Navigating the world of healthcare finance: Adapting to change is the name of the game.

As healthcare institutions adapt to changing reimbursement models, strategies for saving money and growing financially are in no short supply.  The world of healthcare finance is always changing and successful finance professionals must constantly adapt to help steer the ship in often uncharted territory. Medical News recently sat down with Holly Hodge, Chief Financial Officer and vice president of Finance at Hospice of the Bluegrass in Lexington, Kentucky, to find out how they are addressing the challenges and thriving in today’s healthcare environment.

Ben Keeton: Which of your business lines has the most complex business processes from an accounting standpoint?



Holly Hodge: Each line of business is unique and operates differently with regard to billing and collection procedures. The most complex business process from an accounting standpoint is typically the newest line of business as we determine what processes and controls we need to put into place to account for the business operations.  Because the software product we currently use for hospice operations (which is our largest volume business line) doesn’t have the functionality to capture all of our business lines, we have to develop methodologies outside of that framework to capture all activities for new business lines following generally accepted accounting principles and applicable rules and regulations.

On a day to day basis, from an accounting standpoint, the hospice line of business is the most challenging due to frequent regulatory change. For example, in October 2014, The Centers for Medicare & Medicaid Services (CMS) placed new stipulations on billing requirements for hospice admissions.

For each Medicare admission, hospices are required to manually enter a Notice of Election (NOE) within five calendar days which alerts CMS an individual is a hospice patient. When the NOE requirements are not met, exceptions may be requested but they are only approved when certain circumstances exist and human error is never considered an exception that will be approved.

Another example of regulatory change was the implementation of a new reimbursement structure for hospices in January 2016 which created accounting complexities because there was only a small window of time between the time the change was finalized and the implementation date. The challenge for all hospices was to ensure revenue was properly recognized for services provided and to ensure correct reimbursement.

To further complicate the process, CMS announced that even though the new reimbursement structure was in place, the claims processing system was not paying claims correctly and this would not be fixed until mid-February.  Hospices were faced with difficult decisions including whether to hold claims for submission until the billing structure was corrected and risk possible cash flow issues or to submit the claims knowing they would not pay correctly, then put processes in place to ensure they were reprocessed and paid correctly once the fix was implemented.

Hospice is also complicated from an accounting standpoint because of the mandated responsibility for paying all related medical care a patient receives. This requirement necessitates contractual arrangements with numerous medical providers. Hospices first have to maintain processes ensuring contracts are in place with all providers and then pay any bills received in alignment with the established contracts.

BK: Which of your business lines has the most complex business processes from an operational standpoint? If not the same as above, then why are they different?

HH: From an operational standpoint, hospice also has the most complex business processes primarily due to the size and volume.

BK: What tools do you use to enable success?

HH: On a global basis, we use dashboards and analytics to validate accounting information comparing financial results to patient data points and other statistics looking for anything unusual.

On a procedural basis, we have put many controls in place to enable success and monitor compliance with both internal and external regulations. These controls vary depending on the process and also involve interdepartmental planning and cooperation, which increases the complexity of responding.

For example, focusing on the NOE regulatory change, the first step to processing an NOE is to have all of the clinical documentation completed. This is then reviewed by our health information management (HIM) department and the applicable patient information entered into our EMR is reviewed for accuracy. Once this is completed, HIM notifies billing the NOE is ready for processing. At this point, the billing department does a second review of all information submitted on the NOE to validate its accuracy before keying it online. Once it is keyed online, a second individual in the billing department also reviews it for accuracy.

As human error (for example a transposition of a number or incorrect entry of an ICD10 code) is not acceptable to CMS, we are trying to minimize errors prior to submission as we will not be paid for services provided if a data entry error is made from the date of admission until the data entry error is corrected unless the error is corrected within five days of admission. Identifying an error in the first five days is highly unlikely as NOEs are rarely processed within five days of admission. As demonstrated by this example, the controls put into place are extensive across the entire organization to address external regulations.

BK: How have you architected the relationships between your internal departments and your accounting firm to achieve the greatest efficiencies?

HH: With regard to our accounting firm, Crowe Horwath, they are a partner throughout the year instead of just during the audit process. Any time we have an accounting question, they work with us to ensure we are addressing the issue properly and in accordance with guidelines. They also provide a valuable service to us and our Board of Directors by meeting with us after our annual audit is completed and during the 990 process and providing comparative data to other hospices highlighting both similarities and differences. We look forward to this benchmarking and discussion and utilize it to help us achieve greater efficiencies and identify opportunities.  Having the best accounting practices in place is essential to delivering the highest quality patient care.

BK: Did ICD10 have a meaningful impact on any of your business lines or on your overall revenue cycle?

HH: No – for us, the transition to ICD10 was seamless and did not cause any revenue interruptions.  Hospice is billed on a monthly cycle and we had ample opportunity for our claims data to have the correct coding prior to the effective date.

BK: What changes and challenges do you see on the horizon?

HH: Like many healthcare organizations, one of the largest challenges on the horizon is the constant regulatory change which usually requires additional employee time with minimal to no changes in reimbursement. With every change, we need to be able to quickly put processes in place to adhere to the change while at the same time trying to be as efficient as possible.

BK: Is there a need for advocacy to change either accounting rules or payment methodologies to make the system work better / reduce administrative burden?

HH: Most definitely –in the hospice industry, organizations such as the National Hospice and Palliative Care Association (NHPCO) and the National Association for Home Care and Hospice (NAHC) are working on behalf of hospices nationwide specifically on the NOE issue. The additional administrative burden caused by the NOE requirement alone has been substantial and there is no return for this additional burden.

As noted earlier, hospices are now providing care and not being reimbursed in some cases due to billing stipulations beyond their control. Based on a survey completed by NHPCO and NAHC covering the period of January 1 through June 30, 2015, the estimated value of unpaid days of hospice care nationally was approximately $14 million.  While the intent for establishing the NOE rules was meaningful, like other regulatory changes the burden it has caused has been extensive and the need for advocates to help address such changes definitely exists.