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The Edge_March 2009 -



Physician Owned Specialty Hospitals:

Quality of Care?

Timothy S. Brady, Ph.D., FACHE, FHFMA

Regional Inspector General

US Department of Health and Human Services

In the January 2009 issue of HFM, Debbie Welle-Powell wrote a

“Views” article entitled, “Physician-Owned Specialty Hospitals: friend,

foe-or (System) failure?” regarding the debate over physician-owned

specialty hospitals. It was a summary of the issue that was debated at

the 2008 ANI. While the panelists debated and agreed on a number of

points, there seemed to be a sense that the specialty hospitals provided a

good alternative to community hospitals in many areas. Welle-Powell

stated that both panelists “agreed …specialty hospitals provide the

same if not better quality of care than community hospitals.” While the

panelists believe that the quality of care is good, serious weaknesses

exist in these facilities that could affect the overall patient safety and


Public concerns expressed to Congress led the Senate Finance Committee

to request that OIG conduct an evaluation of patient safety and care

in these facilities. The published Office of Inspector General evaluation,

“Physician-Owned Specialty Hospitals’ Ability to Manage Medical

Emergencies,” assessed the emergency departments, staffing patterns,

and policies for managing medical emergencies. The evaluation was

based on data from 109 specialty hospitals. It consisted of a review of

staffing schedules, an analysis of staffing policies and policies for managing

medical emergencies, and structured interviews with administrators

at each hospital.

The evaluators found that 55 percent of the hospitals have an emergency

department. However, more than half of those had only one emergency

bed. While Medicare does not require emergency departments, some

states do, and the requirements vary among states.

For at least one of eight sampled days, seven of the hospitals failed to

have a registered nurse on duty and one did not have a physician on call

or on duty. Less than one-third of the specialty hospitals have a physician

on-site 24 hours, 7 days a week. This lack of coverage is a violation

of the Medicare Conditions of Participation.

According to administrators and policies, 71 of the 109 hospitals evaluated,

instruct staff to call 9-1-1 as part of their emergency medial protocols.

One-third use 9-1-1 assistance to stabilize a patient and half of the

hospitals use 9-1-1 to transfer patients to general acute or tertiary care


Approximately 25 percent of the surveyed physician owned specialty

hospitals lack policies for initial treatment of emergencies, or referral

and transfer of emergency patients. Some of the policies lack information

on the use of emergency equipment or life-saving protocols.

The OIG recommended CMS take appropriate action to ensure that the

specialty hospitals meet the Conditions of Participation and that they

require the hospitals to include protocols for managing medical emergencies

in their written operating policies.

This evaluation represents the results of an evaluation of only 109 hospitals.

It is significant in its findings of the potential weaknesses regarding

patient safety. While the quality of care may be perceived to be better in

physician owned specialty hospitals, the overall care of the patient may

need additional scrutiny.

A Perfect Charge

Description Master Isn’t


Rob Smull

Practice Leader, Hospital Revenue Cycle

Consulting Services; Senior Manager,

Health Care Consulting Group

Moss Adams LLP

What happens when you cross a perfect Charge Description

Master (CDM) with imperfect charging processes in your clinical


You lose money. Often lots of it. Conversely, you may get paid

too much and run the risk of having to self-report overpayments

or even deal with the OIG. Or, you simply are charging for services

you shouldn’t even if no additional payment is received

from Medicare, which can result in an overstatement of charging.

What’s the solution? The best way to address this challenge is to

integrate outpatient charge capture reviews with the CDM management


Your CDM is Perfect!

You employ motivated individuals who are highly skilled in

coding and have strong interpersonal skills. You are doing everything

according to best practices. In addition:

• You use an electronic resource which helps you to ensure that

the right codes are used, and prompts you to check for other


• Your CDM manager meets with each clinical supervisor to

make sure every charge requiring a HCPCS code has one that

correctly reflects the service provided, is accurate, and is applied

appropriately in accordance with regulatory guidelines.

• All your revenue codes are correct.

• Your CDM manager works closely with a CDM committee and

the Compliance Director.

• You have charges in your CDM for everything you can think

of and they all make sense.

• Your CDM manager acts quickly to make sure codes are revised

based on regulatory updates.

• Your finance department has policies in place to establish


• Your Business Office no longer assigns CPT codes and modifiers

on their own to get charges through the Medicare edits.

• You check to make sure your charges are consistently passing

your Medicare edits.

• You assess the accuracy of your outpatient payments.

What’s Left?

That’s all great, but is it enough? Have you done everything you

need to do to make sure you are paid correctly? The answer is a

resounding, “No.” The CDM is just one piece in a continuum of

processes, otherwise known as “the revenue cycle,” governing

how and how much you get paid. CDM management and clinical

department charge processes fall into the Middle process,

between the Front End (often referred to as Patient Access) and

the Back End of the Revenue Cycle, including billing, denials and


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