACTING One of the emerging VBP methods focuses on achieving a financial target for a defined population. This is sometimes referred to as a ―total cost of care‖ arrangement (TCOC). These can take many forms, ranging from performance-

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based, fee-for-service to full capitation. However, all of these models have the same structural elements that usually include the following: • Patient attribution • Global financial target • Global target trend • Risk adjustment • Sharing financial gain (loss) • Cash flow and interim payments • Quality measures and performance standards • Medical management responsibilities

The payer must provide this baseline data using reported claims information incurred during a defined period (often the prior year). The pmpm calculation is based on the contractually allowed charges of the providers in the payer‘s network. This data should be reported by broad service categories, such as hospital inpatient, hospital outpatient, pharmacy, primary care, specialty care, and emergency room services. Providers should analyze the information based on the specifics of the TCOC arrangement.

Patient attribution The first step in structuring a TCOC arrangement is defining the population being served. For instance, providers must figure out how they are going to identify and organize this specific group of patients for accounting and care coordination purposes. This can be done most efficiently when patients are required to select (or be assigned to) a specific provider group responsible for managing their care and the related costs. However, most health insurance arrangements, including Medicare, do not currently have that requirement and rely primarily on claims history to attribute patients to providers.

Providers should consider developing a TCOC

Although patient attribution models are typically retrospective, their specific components vary, and provider groups will have to work with multiple models. For example, attribution methods for a medical home arrangement may differ from a TCOC agreement. How far back claims are reviewed may vary, as will the methods for assigning patients to specific providers (though it is typically based on the outpatient evaluation and management services provided). Each payer must have a consistent methodology of assigning patients that prevents inclusion in another group. Global financial target (baseline) Once patients are assigned to a provider group, a global financial target is established based on historical spending and utilization data. This is used to project budget benchmarks for future performance periods. This target includes all covered health care services delivered in and out of the provider group‘s network and is normally expressed as a per member/per month (pmpm) amount, including the patient‘s cost-sharing amount.

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business model so they can proactively approach the payer and purchaser communities. Global target trend A provider‘s next step is to project forward the global target to the performance year, which can be done by looking at historical cost trends, negotiating an inflationary index, or using a combination of those factors. Providers will need to request data from the payer for the most recent two to three years. The cost and utilization information should be converted into pmpm calculations. This can be used to calculate and analyze the cost and utilization trends over that period of time as well as going forward. Other factors that may be considered in projecting the global target include: • Potential future benefits of care coordination • Evidence-based guidelines • Changes in provider reimbursement or practice patterns The market pressures to contain health care costs, (i.e., not to exceed general inflation) must also be considered when setting future targets.

Providers must realistically assess their ability to manage within these targets, which requires a thorough analysis of the data and an assessment of their own capabilities to provide good results efficiently and cost effectively (bend the cost curve). Risk adjustment When establishing the baseline target and projecting it forward based on trends, it is important to adjust for the risk profile of the patient population. Providers can make adjustments by incorporating basic demographic factors such as age and sex, or apply more sophisticated models that predict future health care utilization. Another form of risk adjustment excludes expenses beyond a defined threshold (e.g., $50,000) when measuring performance against the global target. This ―stop loss‖ arrangement between the provider group and payer protects the provider from assuming ―insurance‖ risk, and allows it to focus on what it can medically manage. Sharing financial gain (loss) The new TCOC models offer providers the incentive to manage health care costs by sharing in the financial gain when savings are achieved against the global target. Most of the current models are shared-savings arrangements, though the proposed Medicare rules provide the option of starting with shared savings and moving toward risk sharing. Provider groups must determine the level of risk they are willing and able to assume. Most will begin with shared-savings arrangements and avoid risk until the group has confidence that it will be successful. However, there is greater potential upside to risk-sharing models. Incentives might include an increase in the provider‘s fee-for-service payments, a percentage of the savings, or a lump sum payment. The patient populations served under these models vary considerably, and therefore, so does the risk. Patients may have a chronic condition (e.g., congestive heart failure) or have been attributed to providers based on claims history. To be successful, provider groups not only need to effectively manage health care services for patients, they must also ensure they have a sufficient group of patients to make the necessary investments pay off. Providers should consider developing a TCOC business model so they can proactively ap-

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Structuring Value-Based Payment Arrangements, Continued... proach the payer and purchaser communities. The discussions may begin by acknowledging their need to contain future premium increases. The goal is to determine what can be done collectively with the payers to make that happen. Good financial modeling tools can illustrate the effects of entering into a global TCOC arrangement with a payer and show the resulting impacts of a variety of actions. These tools are instrumental in realistically planning and developing your TCOC arrangements. Cash flow and interim payments The key piece of any TCOC arrangement is determining how funds will flow to the provider group. Options include: • Payment on a fee-for-service basis • Partial capitation (e.g., for primary care services) • Full capitation Most of the commercial insurance models and the proposed Medicare ACO model pay providers on a fee-for-service basis, with a reconciliation against the global target at various intervals. Supplying partial or full capitation to the provider group makes resources available up front to finance quality and process improvements. It also enables discretion in offering health care services that may be appropriate or beneficial (e.g., e-visits), but which may not be covered on a fee-forservice basis. However, capitated arrangements require that patients are assigned to a primary care physician, which may not be attractive to some. They also require the provider group to assume at least some downside risk.

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Other possibilities include a coordination fee for the services of a primary care medical home, paying a bundled amount for a defined episode, or negotiating alternative fee-for-service rates. Many payment options are possible, so provider groups must examine all the alternatives to determine what is best suited for them. Quality measures and performance standards To ensure the delivery of appropriate and high-quality care, provider groups will need to report on key quality and patient experience measures. Achieving a certain level of performance, as reported through those measures, is typically a condition for earning financial incentive payments through a TCOC arrangement. However, some arrangements are designed to include bonus incentives, beyond the shared savings, if certain performance levels are met. Provider groups must negotiate a quality incentive provision with payers that is meaningful yet achievable. Medical management responsibilities One of the most important arrangements to be worked out between the provider group and payer is the responsibility for conducting medical (utilization) management activities for the defined patient population. Traditionally the payer has accomplished this through prior-authorization or utilizationreview mechanisms. However, a key objective of the new TCOC arrangements is to have the provider group assume the role because it is in a better position to coordinate care and apply evidence-based clinical practices for their patients. The TCOC agreement must clearly define the roles of all involved.

SUMMARY Payment reform will evolve in different ways and at a different pace in each market. The adoption of value-based payment models is inevitable, but the speed will depend on payer interest and provider readiness. Providers should begin developing the capability to manage health care services for a defined population, but must be realistic about the significant challenges of doing so. Participating in this new system may mean developing an integrated provider network or joining a network sponsored by other providers. This paper has outlined the critical elements of developing a TCOC arrangement from the perspective of the provider. The various risk/reward models currently range from performance-based, fee-forservice to full capitation. Providers need to determine where they fit along that spectrum in terms of assuming financial risk and their ability to effectively manage health care services with new requirements for quality and performance. The process of preparing for VBP reform starts with understanding the key elements and principles and assessing how reform is playing out in your market. The next step is to determine how to position your organization in this new order. These first steps will provide a foundation to strategically approach a future already being influenced by health care reform.

Brian Osberg [email protected] 612-397-3259

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HFMA Conference Highlights

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From left Dennis Decker, Janet Taylor, Kory Stout, New Member Steven Taylor, Susan Duncan, Josh Wilks

From left – Susan Duncan, New Member Adriana Iacob, Leigh Patterson, Terri Norath, Jay Umansky

From left New Member Michael Brandon, Jeff Morgan, New Member Christina Duren, Connie Warnat NEWSLETTER

From left Stephanie Fennewald, Jennifer Ogden, Shelly Hunter

From left – Tom Sale, Janet Taylor, Kory Stout

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Surviving the Disaster - Key Take Aways, continued... have all of this covered in your disaster plan, do research now and incorporate possible contacts and plans in your planning document and training. Make sure you communicate this to everyone and continue to drill often. When you drill all coworkers should know to respond to the emergency with badge or identification, so that they can have access to barricaded disaster areas. Be sure each coworker knows where disaster kits are located and how to respond in the even t backup power is down, communication is down and an alternate location where they need to report.

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The last thing I would add is to ensure that you and your coworkers take care of themselves. Provide counseling sessions, make sure there is scheduled time off and that people are dealing with the emotional impact of surviving a major disaster. Recovery takes time and the affects of a disaster can vary with individuals. Watch for signs of stress and be prepared to offer assistance.

At Right: An interior photo of a patient room in St. Jon’s Regional Medical center in Joplin,