How it affects the dialysis provider (and specifically QMS clients

The new bundled payment system is the greatest single change in dialysis reimbursement since End Stage Renal Disease (ESRD) was covered under the Medicare program in 1973. However, the concept is not new as it is a complex variation of the original payment methodology having everything associated with the treatment combined in one composite rate. A guest article, by QMS CEO, Dr. John A. Sargent was published in the October 2010 issue of Renal Business Today and contained a comprehensive discussion of bundling: its antecedents, details, and consequences.

Dr. Sargent was also asked to present, as part of the Renal Economic Symposium at Columbia University in October, the impact of this new payment system on the provider community and the need for sophisticated information systems in addressing the challenges that it presents. The symposium was sponsored by Atlantic Dialysis Management, a significant New York dialysis provider, Columbia University Medical Center, and the New York Society of Nephrology. In his presentation, Dr. Sargent discussed the changing nature of electronic information systems in light of bundling. Below is a summary of this discussion.

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What will be needed to comply and get all earned revenue?

Medical information systems take on an increased importance in light of bundling. Previously, the argument for automated information systems in medicine relied on the general principle of employing the latest technology, with resulting staff efficiencies and improved quality of care. Further expected benefits have been reduced redundancy of information, duplication of testing, and risk of malpractice due to automated safeguards, among other factors.

In spite of these arguments, the market penetration of medical information systems remains relatively small. A study by the Rand Corporation a few years ago yielded an estimated savings of up to $371 billion that could be realized by widespread use of healthcare information technology implied that the decision to use such systems would be easy. However, in the past, much of the cost savings flowed to the payor, while the cost of implementing the systems was borne by the provider. A tacit acknowledgement that the existing economics would not adequately drive adoption of electronic systems was the inclusion of a $40,000 inducement in the 2009 stimulus bill for physicians to automate their offices.

Until recently, dialysis providers were faced with the same issues: adoption of systems and uncertainty about the economic advantage of doing so. Bundling has changed that calculus.

Revenue: With bundling, comprehensive information will be needed to generate claims and assure complete reimbursement for services delivered to a well defined patient. Dialysis claims will also be more comprehensive with the addition of line item laboratory analyses and inclusion of all oral medications for the patient.

Revenue recognition, the accurate computation of expected revenue immediately after claims are submitted, will be critical for rapid business analyses as well as to verify correct payment from the Medicare Administrative Contractor (MAC). The MACs may well have the most challenging task of programming their claims processing systems to accurately compute payment; in this environment, the provider will be justifiably anxious about getting the correct amounts due.

Expenses: With revenue dropping by up to 6-8% from pre-bundling amounts, even with no omissions on the claim there will need to be a reduction in the cost of delivering treatment. An evaluation of the elements of treatment reveals there are areas that will lend themselves to greater optimization than others. Primarily this is likely to be in reduced use of Erythropoietin Stimulating Agents (ESAs) a major target for CMS. However, there are other smaller areas that will need to be addressed regarding delivery of dialysis therapy and other previously separately billable items.

What will be needed for a clinic to keep expenses within what is expected to be reduced revenue?

In ESRD with bundling there has been a drastic paradigm shift: If you don't have sophisticated comprehensive information systems your business is in jeopardy. In a recent article: “Preparing for the bundle: one year later” Premila Bhat, M.D. et al remarked: “All dialysis facilities, big or small, need to transition into electronic medical records (EMR) now.” At the August 2010 QMS Users' meeting Raffi Minasian, M.D. effectively said that clinics without electronic systems will not survive.

What the bundle has done is, in addition to the previous marketing by IT vendors, made a dramatic case for acquiring information systems for the very clear economic reason that without them a provider will be at considerable risk. Such systems are not magic. They represent a critical tool for the provider's staff to effectively address the revenue and expense issues by having better, integrated, information and being able to use it to address problems of payment and streamlining treatment with reduced resources.

What is needed to assure adequate payment? How will reporting oral medications affect future reimbursement?

The initial challenge for the provider is to assure that complete information is on the dialysis claim. A complete description of the patient – age and body size (currently used for the “case mix” calculation); recognized co-morbidities, both chronic and acute will be needed for full payment with accompanying ICD-9 codes. In addition, all ESRD labs done for the patient need to be line items on the claim, there are 53 of them. Of these 53 ESRD labs any that were done (or turn out to have been done) for non-ESRD reasons must carry a modifier, AY, and will be paid separately. Finally, although these data will not be used for payment of claims until 2014 all oral medications should be on the claims. This is a critical issue. There is a risk that providers may not commit enough effort to submit a complete list of oral medications, as it will not result in increased reimbursement. The original proposed rule for bundling included oral medication. However, the provider community raised objections, one of which was that these medications were not well defined and the funds that had been added in the bundle were significantly less than were needed. As a result, CMS asked for them to be put on the claim in order to develop the database that will be used when they are part of the bundle in 2014. Incomplete reporting will consequently result in under reimbursement when oral medications are included in the bundle.

What can providers do to ease any anxieties?

Smaller dialysis providers have long been working with the challenge of increased costs, stagnant reimbursement, and thin margins. Many are understandably anxious about what the future holds. There may be a temptation for these providers to contemplate selling, and the large dialysis organizations have amassed a treasury to take advantage of this nervousness. Our feeling (and our experience has validated this) is that smaller providers with close coordination of medical and business staff provide some of the highest quality dialysis care, and can successfully meet the upcoming challenges. The key is the effective use of information both clinical and financial, as well as tight data coordination and integration. As Dr. P. Bhat has said: “All dialysis facilities, big or small, need to transition into electronic medical records (EMR) now” (in addition to integrated financial systems) in order to successfully work in this new environment. Such capabilities are available and affordable.

QMS is ready for the bundle and our clients are too

Over the course of 2010 the entire QMS organization has been working to make all of the modifications to our systems to address the specifics of bundled reimbursement. We have also been working with our clients so that they will understand what information they will need and how various aspects of clinical data capture and of account set up need to be addressed. The version of our software that addresses the issues of bundling was released on November 12^th. Below are some of the specifics of our efforts:

• We have added tables in our Oracle database with associated entry screens so that additional data required by the bundle can be entered
• We have made key modifications in QCS so that clinical information now required on the claim can be easily entered – populating the Oracle database and these data will seamlessly be available to the claims generation processs
• We have coordinated with renal lab groups to assure that all labs now required on the claim can be automatically transmitted to QMS
• We have defined HL-7 interfacing protocols to labs and other systems to assure a smooth data flow into QMS Focus and QCS
• We are implementing comprehensive revenue recognition so that clients will accurately know their expected revenue as soon as claims are generated and can check MAC payment for completeness

Client orientation and preparation: In order to prepare our clients in advance of the January 1^st launch of bundling we are (and have been):

• Conducting a comprehensive series of Webinars so that clients can organize their data collection effort in advance of the January 1st launch of bundling
• Working with individual clients to get them started setting up their accounts for additional items, diagnostic codes, and different configurations that they will need to address the bundle

Thank you

QMS hopes that the above information is useful as you address the future. We would like to remind you not to hesitate to contact us if you have any questions or concerns about the dialysis industry. We can be reached at 1-800-752-4600 or you can e-mail us at qms@qms-us.com.