Mid Coast Heart Center

1
FESC Alaska Consortium Steering Committee
Meeting December 7, 2006
Klawock Frontier Extended Stay Reimbursement
Methodologies Modeling the Financial Impact On
Alicia Roberts Medical Center David Mather, Dr.
P. H
.
2
Presentation Overview

• Overview
• Introduction
• ARMC
• FESC visits
• Financial Model
• FESC costs
• FESC revenue
• Avoided costs
• Medicare costs
• SEARHC costs
• Areas to be Clarified
• Data issues
• Summary

Klawock Cannery
3
Overview

• Modeling the frontier extended stay clinic (FESC)
  conditions of participating and reimbursement
  methodologies.
• Assessing the financial impact of FESC.
• Budget impact on ARMC.
• Budget neutrality for Medicare
• Avoided costs.
• Other costs impacts on SEARHC?
• Avoided costs for IHS beneficiaries.

• Overview
• Introduction
• ARMC
• FESC visits
• Financial Model
• FESC costs
• FESC revenue
• Avoided costs
• Medicare
• SEARHC costs
• Areas to be Clarified
• Data issues
• Summary

4
Introduction Alicia Roberts Medical Center
(ARMC)

• Alicia Roberts Medical Center is in Klawock on
  the Prince of Wales Island in Southeast Alaska.
• ARMC is 57 air miles from Ketchikan which has the
  nearest hospital.

• Overview
• Introduction
• ARMC
• FESC visits
• Financial Model
• FESC costs
• FESC revenue
• Avoided costs
• Medicare
• Areas to be Clarified
• Data issues
• Summary

H
Prince of Wales Island
5
Introduction Alicia Roberts Medical Center
(ARMC)

• Alicia Roberts medical center (continued).
• Geography.
• 57 miles from nearest available hospitals in
  Ketchikan.
• 147 miles from Mt. Edgecumbe in Sitka.
• 634 miles from Anchorage hospitals.
• 625 miles from Seattle hospitals.
• Extreme weather conditions often delay/cancel
  flights and prevent ferry crossings.
• Center for timber and tourism industry.
• Population 5,000.
• Services offered include primary care, diagnostic
  x-ray and laboratory, 24-hour urgent care, minor
  procedures, dental, pharmacy, mental health
  counseling, health education and wellness,
  women's health, and capacity for extended stays.

• Overview
• Introduction
• ARMC
• FESC visits
• Financial Model
• FESC costs
• FESC revenue
• Avoided costs
• Medicare
• Areas to be Clarified
• Data issues
• Summary

6

Introduction Alicia Roberts Medical Center
(ARMC)

• Overview
• Introduction
• ARMC
• FESC visits
• Financial Model
• FESC costs
• FESC revenue
• Avoided costs
• Medicare
• Areas to be Clarified
• Data issues
• Summary

• OMB IHS all inclusive outpatient rate.
• Alicia Roberts is operated by a tribal health
  provider, the southeast Alaska regional health
  consortium, as a provider based tribally
  operated clinic it uses the OMB/IHS all inclusive
  facility rate which provides one fee of 348 per
  visit per day for Medicare (and 406 per visit
  for Medicaid) outpatient services rendered in an
  IHS or tribally owned facility to IHS eligible
  beneficiaries.
• OMB all inclusive fee does not allow additional
  charges for ancillary services.
• OMB all inclusive fee does allow separate
  charges for pharmacy, and medivac services. OMB
  all inclusive fee also allows a professional fee
  to be billed separately to Medicare.
• The all inclusive fee while generally favorable
  to provider based IHS/tribal facilities limits
  the charges on more complex FESC visits at ARMC.

7
Introduction ARMC FESC visits

• Overview
• Introduction
• ARMC
• FESC visits
• Financial Model
• FESC costs
• FESC revenue
• Avoided costs
• Medicare
• Areas to be Clarified
• Data issues
• Summary

• FESC visit definition.
• CMS proposal is to define FESC visits to be over
  4 hours duration.
• Alicia Roberts medical center has 79 of all
  noted FESC visits with a duration of between 4
  hours and 8 hours.
• Alicia Roberts had 131 potential visits of
  between 2 and 4 hours excluded from this
  definintion

8
Introduction ARMC FESC visits

• Overview
• Introduction
• ARMC
• FESC visits
• Financial Model
• FESC costs
• FESC revenue
• Avoided costs
• Medicare
• Areas to be Clarified
• Data issues
• Summary

• Duration of FESC visits
• ARMC has fewer and shorter FESC visits than
  either Crossroads or Illiuliuk Medical centers
• ARMC has 68 visits
• Mean visit time 6.9 hours
• Longest visit 24.25 hours
• Illiuliuk Family and Health 129 visits
• Crossroads Medical center- 134 visits
• Mean visit time 19.3 hours
• Longest visit time over 4 days

9
Introduction ARMC FESC visits

• Overview
• Introduction
• ARMC
• FESC visits
• Financial Model
• FESC costs
• FESC revenue
• Avoided costs
• Medicare
• Areas to be Clarified
• Data issues
• Summary

• Disposition of of FESC visits at ARMC

10
Financial Modeling Fixed Costs

• FESC Assumptions-fixed costs

• Overview
• Introduction
• ARMC
• FESC visits
• Financial Model
• FESC costs
• FESC revenue
• Avoided costs
• Medicare
• Areas to be Clarified
• Data issues
• Summary

Actual fixed costs during the demonstration
period were below the budgeted amounts due to
implementation delays and unexpected vacancies.
11
Financial Modeling FESC costs ARMC

• Overview
• Introduction
• ARMC
• FESC visits
• Financial Model
• FESC costs
• FESC revenue
• Avoided costs
• Medicare
• Areas to be Clarified
• Data issues
• Summary

Variable costs only represent a small proportion
less than 6 of all additional FESC costs.
12
Financial Modeling FESC Revenue from ARMC

• FESC Billings

• Overview
• Introduction
• ARMC
• FESC visits
• Financial Model
• FESC costs
• FESC revenue
• Avoided costs
• Medicare
• Areas to be Clarified
• Data issues
• Summary

Revenue projections are based on an assumed fee
structure of 800 for each 4 hour block or part
of 4 hour block after the first 4 hours Revenue
is highly sensitive to volume (definition of FESC
visit) and the billing unit approved by CMS.
13
Financial Modeling FESC Revenue

• FESC Assumptions FESC Revenue

• Overview
• Introduction
• ARMC
• FESC visits
• Financial Model
• FESC costs
• FESC revenue
• Avoided costs
• Medicare
• Areas to be Clarified
• Data issues
• Summary

The above revenue projections assume
reimbursement rates as noted FESC demonstration
fees apply to Medicare only- Medicaid and
Commercial insurance carriers may not choose to
reimburse at rate assumed above.
14
Financial Modeling ARMC Financial Impact

• Overview
• Introduction
• ARMC
• FESC visits
• Financial Model
• FESC costs
• FESC revenue
• Avoided costs
• Medicare
• Areas to be Clarified
• Data issues
• Summary

The impact of the FESC demo on the ARMC financial
bottom line was negative for the demonstration
period
15
Financial Modeling Avoided Costs

• Avoided Transfers for FESC patients
• A medivac was noted as avoided if the data
  indicated that the patient was sent home and
  would have been medivaced immediately otherwise.
• ARMC reported 19 medivacs avoided from the 68
  FESC patients included in the study period.

• Overview
• Introduction
• ARMC
• FESC visits
• Financial Model
• FESC costs
• FESC revenue
• Avoided costs
• Medicare
• Areas to be Clarified
• Data issues
• Summary

16
Financial Modeling Avoided Costs

• Avoided Transfers for FESC patients
• ARMC reported significant overall drops in
  Medivacs during the demonstration period.

• Overview
• Introduction
• ARMC
• FESC visits
• Financial Model
• FESC costs
• FESC revenue
• Avoided costs
• Medicare
• Areas to be Clarified
• Data issues
• Summary

17
Financial Modeling Avoided Costs

• Avoided costs for FESC patients.
• Avoided costs are based on the following
  assumptions.
• The cost of a medivac was based on actual cost to
  location specified
• Medivacs without a location specified were
  assumed to have gone to Ketchikan
• The costs of one inpatient day (5,000) was
  computed for 50 of FESC visits over 4 hours
  which had an avoided transfer.
• The costs of a transfers and ER visit at the
  receiving hospital was assumed to be avoided for
  each avoided medivac

• Overview
• Introduction
• ARMC
• FESC visits
• Financial Model
• FESC costs
• FESC revenue
• Avoided costs
• Medicare
• Areas to be Clarified
• Data issues
• Summary

18
Financial Modeling Medicare costs

• Impact on Medicare Program
• ARMC FESC visits are budget neutral (FESC saves
  Medicare 29,000) to Medicare based on projected
  Medicare billings and the Medicare avoided
  costs estimated.

• Overview
• Introduction
• ARMC
• FESC visits
• Financial Model
• FESC costs
• FESC revenue
• Avoided costs
• Medicare
• Areas to be Clarified
• Data issues
• Summary

19
Financial Modeling SEARHC costs

• Impact of FESC on overall SEARHC costs.
• FESC savings or avoided costs extend to SEARHC
  patients by reducing Medivacs and hospitalization
  for IHS beneficiaries which would have to be paid
  by SEARHC. This reduces the overall costs to
  SEARHC for FESC by another 48,000.

• Overview
• Introduction
• ARMC
• FESC visits
• Financial Model
• FESC costs
• FESC revenue
• Avoided costs
• SEARHC costs
• Discussion
• Data issues
• Summary

20
Discussion and Conclusions

• Definition of FESC visit
• Limited to over 4 hours by CMS
• FESC fixed cost in fact improve capacity for
  extended stay but also improve responsiveness for
  24/7 ER capability and this additional capacity
  increases savings for medivacs as well. Omitting
  these visits from the reimbursement pool does not
  adequately compensate the clinics for this care.
• FESC fixed costs-
• Costs originally defined as FESC fixed costs in
  fact may need to be spread over the FESC and
  shorter ER visits. This would reduce the long
  term costs associate with FESC visits and
  materially improve the bottom line of the FESC
  categorization
• This would not help the financial bottom line of
  the ARMC unless additional revenue categories
  were approved for these (2-4 hour visits) as well
  such as hospital ER codes.
• FESC revenue
• Medicare is the only payer that must accept FESC
  fees under the Demonstration project and it only
  represents only 18 of the payer mix.
• Need to clarify the for IHS/CMS all inclusive
  rate the ancillaries will be billable for the
  entire time of the visit and the initial 4 hr
  charge would substitute for the pro fee only for
  the first 4 hours.
• CMS demo indicates that a FESC demo fee will be
  established for each state. Accomplishing this
  while accommodating the broad variation in FESC
  visit volume and character.

• Overview
• Introduction
• ARMC
• FESC visits
• Financial Model
• FESC costs
• FESC revenue
• Avoided costs
• Medicare
• Discussion
• Data issues
• Summary

21
Data Issues

• Data on avoided medivacs and other avoided costs
  the CMS demo project is requiring the sites to
  document these costs- Pilot sites have
  discontinued entering data on these item
  effective July 1, no data collection is currently
  ongoing to meet this requirement. These
  questions should be reviewed and reimplementation
  in the data set.
• Data needed on IHS eligibility of patient for
  each FESC visit.
• Some data is provided in question 27 that request
  the payer but it is not provided consistently
  when there are multiple payers..

• Overview
• Introduction
• ARMC
• FESC visits
• Financial Model
• FESC costs
• FESC revenue
• Avoided costs
• Medicare
• Discussion
• Data issues
• Summary

22
Summary/Key Findings

• ARMC recorded 73 FESC visits in the first three
  months of the project (April through June 2005).
  This would provide for an estimated 292 annual
  visits.
• Most FESC visits recorded (70) in the initial 3
  months at ARMC were for less than 4 hours.
• Only 72 annual visits would be over 4 hours
  duration.
• FESC stays currently generate significant
  billings for the ARMC.
• Each FESC visit currently generates about 1415 in
  billings.
• IHS beneficiary billings to Medicare and Medicaid
  average about 992 despite the all inclusive fee
  structure of these fees.
• FESC costs experienced by the ARMC are primarily
  fixed costs.
• Variable costs attributable to FESC visits are
  only between 4 to 10 of the estimated fixed
  costs of providing care to FESC visits.
• Since most cost are fixed the true costs of
  providing FESC services in highly sensitive to
  the volume of FESC visits.
• Based on the FESC revenue assumptions the ARMC
  did not recover fixed costs through FESC
  billings.
• It would require 352 FESC visits to recover the
  full costs of providing FESC services under the
  revenue assumption utilized in this report.

• Overview
• Introduction
• ARMC
• FESC visits
• Financial Model
• FESC costs
• FESC revenue
• Avoided costs
• Medicare
• Areas to be Clarified
• Data issues

23
Summary

• Klawock, Prince of Wales Island, Alaska

• Overview
• Introduction
• ARMC
• FESC visits
• Financial Model
• FESC costs
• FESC revenue
• Avoided costs
• Medicare
• Areas to be Clarified
• Data issues