www.schfma.org Spring 2011

HFMA Healthcare Financial Management Association

The 2011 SC HFMA

Annual Institute

Indulge in Education, Networking, Leadership

Development and Family Fun

The Myrtle Beach Hilton

May 31 – June 3, 2011

Page 13-14

The 2011 SC HFMA

Annual Institute

Indulge in Education, Networking, Leadership

Development and Family Fun

The Myrtle Beach Hilton

May 31 – June 3, 2011

Page 13-14

PalmettoStateNews

Editor: Jay Rickman, Jr.111 Lancewood Road

Columbia, South Carolina 29210803-217-3831 • Fax 803-798-4966Email: jay.rickman@amcolsystems.com

Please contact Jay with any updates to

data contained within this publication.

Palmetto State News is the officialpublication of the South CarolinaChapter of the Healthcare FinancialManagement Association.

Opinions expressed here are those ofthe author and do not reflect theviews of the HFMA or the SouthCarolina chapter.

© 2010-2011 South CarolinaChapter, Healthcare FinancialManagement Association. All rightsreserved.

For a copy of the publications policyand guidelines, send a letter or emailto the Editor at the address above.

PresidentKen SchellerPalmetto HealthEmail: ken.scheller@palmettohealth.org

President-ElectRonnie HyattBon Secours St. Francis Hlth SystemsEmail: rhyatt@stfrancishealth.org

SecretaryDiane StoryRoper St. FrancisEmail: diane.story@rsfh.com

TreasurerJude CrowellWashington and WestEmail: j.crowell@washingtonwest.com

Immediate Past PresidentRaymond L. High, MHAMedAssets, Inc.Email: rhigh@medassets.com

Chapter Board of Directors

Bob Minus, CHFPCredit Adjustment BureauEmail: bobminus@creditadjustment.com

Susan BichelGreenville Hospital SystemsEmail: sbichel@ghs.org

Ray McCullochBon Secours St. Francis Hlth SystemsEmail: rmcculloch@stfrancishealth.org

Jimmy JoyeDatatrac Receivables Recovery GroupEmail: jjoye@dtrr.com

Jeff WhiteBeaufort Memorial HospitalEmail: jlwhite@bmhsc.org

Greg TaylorDixon Hughes PLLCEmail: gtaylor@dixon-hughes.com

Woody TurnerLexington Medical Centerlwturner@lexhealth.org

Barney OsborneSC Hospital Associationbosborne@scha.org

Eddie SingletonConifer Health Solutionseddie.singleton@coniferhealth.org

Tommy CockrellSC Hospital AssociationEmail: tcockrell@scha.org

Committee Chairs

Advisory CommitteeRay High, Chair

Davis Chapter ManagementDiane Story, Chair

Strategic PlanningKen Scheller, Chair

CommunicationsJay Rickman, Jr., Chair

Education/ProgramsGreg Taylor, Chair

Budget/FinanceBarney Osborne, Chair

Corporate SponsorshipJennifer Winchester, Chair

MembershipBob Minus, Chair

Membership DirectoryRonnie Hyatt, Chair

NominatingRay High, Chair

Professional Excellence/CertificationSteve Lutfy, Chair

CRCABrian Walker, Chair

Information SystemsMichael Bowe, Chair

Yerger AwardsDebbie Hunt, Chair

New Advertising Prices!

1/4 page 3 7/8 x 5 3/8 $250 per issue

Half page 7 1/2 x 5 $450 per issue

Whole 7 1/2 x 10 $800 per issue

Include links to company websites and e-mailaddresses

advertise@schfma.org

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Officers, Board & Committee Chairs ’10-11’

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A Message from the Chapter President…..

It’s hard to believe that this is my last President’s Message. Where has the time gone, seems likeyesterday I was being sworn in as your Chapter President.

Our last one day education session, “Healthcare Payor Summit”, held March 21st at the EmbassySuites in Columbia was well attended, with 73% of those attending coming from the providercommunity. I would like to thank Greg Taylor, Alice Childs and Barney Osborne for facilitating thisevent.

I would like to provide the membership an update on the health of the Chapter.

1. Our goal for education this year was to provide 13.6 hours of education per member. Year to Date, we have provided15.2 hours. • Special thanks to Greg Taylor and the Education Committee for helping us surpass our goal.

2. Our goal for membership was 478. Our current membership is 479. • Special thanks to Bob Minus and the Membership Committee for helping us surpass our goal.

I would like to say a special Thank You to this year’s Sponsors, because without your support we would not be able toprovide the high level of education to our members.

It amazes me how fast time has flown and I can hardlybelieve that my year as the president of the South CarolinaChapter of HFMA is coming to a close. I reflect on the pastyear and the many people that I have met along the way. Ihave enjoyed every moment! I have met so many newpeople and many of you have become my very close friends.

To my officers this year, Ronnie Hyatt, Diane Story and JudeCrowell, I offer my most sincere gratitude. This group is anhonest, unselfish, intelligent, sensible, humble and fun team.It has been an honor serving with you and I am glad to beable to call you true friends. You made my year as Presidenta pleasure.

To the Chapter Membership – Thank You for allowing me toserve as your chapter President. I challenge everyone to bean “Active” member and STEP Up. If there is anything that Ican do for you, please let me know.

Thanks for allowing me to STEP Up.

Ken

Ken Scheller

Table of Contents

Chapter Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

President’s Message. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Top Health Industry Issues of 2011 . . . . . . . . . . . . . . . . . . . 5-6

Are You Taking Full Advantage of the

Open Window Opportunities. . . . . . . . . . . . . . . . . . . . . . . . . 8

Certified Revenue Cycle Associate (CRCA)

2011 Update. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

The 2011 SC HFMA Annual Institute . . . . . . . . . . . . . . . . . . . 10

SCHFMA Annual Institute 2011

Schedule at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Member Spotlight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-13

Improved Website Sets Visual/Technical

Tone for Chapter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

2011 HFMA ANI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Membership News. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Upcoming Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

2011-2012 Chapter Leadership Team Holds

Two Day Planning Meeting . . . . . . . . . . . . . . . . . . . . . . . . . 17

From the editor’s desk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Five Strategies for Physician Engagement . . . . 18-19, 21-22

Strange Bedfellows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-25

2010-2011 Corporate Sponsors. . . . . . . . . . . . . . . . . . . . . . . . 26

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Top Health Industry Issues of 2011For more information please contact Steve Lutfy, FHFMA at

Stephen.G.Lutfy@us.pwc.com or (803)753-5209

By: Serena Foong, Senior ManagerSandy Lutz, Managing Director, Lone Star ChapterTony Lopez, Research AnalystColleen Chelini, Senior Associate Sarah Haflett, Manager

2011 is a makeover year for health industry organizationsreacting to and preparing for new rules and paymentmodels. Continuing cost pressures and new customerdemands require a fresh look at existing roles of industryplayers.

Issue #1:Booming business in health information technology

The HIT spending boom is driven by the federalrequirements that hospitals and physicians meet at leaststage one requirements for the meaningful use ofelectronic health records to qualify for federal stimulusfunds in 2011.

Stage one requirements mean hospitals and physiciansmust be able to provide patients with an electronic copyof their health record upon request.

An aggressive timetable for massive upgrades in back-office infrastructure to comply with new medical codingrequirements that will add five times the number ofdiagnosis and inpatient codes and require providers andpayers to use the new HIPAA 5010 electronic transactionformat, which will require more than 1,300 systemmodifications by January 2012.Final FDA rules that willrequire online reporting of adverse events related tomedical devices, resulting in possible new trackingtechnology throughout the supply chain.

Issue #2:Gearing up to redefine health insurance: From MLRsto insurance exchanges

Legislating coverage was the first step. Implementingcoverage is the next. And, that implementation has newguardians. The percent of insurance premium dollarsallocated to providing care, known as the medical lossratio (MLR), will be a primary focus of the governmentand the health insurance industry.

In 2011, health plans must start reporting their MLRs forindividual and small group health insurance for each state

in which they do business. The deadline won’t be until2014 for state health insurance exchanges to connectindividuals and small businesses with health insurance,but states must apply for certification by January 2013 orlet the federal government set up an exchange for them.

The new health reform rules significantly impact profitmargins for health insurers by setting a floor for MLRs:80% for small employers currently defined as those withfewer than 50 employees, and 85% for large employers.That means that if insurers don’t spend what the lawmandates as the minimum percentage on medical services,they must provide a rebate for customers, beginning inAugust 2012.

Issue #3:ACOs: Is this the next big thing or not?

The health reform law will create a new type of caremodel, called the accountable care organization (ACO). It’salready created a large amount of buzz within the industryalthough less than a third (28%) of consumers surveyedby PwC were familiar with the term ACO. While ACOshold great promise for reduced costs and improvedquality, the challenge will be keeping people in the ACOand engaging them to stay healthy, which could be thedifference between profit and losses. PwC’s research foundsignificant demographic and geographic differences inconsumers’ willingness to seek all their care within ACO-like organizations, indicating the need for consumersegmentation strategies.

Issue #4:Nowhere else to cost shift: Consumers could continueto reduce utilization

In 2011, for the first time, most employers are expected tohave a deductible of $400 or more built into theiremployer-sponsored health insurance. The trend in risingdeductibles has been remarkably fast. In 2008 and 2009,the most common plan had no deductible, according toPwC's survey of 700 employers. By 2010, the mostcommon plan among employers surveyed by PwC haddeductibles of $400 to $999. In addition, according to thePwC survey, high-deductible plans are now the primaryplans for 13% of employers surveyed in 2010, up from sixpercent in 2008 (See Figure 4).

This level of deductibles is expected to trickle down to

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providers. Research has shown that as consumers areforced to pay higher deductibles, they reduce utilizationbecause they have nowhere else to shift their portion ofthe costs. That's likely to be especially true in a slowlyrecovering economy. With coinsurance as with highdeductibles, workers become more aware of the full costof the drugs or services they're using and consequentlywould be more likely to shop around for, delay or avoidservices.

With more employees being squeezed with high-deductible plans and coinsurance, their increased costsensitivity will push them to make hard decisions on howoften to go to the doctor or what prescriptions to fill. Thedanger lies in whether short-term cost avoidance couldlead to more expensive conditions in the long term. Sixtypercent of consumers surveyed by PwC said they expectedto continue paying more out of pocket for healthcare.

Issue #5:M&A: Deals will bond the familiar and unfamiliar asorganizations look to fill strategic gaps

Deal activity in all health sectors is on an upward trendthat will continue into 2011. Companies will be lookingfor growth as well as to fill in services along the

continuum of care. With continued low interest rates andmore cash on hand, healthcare organizations will beencouraged to discuss deals that help them manage futurerisks and tackle costs. The activity could traverse unlikelyterrain as suppliers buy providers, as health plans teamwith providers, and as pharma/life sciences companies getinto more services along the care pathway. Thoughconsumers are wary of the benefits of M&A, many seemopen to new provider alliances.

Issue #6:Follow-me healthcare: Patients look to healthorganizations that are always on

Rapid innovation and the adoption of digital technologiesare dramatically changing customer expectations of thehealth industry. Physicians and patients expect increasingamounts of health-related information, anytime andanywhere. Healthcare organizations are spending tons ofresources to produce online content, yet PwC found thatconsumers are three and a half times more likely to go tothe media and third-party information service companiesfor information about treatments and conditions than toany other site, especially pharmaceutical company websites.

HFMA, South Carolina Chapter

Our Vision: The South Carolina Chapter of the Healthcare Financial Management Associationwill continue to be the leading professional resource for individuals seeking excellence in thearea of financial management of integrated health systems and other healthcareorganizations.

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Make your chapterwork by workingfor your chapter

Become aVolunteer!www.schfma.org

TRUST.VALUE.CHOICES.SouthCarolinaBlues.com

BlueCross BlueShield of South Carolina is an independent licensee of the Blue Cross and Blue Shield Association.

HFMA Certification Program

What’s New in 2011?

For more information on certification changes, please contact: Steve Lutfy, FHFMA 803.753.5209 stephen.g.lutfy@us.pwc.com or visit: http://www.hfma.org/certification/

Old Certification Program New Certification Program (effective January 2011)

Successful completion of 2 certification examinations required: the Core exam and a Specialty exam

Successful completion of 1 comprehensive certification examination is required

Candidates must be members of HFMA for a minimum of 2 years

Candidates must hold HFMA membership. No time duration prior to becoming certified is required

Preparation materials are available as printed hard copy

Preparation materials will be available online

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Are you Taking Full Advantage of the OpenWindow Opportunities?

Mary Cronin, FHFMADirector, Reimbursement Services, Besler Consulting

It is that time of year again, as the weather begins to cool down, opportunities surrounding your wage indexbegin to heat up. The Center for Medicare and Medicaid Services (CMS) has released the FY 2012 Hospital Wage IndexDevelopment Timetable. The first key date listed on the timetable is October 4, 2010, when CMS issued two public usefiles: (1) the unaudited FY 2008 wage data file and (2) the 2007-2008 occupational mix survey data. The second keydate is December 6, 2010, which is the deadline for hospitals to submit all revisions to their worksheet S-3 wage data, aswell as, their 2007-2008 occupational mix survey data. This open window timeframe provides hospitals with one lastopportunity to review their wage index and occupational mix data which will be used in the calculation of the FY 2012Hospital Wage Indices. All requests for revisions, with supporting documentation, are due to your FI/MAC by December6, 2010.

The long debated issue of transforming the wage index and how it will change is among the many discussions onhealthcare reform and the future changes to Medicare reimbursement. Although they have until December 31, 2011 tofinalize their decisions on wage index reform, CMS has recently stated their intent is to include these changes in the FY2011 rulemaking for FY 2012. With that said, since the future of wage index is unknown, there is still the need toreview the FY 2008 wage data being issued by CMS because of the possibility that this will be the data used for the FY2012 wage index calculations.

It is essential that providers review the FY 2008 data included on the public use file and to revise the submission for anyadditional data they may have at this point. The national unadjusted average hourly wage for FY 2011 is $34.9895,which is a 4.3% increase over the FY 2010 national unadjusted average hourly wage of $33.5491. So, in order tomaintain your fair share of the wage index dollars, the average hourly wage for your Core-Based Statistical Areas (CBSA)needed to increase at least 4.3% between 2006 and 2007. Many hospitals have begun to include their Administrativeand General contracted labor on Line 22.01, but this opportunity remains for many providers.

Hospitals also have an opportunity to review the 2007-2008 occupational mix submission. The calculated averagehourly wage is adjusted for occupational mix, which is currently based on the 2007-2008 occupational mix survey data.The occupational mix adjustment reduces the FY 2011 national average hourly wage by 0.06% or $0.02. The purpose ofthe occupational mix adjustment is to adjust the average hourly wage in a CBSA for the choice of staffing mix by theproviders in that area. Providers (and their respective CBSAs) with a higher mix of lower paid personnel (i.e. nursingassistants and nursing aides) receive higher occupational mix adjustments.

In addition to the current open window reviews, CMS is proposing to issue the next occupational mix survey for payperiods in calendar year 2010, which would be due July 1, 2011. Assuming the occupational mix continues to be usedas it has been historically, the data from this next survey would be applied to the Fiscal year 2013, 2014, and 2015 wageindices. Hospitals should take the time to review their job code mapping used for their previous occupational mixsurvey submissions to ensure each job code is being mapped appropriately.

Although many of the recommendations for revising the wage index include using a different data source, CMS is stillrequesting providers to review the data elements currently used in the wage index calculations for FY2012. It is essentialfor providers to review the wage data included in the public use file and to submit any requests for revisions to theirFI/MAC by December 6, 2010. The FI/MAC will then have until February 9, 2011 to review the requested revisions,make a determination and submit the revised data to CMS. If a provider has revisions that are accepted by the FI/MACthe next step would be to review the revised public use file upon its release by CMS on February 22, 2011.

For more information, please contact Mary Cronin at 732.839.1217or mcronin@beslerconsulting.com.

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Certified Revenue Cycle Associate(CRCA) 2011 Update

By: Darlene Essick, CPA, CRCA, CRCA Committee Member

SCHFMA’s Certified Revenue Cycle Associate (CRCA)Committee members held a meeting in Columbia onFebruary 25 to plan for upcoming CRCA events andtesting. The CRCA program and certification provide astate specific training program for revenue cyclepersonnel. A CRCA certification provides graduates witha competitive edge in today’s healthcare industry.

CRCA committee members and volunteers are feverishlyupdating the study manual to include the latestinformation in the area of revenue cycle processes. Anintensive review of the manual is scheduled for Friday,June 17 at the Lexington Medical Center auditorium.Representatives from payers and other SCHFMA associateswill review the content of the fourteen chapters includedin this year’s manual. Topics will include patient access,customer service, billing claim forms’ requirements, payerspecific details, COBRA, HIPPA, compliance, collections,coding and reimbursement. Anyone interested infurthering his or her knowledge of the revenue cycle isinvited to attend this free session. You do not have to be amember of HFMA to attend this session. You will be ableto register for this event on the SCHFMA website at(www.schfma.org/crca.htm) in the near future.

Registration for the CRCA program will open in earlyJune. Candidates will be able to register for the programon the SCHFMA website at www.schfma.org/crca.htm.Registration for the program is $65.00 and includes a CDof the study manual and a CD video of the study sessionon June 17 with the accompanying PowerPoint slides.CRCA certification testing is tentatively scheduled forsometime during the week of October 10 with a re-takeexam to take place in mid November. The cost of theexam is $100.00 and the re-take exam if necessary will be$50.00 (for one or both sections). Exam dates andlocation will be announced soon. The exam consists of 2parts and approximately 130 questions with a passinggrade of 80%. If a candidate passes only one part of theexam, they will need to re-take only the section notpassed. If you need any additional information about thisprogram, please email Brian Walker (Committee Chair) atBrianK.Walker@PalmettoHealth.org or Michael Jebaily(Committee Co-Chair) at michael.jebaily@us.pwc.com.

Congratulations to all 2010 graduates of the program withspecial recognition to Donna McGowan of PalmettoHealth for having the highest score on the exam taken lastOctober.

Way to Go, Donna!

Pictured in photo from left to right: Brian Walker, Debbie Hunt, Donna McGowan and Tom Eckert

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The 2011 SC HFMA Annual InstituteIndulge in Education, Networking, Leadership Development and Family Fun

The Myrtle Beach Hilton • May 31 – June 3, 2011

More info or to Volunteer: Contact Woody Turner 803-791-2915Online Registration Now Open

ACHIEVING NET RESULTS!Join your colleagues for the premier, knowledge-sharing event for healthcare financial professionals.

Stay on top of the latest trends and topics, including:

• Innovative Revenue Cycle Strategies• Understanding ACO’s• Updates on Healthcare Reform• Developing leaders • Updates on ICD10 and 5010• Understanding Meaningful Use

GENERAL INFORMATION Register online at http://www.schfma.org/events.htm . Please make checks payable to SCHFMA and mail withregistration form to:

SCHFMA Annual Institute 2011Debbie Hunt 293 Greystone Blvd Columbia, SC 29210 E-mail: Deborah.Hunt@PalmettoHealth.org

ACCOMMODATIONS Please make your hotel arrangements by May 13, 2011 bycalling:

Hilton Myrtle Beach Resort Kingston Plantation 10000 Beach Club Drive Myrtle Beach, SC 29572 843.449.5000.

Reserve your hotel room early! SCHFMA has reserved alimited block of rooms until May 11, 2011. After this date,reservations at the group rate will no longer be honored. Toreserve a room, you may contact the hotel directly at 1-800-445-8667.

EXHIBITORSIf you are interested in exhibiting at this SCHFMA AI 2011contact Jennifer Winchester: jpwinchester@lexhealth.org

CPE CREDIT Your state board is the final authority on the number of credithours allowed for a particular program. In all cases, theresponsibility for establishing that a particular program orcourse is acceptable and meets the continuing professionaleducation requirements rests solely with the individualapplicant for license renewal. We will provide certificates ofattendance for submission to your state board for credit.

CANCELLATION POLICYFull refunds will be issued to written cancellation requestspostmarked by May 22. After this date, refunds less a $50 feewill be issued on written requests postmarked by May 22. Norefunds will be issued after May 22.

DRESS RECOMMENDATIONS Business casual attire is appropriate for all meetings andsessions. Casual resort attire (bathing suits, shorts, etc.) isappropriate for volleyball, poolside networking, etc.

QUESTIONS? Please contact Woody Turner at lwturner@lexhealth.org or803-791-2915.

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SCHFMA Annual Institute 2011Schedule at a Glance

Tuesday, May 31st

3:30 - 5:00 pm Board Meeting

5:30 - 6:30 pm Presidents Reception

Wednesday, June 1st

8:00 - 9:00 am HFMA Certification Update

9:00 - 9:30 am Welcome – HFMA National Update

9:30 - 10:30 am ICD9 to ICD10

10:30 - 10:45 am Break

10:45 -12:00 am Round Table Discussion PFS – Proven Strategies for Success

12:00 - 2:00 pm Installation of Officers and Luncheon

2:00 - 3:15 pm ACO’s – Preparing and Developing a strategy

3:15 - 4:00 pm Vendor Appreciation Break

4:00 - 5:00 pm Meaningful Use

4:00 - 5:00 pm Physician Alignment Strategies and Options

6:30 - 9:30 pm Crocodile Rocks

Thursday, June 2nd

8:00 - 9:00 am Prayer Breakfast

9:00 - 10:00 am Precertification – Best Practices

9:00 - 10:00 am Audit and Accounting Update

10:00 - 11:30 am Healthcare Update

11:15 - 12:00 pm Family Lunch

12:00 - 5:00 pm Annual Jerry Walker Memorial Volleyball Tournament

12:00 - 5:00 pm The Ernie Easterling Golf Tournament

6:00 - 7:00 pm Reception – dinner on your own

Friday, June 3rd

6:30 - 8:00 am 3rd Annual Unofficial 5K Fun Run/Walk

8:00 - 9:00 am Breakfast

9:00 - 10:15 am Denials Management and Physician Documentation

9:00 - 10:15 am Developing Leaders for your organization

10:15 - 10:30 am Break

10:30 - 11:45 am “The Mammalogues”

11:45 - 12:00 pm Closing and Door Prizes

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MEMBER SPOTLIGHTBret D. Johnson, CPA

Sr. Vice President and Chief Financial Officer, Roper St. Francis Healthcare

College attended and degree earnedBA in Accounting from the University ofIowa Certified Public Accountant and memberof the American Institute of CertifiedPublic Accountants

What is new and exciting at yourhealth system?There are many exciting initiatives underway at Roper St.Francis Healthcare. On November 1st, we opened a new85 bed hospital in Mount Pleasant. In October of thisyear, the Roper St. Francis Cancer Center opened on thecampus of Bon Secours – St. Francis Hospital in WestAshley. The Physician Partners division continues to growand will soon exceed 200 physicians. Roper St. Francisalso received CON approval for a new 50 bed hospital inBerkeley County.

What are some of the biggest challenges in opening anew hospital?I really don’t know where to begin with this one. I wasamazed at how well coordinated the construction processwas and how they kept the project on schedule. A lot ofwork went into assembling the clinical team that wouldbegin operations at the facility and the corporate servicesareas worked hard to ensure all the back office functionswere in place. A lot of time was spent on medical staffdevelopment for the new facility and many hours wereinvested educating the community on the services the newhospital will offer. There are numerous permits andregulatory approvals needed prior to opening and itsimportant to note that certain payers (particularlyMedicare) do not reimburse for services until the facilityreceives accreditation.

What are some of your personal priorities for yourhealth system this year?Sustain margins during a period of rapid growth andcontinue to strengthen the System’s balance sheet.

What is your business philosophy?20 plus years in health care finance has taught meorganizations that focus heavily on excellence in patientcare along with employee and physician engagementconsistently perform well financially. Also, a critical factorto achieving and sustaining organizational results isimplementation of an objective leader evaluation systemthat properly aligns leaders to stated organizational goals.

What is the best way to keep a competitive edge?Make sure you are part of a team that is committed toexcellence. I also try to stay technically competent in the areas Isupervise and stay current with news and events withinthe industry. With all the changes taking place in healthcare, you have to work hard to stay current and maintainyour technical skills.

How do you measure success?Based on Roper St. Francis Healthcare achieving itsMission in the community and continuing to maintain thefiscal strength necessary to fund the strategic plan for theorganization.

What are your biggest accomplishments in the last 24months?In terms of the organization, I would note again theexciting strategic growth initiatives mentioned above.From a financial perspective, I’m pleased we havecontinued to increase cash flows during a period of rapidgrowth. Roper St. Francis has also implemented a formalBoard approved plan to strengthen the balance sheet inresponse to investment losses experienced in 2008. Theteam also continues to make strides in revenue cyclemanagement.

What goal have you set, but not yet achieved?Lose more weight and be able to throw away my bloodpressure medicine. That goal came from my wife.

What has been your toughest business decision?How to strategically allocate limited resources in suchuncertain times probably tops the list for many leaders inhealth care.

What has been your biggest business lesson learned?The financial markets meltdown in 2008 taught me neverto say never and reinforced the need to always stayfocused on key fundamentals of financial management.

What is your career advice?Make sure you are part of a team you are comfortable withand respect. Hire the best talent you can and make sureyou enjoy coming into work.If you want to continue to progress in your career, makesure you are always in an environment that promotes thedevelopment of the skills and relationships necessary tomove up.

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What do you like least about your job?The uncertainty about where the health care industry isheading in the coming years. The new underwritingguidelines banks have implemented aren’t much fun todeal with either, but I’m sure that will improve over time.

What do you like most about your job?I very much enjoy working for a company that makessuch an important contribution to the community. I havegreat respect for those who have dedicated their careers tohealing the sick. Witnessing those involved in patientcare strive for excellence motivates me and my team tostrive for excellence in the things we do.

Attention Providers

Be sure to locate your business partner on theback page of the Palmetto State News and letthem know you appreciate their sponsorship!

Well if you haven’t seen it yet, you have missed our newly reconstructed website. Visit the much improved website at www.schfma.org. The website contains many new features and was redesigned by chapter Information Services Committee Chair Michael Bowe and chapter webhost and site designer, Randy Soles. “After reviewing the membership survey, feedback from our events, and board meeting discussion it was apparent that we needed to give the Chapter website and fresh new look with more functionality.” said Information Services Committee Chair Mike Bowe.

Randy Soles, who has been providing web support to the chapter since 2003 credits direction from key chapter members for the current design. “I met with Mike Bowe and Debbie Hunt to discuss a new site plan and layout. After determining which enhancements would best serve the Chapter I started on a new design. The new site took about a month to develop and after getting approval from Mike and Debbie we went live. We also moved the hosting to a new server which has more features to accommodate the enhancements.” After taking just a few minutes to navigate through all the new and redesigned pages of our site, be sure to let Mike and Randy know what you think! Reach Mike at michaelb@resourceone-llc.com and Randy at randy@solnar.com. 14

Improved Website Sets Visual/TechnicalTone for Chapter

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2011 HFMA ANIOrlando, Florida • June 26-29, 2011Gaylord Royal Palms Resort Hotel

http://www.hfmaconference.org

Register Now for HFMA’s 2011 ANI: The Healthcare Finance Conference

Join us in Orlando, Florida June 26-29, 2011 for a powerful line-up of best-practice sessions led byindustry leaders and covering important topics such as Reform, Value, Clinical Transformation,Accountable Care, and Revenue Cycle. In addition, multiple networking opportunities and 27.5CPEs ensure a valuable experience. Learn more and register – early-bird pricing now available.

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MEMBERSHIP NEWSBob Minus, Membership Chair

incoming Chair of the Membership Committee for the 2

I'm p

Christy Powers, incoming Chair of the Membership Committee for the 2011-2012 year, is currently inthe process of recruiting committee members from SC HFMA membership. "During the 2011-2012chapter year our membership committee will be working, at a minimum, to meet the CBSC goals formembership for the chapter year. I'm proud to be the incoming Chair & look forward to membersvolunteering for my committee, " said Powers.

Those interested in learning more about the membership committee or interested in serving shouldcontact Christy at christypowers@synovus.com.

Christy Powers2011-2012

Membership Chair

UPCOMING EVENTSUPCOMING EVENTS

HFMA LTC May 15-17 New Orleans

Annual Institute May 31-June 3 Myrtle Beach, SC

HFMA ANI June 26-29 Orlando, FL

Committee Meetings Mid-July Columbia, SC

Fall President’s Meeting Sept. 23-Oct. 1 Caribbean Princess

Fall Institute Oct. 19-21 Greenville, SC

Awards Luncheon Jan. 2012 Columbia, SC

Reg. V Dixie Institute Feb.21-24 Greensboro, GA

HFMA LTC May 15-17 New Orleans

Annual Institute May 31-June 3 Myrtle Beach, SC

HFMA ANI June 26-29 Orlando, FL

Committee Meetings Mid-July Columbia, SC

Fall President’s Meeting Sept. 23-Oct. 1 Caribbean Princess

Fall Institute Oct. 19-21 Greenville, SC

Awards Luncheon Jan. 2012 Columbia, SC

Reg. V Dixie Institute Feb.21-24 Greensboro, GA

From the editor’s desk

During my last few days of preparing the chapternewsletter for delivery my sister Rena happen toremind me that since I turned 50 years old lastDecember that its time for the dreaded“colonoscopy”. Rena’s 7:00 AM e-mail came as Iwas at my desk preparing for the day so thewonderful reminder stuck with me all day.

Rena, being delightful as she is, also included somehumorous quotes to share with my doctor when Ido decide that its time for the ultra-fun and ultra-anticipated procedure. I thought how appropriateto share with my fellow healthcare industryprofessionals!

Colonoscopies are no joke, but these commentsduring the exam were quite humorous..... Aphysician claimed that the following are actualcomments made by his patients (predominatelymale) while he was performing their colonoscopies:

1. 'Take it easy, Doc. You're boldly going where noman has gone before!'

2. 'Find Amelia Earhart yet?'

3. 'Can you hear me NOW?'

4. 'Are we there yet? Are we there yet? Are wethere yet?'

5. 'You know, in Arkansas, we're now legallymarried.'

6. 'Any sign of the trapped miners, Chief?'

7. 'You put your left hand in, you take your lefthand out...'

8. 'Hey! Now I know how a Muppet feels!'

9. 'If your hand doesn't fit, you must quit!'

10.'Hey Doc, let me know if you find my dignity.'

11.'You used to be an executive at Enron, didn'tyou?'

12.'God, now I know why I am not gay.'

And the best one of all:

13.'Could you write a note for my wife saying thatmy head is not up there?

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2011-2012 Chapter Leadership Team HoldsTwo Day Planning Meeting

Meeting on a Friday afternoon thru Saturday morning, April 8th & 9th, incoming SC Chapterleaders led by President-elect Ronnie Hyatt held a two day leadership summit in Greenville, SC.

The Mini LTC, as commonly referred to as the meeting, had representatives from all majorcommittees.

"We spent a lot of time at Mini-LTC focusing on Committee Chairs and Committee responsibilities,and hearing from those incoming Chairs as to their upcoming plans being developed and finalized.”said Hyatt. “It was a huge success, based on all comments received. We reviewed many things perour Agenda, such as the Strategic Plan, 2011-2012 Budget, upcoming CBSC Goals and Objectives,

Bylaws, CRCA, etc.”

Hyatt, Incoming President-elect Diane Story and Secretary Jude Crowell along with the major committee chairs willtravel to New Orleans for the HFMA Leadership Training Conference (LTC) May 14th thru 17th. HFMA as well asChapters conduct LTC meetings annually to help volunteer leaders prepare for their year in office.

Ronnie HyattPresident-elect

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FIVE STRATEGIES FOR PHYSICIANENGAGEMENT

By Nick Sears, MD

The incentives for physician integration are plentifulfor hospitals, especially as payment reforms shift thebasis of payment from volume to value and as risingsupply costs make it increasingly difficult for hospitalsto improve service-line margins. Successfully engagingphysicians in cost containment initiatives can tilt thebalance on service line operations toward greaterprofitability—and ultimately improve overall operatingmargins.

“Physician engagement is the lynchpin to turn papersavings into real savings,” says Roger Weems, senior vicepresident, performance improvement, WestchesterMedical Center, Valhalla, N.Y. “You can negotiate newcontracts with savings in place, but if you aren’t effectivelyworking with physicians and gaining assurances that theirutilization patterns will support those presumed savings,it’s a useless effort.”

There is no “one-size-fits-all” approach to physicianengagement. Each organization has unique operationaland political issues as well as varying levels ofcommunication between the members of its medical staffand its administrators. However, a number of successfulstrategies for physician engagement can be learned fromproviders nationwide that have reduced supply costs andmaximized reimbursement through effective collaborationwith physicians. Here are five strategies your organizationcan incorporate to drive physician engagement.

Strategy No. 1: Listen to Physicians’ ConcernsBefore Making RequestsOne of the most effective strategies for successfulphysician engagement may also be one of thesimplest: taking a step back to listen to whatphysicians are saying and build the trust that’s thefoundation for any productive partnership.

For Joe Colonna, vice president of supply chain forPiedmont HealthCare in Atlanta, the strategy is blunt,but effective. “Shut up and listen,” he advises. “Trust isabout building relationships and not coming to thetable the first time with an ‘ask.’ Don’t make your firstconversation with physicians about what they can dofor you. Instead, get their input on where they seeopportunities to lower costs and improveperformance, and be in a position to deliversomething from those conversations.”

These initial conversations with physicians also canprovide insight into the quality of communicationwithin an organization and whether physicians and

administrators are aligned or have a contentiousrelationship. Where good dynamics exist, it’s ofteneasy to determine expectations from both sides as wellas forecast the level of cooperation expected at theoutset. In situations where relationships are strained,one-on-one meetings with physicians will yield detailson the issues that present challenges, the roadblocksto navigate, and potential solutions.

Once those findings are presented to theadministration, providers can decide on ways toresolve issues and broker deals that focus attention onthe true problem at hand, such as how to decrease thecosts of physician preference items while preservingthe quality of care, or how to develop a value analysisprocess and gain physician support over the long haulthat sustains lower price points.

And when trust is established and communicationissues are resolved, the concept of physicianengagement can evolve into a reality. Pam Scott, vicepresident of supply chain management for BaylorHealthcare System, Dallas, subscribes to the benefitsof listening: “Physicians have been phenomenal intheir support of our initiatives. They know that whenwe have an issue in one of our service lines, I’m firstgoing to get their input and ask them for guidance onhow to respond. In turn, they will help manage usthrough the process of dealing with the issue.”

Strategy No. 2: Identify Physician ChampionsA critical first step in establishing the level of trustnecessary for effective communication is identifyingchampions from among medical staff members whowill serve as liaisons to the administration and provideleadership, accountability, and clinical oversight forinitiatives designed to reduce the costs of physicianpreference items. Doing so will provide the frameworkto address issues and ensure targeted, efficientcommunication.

Baylor Healthcare System has physician champions inplace at each of its 14 facilities to help with strategicinitiatives. “When our organization consideredundertaking an orthopedic/spine initiative, we went toour champions first, explaining the project, theprojected savings around it, and its overall impact onour system, and emphasizing the need for physicianparticipation,” Scott says. “Once our physicianchampions for this specialty were on board, weintroduced the initiative to all of the orthopedic/spinesurgeons who practice in the Baylor system.”

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Scott and her team held meetings with itsorthopedic/spine physicians, sharing aggregatedservice line data as well as individual proceduraloutcomes and financial data, and discussed how costsrelated to the service line affected margins. “Weshowed them everything so that it was transparent:‘Here are the costs, and here’s what Medicare pays,’”Scott says. “The physicians understood that theinitiative was not just a process to help ourorganization save money and improve our bottomline. It was about the fact that this service line waslosing money—and this threatened our organization’sability to continue infusing capital into the service lineif that trend continued.”

Because Baylor took the time to secure physicianchampions for the initiative before it was introducedto all physicians in this service line, the organizationhad such a strong level of support for the project thatit was able to complete the initiative in 90 days—three months ahead of schedule.

The process of engaging physician champions canvary. Regarding Westchester Medical Center, Weemssays, “We try to be less formal. For our various serviceline projects, we know that the chair of surgery ineach area is going to make or break the initiative, sowe rely on the leader to provide insight and supportfor hospital-led initiatives in those areas. We ask theserepresentatives which physicians need to be at thetable for the initiative to succeed, and how tocommunicate change to the physicians who areperforming the procedures. We respect each leader’spreference on how to engage physicians in the serviceline, so we allow our surgery chairs to lead the chargeand structure the communication in a way that worksbest for their departments.”

Irv Zeitler, DO, vice president of medical affairs forShannon Health in San Angelo, Texas, credits hisphysician leaders with securing the support of themedical staff for key initiatives: “They commandrespect, and their opinions are valued by the otherdoctors. The practice of medicine isn’t different herethan anywhere else, but the way in which we interactwith our peers to accomplish what’s required clinicallyhas supported our organization’s success.”

Strategy No. 3: Ensure that Practice PatternsSupport Savings Over TimeSuppose a provider negotiates a 30 percent savings onthe price of bandages. Initially, it’s easy to quantify thecost reduction. However, as time passes, it’s importantto continue to track those savings and determinewhether actual physician usage is mirroring theexpected financial benefits.

For example, what if the supplier were to introduce anew, improved bandage that would decrease physicianuse of the older type of bandage in favor of theupgraded—and more expensive—new bandage? Andwhat would happen if both types of bandages wereunder contract, but physicians favored use of thecostlier bandage? Projected savings in both instanceswould go out the window. To stop the savings drain,it’s crucial to be able to quickly identify shifts inutilization, discuss the shifts with physicians, andadjust contracting strategies accordingly when newtechnologies enter the picture.

Strategy No. 4: Involve Physicians in MonitoringCost SavingsIn today’s world, sound physician engagementstrategies, coupled with advancements in technology,allow providers to gain the upper hand in controllingthe cost of supplies and medical devices. Innovativeproviders have found that involving physicians intracking the costs related to their use of supplies anddevices can lead to unexpected savings.

Piedmont HealthCare in Atlanta has implemented amodel that allows physicians to self-manage the cost-savings initiative. “In our electrophysiology area, werecently reached a market share agreement with ourphysicians where we commit a certain percentage ofour market share for products such as pacemakersand defibrillators to two suppliers,” Colonna says.

Each electrophysiology physician at PiedmontHealthCare reviews usage numbers weekly, and thephysicians meet as a group monthly to ensure that theelectrophysiology service line is meeting its marketshare commitment. The process allows the supplychain team to meet quarterly with suppliers andconfirm that Piedmont delivered the numbersexpected in return for continued aggressive pricingoffered under the contracts.

“From the supply chain side, we facilitated thedialogue with the physicians in this specialty andshowed them the opportunity for savings,” Colonnasays. “Ultimately, they decided that it was a modelwith which they could live, so we developed it withtheir guidance. Now—on a daily, weekly, and monthlybasis—our physicians are ensuring that we meet ourmarket share commitments and achieve the projectedsavings.”

One key to the model’s success: All sides honor theircommitments, which is important not only to meetbusiness goals, but also to respect the dynamics ofrelationships between the provider, its physicians, andsuppliers. “To get to the next level of savings, we need

Continued on page 21

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to better understand our suppliers’ cost points andmake the case that through these initiatives, we canhelp reduce their cost of doing business,” Colonnasays. “In return, our organization should get areciprocal reduction in the cost of our goods.”

The dynamics of each provider and the markets aprovider serves affect how strategies for physicianengagement are implemented, but the desired resultsare the same across the board: getting physiciansengaged in reducing supply costs. Shannon MedicalCenter serves a semirural community in West Texas.“Our physicians understand how their practices andour hospital and satellite clinics work together foreveryone’s benefit,” Zeitler says. “They also realize thatnow more than ever, in an era of healthcare reform,it’s important that the hospital be successful. We mustpreserve high-quality patient care, but theorganization has to be financially viable to providecare and service.”

At Shannon Medical Center, hospital administratorsare working with physicians in specific service lines toenhance margins. For example, by working with theorganization’s neurosurgeons, Shannon Medical Centercompleted a cost-reduction initiative in the neurologydepartment in fewer than six months. “Theneurologists have been very cooperative in ourefforts,” Zeitler says. “They sent the message tosuppliers that if suppliers chose not to work with ourorganization to reduce costs, the neurologists wouldwork with another supplier.”

Strategy No. 5: Use Data to Support Changes inBehaviorDefinitive results are not earned on the basis ofgoodwill alone. For physicians, data are a criticalcomponent in making tough decisions that couldbenefit the hospital and their department.

“Physicians want comparisons,” Zeitler says. “They’renot very eager to accept the word of hospitaladministrators at face value when administrators areasking them to make a change. But whenadministrators can present physicians with benchmarkdata, regardless of the clinical indicator, it makes thetask a lot easier.”

Historically, Westchester Medical Center has beenstarved for good data, but investments in newtechnology have been the cornerstone for recentsuccess in engaging physicians in the cost-savingprocess, according to Weems. “Data are thedifferentiators between successful cost savingsinitiatives and less successful attempts to engagephysicians,” he says. “Physicians are scientists, andwhen we bring detailed information to the table to

share with them behind the scenes as we construct aprocess for achieving cost savings, they latch onto thatdata.”

Detailed transactional data played a key role inWestchester’s financial improvement initiative for itsorthopedic/spine service line, which has the highestnumber of suppliers of all service lines, as well as thelargest group of surgeons from whom to gain buy-in.The top spine surgeon used products almostexclusively from one of the market leaders, but thoseproducts were a major cost contributor to spineprocedures. Detailed data provided by Weems and histeam helped open that surgeon’s eyes to the costs ofthe products he was using at Westchester relative toprices charged at other hospitals at which hepracticed—where he had been privy to such details.

“It was the first time he had seen data relative to hiscases here, and he was irate about the costs that wewere incurring,” Weems says. “Not only did hesupport tougher negotiations with that supplier, buthe also vowed not to use those products until theprice was lowered significantly. And he even offered tomake calls and attend meetings with the supplier.Other surgeons in that specialty were similarlydismayed by the numbers. In effect, the strength ofthe data created a united front for change fromphysicians that’s a dream scenario for any supplychain executive.”

The important decisions that lead to savingsopportunities only resonate over time if the requisitefollow-up reinforces the process with physicians.Many physicians initially greet cost savings initiativeswith skepticism, remembering previous projects wheremomentum stalled and follow-up failed to happen.Keeping physicians up to date on progress made, andproviding feedback on financial performance throughtimely reports, emphasizes the ongoing value of thework. Diligent tracking beyond implementation letsall parties involved to know that not only have costsdecreased, but also that savings are being maintained.

Physician engagement initiatives require a unique mix ofpeople skills, process maneuvering, technologycapabilities, clinical prowess, and tenacious follow-up.The lessons learned are transforming the supply chainprocess—and how the clinical and supply sides of theequation work together. Physicians are beginning to viewthe supply chain team as an advocate and a resource, aswell as a strategic ally for continued improvement.

“At Baylor, we are getting more analytical and morestrategic,” Scott says. “It’s not about moving products; it’show you’re managing your business. As we enter the newworld to be created by healthcare reform, the supply chain

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Continued from page 19

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management team is going to be a key driver for finance,offering meaningful data and suggestions on how to useproducts to save money.”

According to Scott, providing physicians with the datathey need to make informed decisions is a key componentfor successful engagement of physicians in cost savingsinitiatives. “We have to own and understand the databefore we go to doctors for their support on an initiative,”he says. “We need to think about the questions they willask and be able to talk to them about their practices andtheir patients, and how they affect the organization interms of spend and product selection.”

Success in this arena creates its own momentum. AtWestchester Medical Center, both physician leaders andmedical staff members are pleased with the process forinvolving physicians in cost savings initiatives and itsstructure, and are bringing an abundance of new ideas forsavings to the table, using success on items such asimplants as springboards to consider other product areas.“Our physicians are engaged,” Weems says—and that isthe optimal outcome.

Nick Sears, M.D. is the Chief Medical Officer atMedAssets. He can be reached at nsears@medassets.com

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In a first-time effort to combine resources, the SouthCarolina Fair Share, a state patient advocacy group, haspaired with SC Hospitals to improve the availability ofcharity care to South Carolinians unable to pay because offinancial hardship. As part of the recent SCHFMAProvider Summit, John Ruoff, PHD, the SC Fair Sharepresident, presented to attendees recent new efforts toimprove the provision of charity care to the residents ofSouth Carolina. Through open minded meetings with anumber of hospital collections officials throughout the statethe patient advocacy group (often viewed as spokespersonsagainst the hospital collection process) has recognized thatthe CMS Medicare Bad Debt program, which is intended toprotect hospitals from unpaid Medicare co-pays anddeductibles, often serves as a inadvertent hindrance to theapproval of not only Medicare charity applications, buthospital charity approvals of all financial classes. SC FairShare’s meetings with the hospitals staff was part of asubcommittee of South Carolina Healthcare Voices, aconsolidated group of advocacy associations charged withsuggesting the implementation of PPACA at the state level.

The Impact on Medicare Cost Reports CMS recognizes verified bad debt and charity deductionson Medicare accounts as legitimate Medicare costs andreimburses hospitals 70% of Medicare Part A bad debt andcharity adjustments on the Medicare Cost Report. AsMedicare bad debt and charity recoveries remain one of thefew cost adjustments settled on fiscal year end CostReports since Medicare’s fully prospective payment systemwas enacted, Medicare Cost Report auditors in recent yearshave become more and more aggressive in reviewingMedicare bad debts and charity and have begun applyingvery strict interpretations of Medicare’s audit guidelines.Medicare bad debt and charity denials have become a verycostly part of the Medicare Cost Report audit process formany SC hospitals. Much of the new emphasis wasplaced on cost report audit pursuit of Medicare Bad Debtprocess adequacy in policy, procedure and documentation.A large number of South Carolina hospitals faced heavycost report settlements as auditors redefined whatconstituted adequate pursuit of an account at the time thecost report was prepared. Many adjustments were appliedto unsettled cost reports retroactively, in many cases over10 years in arrears; allowing hospitals no opportunity toconform retrospectively to the new interpretations. Manyother hospitals saw significant losses as FI’s refused torecognize CMS’ own provisions in place since the late1990s passed by congress to protect hospitals fromMedicare disallowances of Medicare bad debts based on

new requirements on providers (the moratorium).Defending the FI’s position, and consequently supportingmost associated cost report denials, CMS issued a JointSignature memorandum (JSM) in 2008 contradicting theirown moratorium by stating that “We have determined thatany instructions previously issued which allowed hospitalsto claim Medicare bad debts for accounts at a collectionagency based on a Medicare contractor’s interpretation ofthe policy as of August 1, 1987, are incorrect.” This JSMwas seen by CMS as closure of the Medicare bad debtissue.

As bad debt accounts were by far the larger portion ofMedicare uncollected coinsurance and deductibles, theimpact of the new imposition of enhanced charity auditrestrictions did not begin to surface until after the bad debtdust settled. Again as with the bad debt standards, the FIsinterpretation of very broad CMS regulations applied formany years to charity determinations became much morestringent and are being applied retroactively to cost reportyears long-since filed, even after good faith efforts weremade to comply with what had become longstanding auditpractices.

Perhaps even more importantly, the Medicare recipientloses in either situation. Given the financial position ofmost Medicare recipients, placing more stringentrequirements for documentation on this aged population isnot a justifiable requirement. Tightening the requirementsfor documentation of simple indigence places an undueburden on the patient. Accumulating documentation offederal income tax returns, W-2 forms, banks statements,etc., is a complicated and time consuming process foranyone, but particularly for the older population alreadyassumed to be in poor health because of their need forhealthcare in the first place. Conversely, there is concern that nationally, hospitals maysimply stop pursuit of charity applications based on themultiple steps and materials needed for charity dollars tobe claimed, therefore requiring these hospitals to processthe accounts as any other self-pay account. This places theunwarranted stress on a Medicare beneficiary of knowingthey are responsible for a bill causing hard decisions onpaying the hospital bill versus paying for other necessitiesduring the month such as drugs or food. Understandingthat charity efforts must be applied consistently to allpayers, reducing Medicare charity efforts could negativelyimpact the amount of charity care provided to all payers.Regardless of CMS’ current audit requirements and theirfuture implications on healthcare finance, it is unfair to

Strange Bedfellows

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hospitals to change the functional audit standards whichapply to previous periods as hospitals were followingpredetermined working interpretations of MedicareFIs/MACs, whether or not they fall within the boundariesof 42 C.F.R. § 413.20(b). Pursuant to the District Courtsinstructions to amend the PRM to uniformly define therequired components of a charity determination, we feelthat it is only reasonable that CMS define theirexpectations now and apply these standards to audits offuture periods after hospitals have had the opportunity tocomply with these requirements.

The Domino EffectAs charity guidelines, policies and procedures for Medicarebad debt approvals must mirror those of non-Medicareaccounts, conforming to Medicare audit findings frequentlydetermines the approval of uninsured and self-pay balancesas well therefore limiting those approvals. Strictrequirements for documentation of personal income andassets from FIs on Medicare charity approvals must beadhered to across-the-board to all payor types includingthe uninsured, making the charity application a very longand difficult process. Through first-time meetings directlywith hospitals, SC Fair Share and other patient advocacygroups have recognized that conforming to Palmetto GBA’sstrict interpretation of charity approvals, regardless ofhospital’s best intentions; have made it hard for non-Medicare recipients to receive charity approval as well.

Round one: IRS vs. CMSRecognizing that classifying indigent accounts as charityrather than bad debt better represents actual accounthistory both on the hospital’s internal financial reports aswell as a component of federal CMS reporting, the denialof charity accounts on the cost report misrepresents actualaccount activity and could distort information provided tolawmakers and impact future reimbursement decisionsaccordingly across all payor lines. Likewise, as hospitalsare being encouraged to provide charity care as a means ofcommunity benefit, Sen. Charles Grassley (R-IA), alongwith Sen. Jeff Bingaman (D-NM), have proposed that theIRS, CMS and Medicare Payment Advisory Commissionwork jointly to develop standard definitions of charity care.Sen. Grassley and Sen. Bingaman also want to establish ameasurement of charity care to become a factor in allowinghospitals not-for-profit status based partially on theamount of charity care that they provide. Continual denialof charity classification on the cost report due to minordetails will without a doubt reduce the amount of charitycare adjustments considered in these minimumrequirements potentially placing hospital’s NFP status atrisk.

The IRS has traditionally steered clear of hospital financeallowing Medicare protocols and audits to justify theappropriateness of hospital not for profit statuses. Morerecently, in response to concerns of the legitimacy ofhospitals NFP tax relief from legislators such as SenatorChuck Grassley, the IRS has created the new Schedule-Hon the 990 which allows hospitals to “Enter the estimatedamount of the organization’s bad-debt expense (at cost)attributable to patients eligible under the organization’scharity care policy.” The 990 Schedule H instructionsread:

Provide an estimate of the amount of cost reported online 2 that reasonably could be attributable to patientswho likely would qualify for financial assistance underthe hospital's financial assistance policy as reported inPart I, lines 1 through 4, but for whom sufficientinformation was not obtained to make a determinationof their eligibility.

At first glance this would serve the hospitals need toconvince the public that much of what is now consideredas bad debt is in actuality charity care not verified due toMedicare’s own tight restrictions and the patientsunwillingness to comply with supplying the necessarydocumentation. In reality, this addition has become a twoedged sword in that it is nearly impossible for a hospital toestimate this amount without national standards anddefinitions. Typically, hospitals in South Carolina aresupplying no data in this field. For those argumentsagainst a hospital’s NFP status, this blank field is beinginterpreted as a response of zero or no bad debt dollarsthat would have actually qualified as charity. Therefore, itnow appears that hospitals are admitting that verifiedcharity approvals are the only true charity that hospitalsoffer their communities, even though the entire hospitalfinance community knows differently. Underestimatingthis amount, to a lesser degree will have the same impactwhile overestimating this amount will lead to morequestions about the accuracy of hospital data. Thisresolution will not be made in short order making it evenmore important than ever for CMS to allow hospitals toprovide free care (documented free care) to theircommunities.

Combined ForcesThe South Carolina Hospital Association (SCHA) hasalready challenged Palmetto GBA’s interpretation with theiraudit officials and has filed an appeal to the regional CMSoffice seeking support from the South Carolina federallegislature. Recognizing the impact on these auditoutcomes to all charity approvals in the state, SC FairShare officials have joined forces with the SCHA in

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pursuing a review of Palmetto GBA’s interpretation of thefederal guidelines as well as the audit application of such.In this new consolidated effort SC Fair Share has filed twoadditional complaints with the regional CMS office and ispursuing the issue further with the agency. As is should,this communicates to CMS that this is not an issue limitedstrictly to Medicare reimbursement, but to charityapprovals across all payor lines. SC Fair Share is teamingwith hospitals in attempting to redefine Palmetto GBA’sdefinition of due-diligence in approving charityapplications; in particular the verification of personal assetswhich often requires the most participation from thepatient or responsible party. Ruoff also shared his group’sideas for making patients more aware of the availability ofcharity care to needy South Carolinians and the need forfollow up with patients post-discharge to assist withcompleting the application process.

Differing PerceptionsWhile unified on the Medicare audit issue, at the ProviderSummit Mr. Ruoff further expressed his groups concernsthat SC hospital’s charity policies were too stringent, all SChospitals should utilize a statewide charity policy andapplication, hospitals did not make reasonable efforts topromote the availability of charity care and his opinion thatcharity care should be extended to patients with income farabove current standards. In the question and answerportion of his presentation, those in attendance expressednumerous concerns with the patient advocacy group’ssuggestions such as the potential anti-trust implications ofa consolidated application and discount policy as well asother potential legal implications. .

Further discussion proceeded in the afternoon sessionwhich highlighted many facts that this and many otheradvocacy groups should recognize. One particular pointrecognized by the group is the fact that the very structureof healthcare charity is on the brink of change to bebrought about by healthcare reform as one of the key goalsof the ACA is to extend healthcare coverage to a greatmajority of US citizens, to include assistance to those withincomes up to 400% of the US poverty level. State andhospital Medicaid, charity and discount policies must becarefully structured not to contradict those of the new ACAlegislation and hospitals should be cautious not to assumethe role of a quasi national healthcare insurance provideroutside of federal regulations. This, identifying yet anotherlayer of importance to recognizing charity care as such.

Mutually BeneficialIronically, qualifying care provided to the uninsuredwithout the ability to pay for their care as “charity care” hasalways been a pursuit of hospitals. Continuing the billing

process on accounts with no ability to pay is a costlyfunction for hospitals delivering little if any financialresults. Following the normal AR process on theseaccounts increases a hospital’s AR Days and often producesmore lost recoveries on the Medicare Cost Report due toaudit rejections than by simply ignoring the charityprocess, making the required collection attempts andlisting the account as bad debt on the cost report. Perhapsmore importantly, the inability to quantify bad debts thatwould more appropriately be classified as charity write-offsgrossly understates a hospital’s true financial benefit to itscommunity. With looming threats to hospital’s not-for-profit statuses, these classifications will become a financialreality as well.

GroundbreakingThese recent efforts to share information and commoninterest among hospitals and patient advocacy groups havebeen the first of their kind in our state. This presentationfrom SC Fair Share was a first attempt by the HFMA PayorSummit planners to include SCHFMA in that process.Hospital advocacy groups such as SCHFMA and SCHAneed to educate outside groups of hospital self-paycollections challenges and the fact that actual collectionpractices of hospitals do not involve home foreclosures andother such drastic measures as is often assumed and evenpresented in the press. The planners of the meetingapplaud SC Fair Share for their brave participation in themeeting. Planners feel that the attempt will provebeneficial in the future and that an appropriate next stepwill be a follow-up with the entire advocacy group tosummarize both the summit attendee’s concerns and thefact that hospitals themselves serve as the ultimate patientadvocate by continuing to provide care to those patientswithout the ability to pay, far beyond the EMTALArequirements for emergency care, even though manycannot or refuse to comply with charity application anddocumentation requirements. We hope these insightfulsuggestions towards the benefits of the two groups workingtogether can continue to open doors to the public’sunderstanding of healthcare’s challenge of providing care tothe truly needy without passing along inappropriate coststo our paying customers the cost of care for those whosimply refuse to pay.

Osborne

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2010/2011 Corporate Sponsors

The 2011-2012 South Carolina HFMA Corporate SponsorshipApplications are now open!

The chapter truly appreciates the generous support from all of ourcorporate sponsors.

Contact Ray High at rhigh@medassets.com for more information on becoming aSC HFMA Corporate Sponsor

Presidents ClubBlueCross BlueShield of South Carolina • www.southcarolinablues.com PricewaterhouseCoopers, LLP • www.us.pwc.com

GoldDraffin & Tucker, LLP • www.draffin-tucker.com Grant Thornton LLP • www.grantthornton.com

MED A/Rx • www.medarx.com

SilverBank of America Merrill Lynch • www.bankofamerica.com HyBridge Solutions, Inc. • www.hybridgesolutions.com

Bottom Line Systems, Inc. • www.onlinebls.com MedAssets • www.medassets.com

Chamberlin Edmonds • www.chamberlineedmonds.com Meridian Leasing

Deco, LLC • www.decorm.com PNC Healthcare • www.pnc.com

BronzeAccounts Receivable Collections, Inc. • www.arciservices.com Medical Data Systems, Inc. • www.meddatsys.com

Advanced Patient Advocacy LLC • www.apallc.com NCO Financial Systems • www.ncogroup.com

AMCOL SYSTEMS • www.amcolsystems.com Paragon Revenue Group • www.paragonrevenuegroup.com

CAB Collection Agency • www.cabrmc.com Proficient Health • www.proficienthealth.com

CB & T, a division of Synovus Bank • www.apsolutions-cbt.com Professional Recovery Consultants, Inc. • www.prorecoveryinc.com

Chapin Revenue Cycle Management, LLC • www.chapinrcm.com Receivables Management Corporation • www.reccollect.com

Digital Assurance Certification (DAC) • www.dacbond.com Receivable Solutions, Inc. • www.receivable-solutions.com

FirstPoint Resources • www.firstpointresources.com Security Collection Agency • www.abs-sca.com

FivePoint Solutions, LLC • www.MyFivePoint.com South Carolina Hospital Association • www.scha.com

Hollis Cobb Association • www.holliscobb.com The Outsource Group • www.theoutsourcegroup.com

Laddaga-Garrett, P.A. • sehealthlaw.com Yon-Drake & Associates

LarsonAllen LLP • www.larsonallen.com