Practice Management

The Centers for Medicare & Medicaid Services (CMS) has too many new payment models for a practicing doctor to keep up with them all. But there are three that I think are most important for hospitalists to know something about: hospital value-based purchasing, MACRA-related models, and bundled payments. Here, I’ll focus on the latter, which unlike the first two, influences payment to both hospitals and physicians (as well as other providers).

Bundles for Different Diagnoses

Bundled payment programs are the most visible of CMS’s episode payment models (EPMs). There are currently voluntary bundle models (called Bundled Payments for Care Improvement, or BPCI) across many different diagnoses. And in some locales, there is a mandatory bundle program for hip and knee replacements that began in March 2016 (called Comprehensive Care for Joint Replacement, or CCJR or just CJR).

These programs are set to expand significantly in the next few years. The Surgical Hip and Femur Fracture Treatment (SHFFT) becomes active in 2017 in some locales. It will essentially add hip and femur fractures requiring surgery to the existing CJR program. New bundles for acute myocardial infarction, either managed medically or with percutaneous coronary intervention (PCI), and coronary bypass surgery will become mandatory in some parts of the country beginning July 2017.

How the Programs Work

CMS totals all Medicare dollars paid per patient historically for the relevant bundle. This includes payments to the hospital (e.g., the DRG payment) and all fees paid to physicians, therapists, visiting nurses, skilled nursing facilities, etc., from the time of hospital admission through 90 days after discharge. It then sets a target spend (or price) for that diagnosis that is about 3% below the historical average. Because it is based on the past track record of a hospital and its market (or region), the price will vary from place to place.

If, going forward, the Medicare spend for each patient is below the target, CMS pays that amount to the hospital. But if the spend is above the target, the hospital pays some or all of that amount to CMS. Presumably, hospitals will have negotiated with others, such as physicians, how such an “upside” or penalty payment will be divided between them.

It’s worth noting that all parties continue to bill, and are paid by Medicare, via the same fee-for-service arrangements currently in place. It is only at the time of a “true up” that an upside is paid or penalty assessed. And hospitals are eligible for upside payments only if they perform above a threshold on a few quality and patient satisfaction metrics.

The details of these programs are incredibly complicated, and I’m intentionally providing a very simple description of them here. I think that nearly all practicing clinicians should not try to learn and keep up with all of the precise details. They change often! Instead, it’s best to focus on the big picture only and rely on others at the hospital to keep track of the details.

Ways to Lower the Spend

These programs are intended to provide a significant financial incentive to find lower-cost ways to care for patients while still ensuring good care. Any successful effort to lower the cost should start by analyzing just what Medicare spends on each element of care over the more than 90 days each patient is in the bundle. For example, for hip and knee replacement patients, nearly half of the spend goes toward post-hospital services such as a skilled nursing facility and home nursing visits. So the best opportunity to reduce the spend may be to reduce utilization of these services where appropriate.

 

For patients in the bundles for coronary artery bypass grafting and acute myocardial infarction treated with PCI, only about 10% of the total spend goes to post-hospital services. For these, it might be more effective to focus cost reductions on other things.

Each organization will need to make its own decisions regarding where to focus cost-reduction efforts across the bundle. For many of us, that will mean moving away from a focus on traditional hospitalist-related cost-containment efforts like length of stay or pharmacy costs and instead looking at the bigger picture, including use of post-hospital services.

Some Things to Watch

I expect there will be a number of side effects of these payment models that hospitalists will care about. Doctors in different specialties, for example, might change their minds about whether they want to serve as attending physicians for “bundle patients.” One scenario is that if orthopedists have an opportunity to realize a significant financial upside, they may prefer to serve as attendings for hip fracture patients rather than leaving to hospitalists financially important decisions such as whether patients are discharged to a skilled nursing facility or home. We’ll just have to see how that plays out and be prepared to advocate for our position if different from other specialties.

Successful performance in bundles requires effective coordination of care across settings, and I’m hopeful this will benefit patients. Hospitals and skilled nursing facilities, for example, will need to work together more effectively to curb unnecessary days in the facilities and to reduce readmissions. Many hospitals have already begun developing a preferred network of skilled nursing facilities for referrals that is based on demonstrating good care and low returns to the hospital. Your hospital has probably already started doing this work even if you haven’t heard about it yet.

For me, one of the most concerning outcomes of bundles is the negotiations between providers regarding how an upside or penalty is to be shared among them. I suspect this won’t be contentious initially, but as the dollars at stake grow, it could lead to increasingly stressful negotiations and relationships.

And, lastly, like any payment model, bundles are “gameable,” especially bundles for medical diagnoses such as congestive heart failure or pneumonia, which can be gamed by lowering the threshold for admitting less-sick patients to inpatient status. The spend for these patients, who are less likely to require expensive post-hospital services or be readmitted, will lower the average spend in the bundle, increasing the chance of an upside payment for the providers. TH

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Dr. Nelson has been a practicing hospitalist since 1988. He is co-founder and past president of SHM, and principal in Nelson Flores Hospital Medicine Consultants. He is co-director for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. Write to him at john.nelson@nelsonflores.com.

The Centers for Medicare & Medicaid Services (CMS) has too many new payment models for a practicing doctor to keep up with them all. But there are three that I think are most important for hospitalists to know something about: hospital value-based purchasing, MACRA-related models, and bundled payments. Here, I’ll focus on the latter, which unlike the first two, influences payment to both hospitals and physicians (as well as other providers).

Bundles for Different Diagnoses

Bundled payment programs are the most visible of CMS’s episode payment models (EPMs). There are currently voluntary bundle models (called Bundled Payments for Care Improvement, or BPCI) across many different diagnoses. And in some locales, there is a mandatory bundle program for hip and knee replacements that began in March 2016 (called Comprehensive Care for Joint Replacement, or CCJR or just CJR).

These programs are set to expand significantly in the next few years. The Surgical Hip and Femur Fracture Treatment (SHFFT) becomes active in 2017 in some locales. It will essentially add hip and femur fractures requiring surgery to the existing CJR program. New bundles for acute myocardial infarction, either managed medically or with percutaneous coronary intervention (PCI), and coronary bypass surgery will become mandatory in some parts of the country beginning July 2017.

How the Programs Work

CMS totals all Medicare dollars paid per patient historically for the relevant bundle. This includes payments to the hospital (e.g., the DRG payment) and all fees paid to physicians, therapists, visiting nurses, skilled nursing facilities, etc., from the time of hospital admission through 90 days after discharge. It then sets a target spend (or price) for that diagnosis that is about 3% below the historical average. Because it is based on the past track record of a hospital and its market (or region), the price will vary from place to place.

If, going forward, the Medicare spend for each patient is below the target, CMS pays that amount to the hospital. But if the spend is above the target, the hospital pays some or all of that amount to CMS. Presumably, hospitals will have negotiated with others, such as physicians, how such an “upside” or penalty payment will be divided between them.

It’s worth noting that all parties continue to bill, and are paid by Medicare, via the same fee-for-service arrangements currently in place. It is only at the time of a “true up” that an upside is paid or penalty assessed. And hospitals are eligible for upside payments only if they perform above a threshold on a few quality and patient satisfaction metrics.

The details of these programs are incredibly complicated, and I’m intentionally providing a very simple description of them here. I think that nearly all practicing clinicians should not try to learn and keep up with all of the precise details. They change often! Instead, it’s best to focus on the big picture only and rely on others at the hospital to keep track of the details.

Ways to Lower the Spend

These programs are intended to provide a significant financial incentive to find lower-cost ways to care for patients while still ensuring good care. Any successful effort to lower the cost should start by analyzing just what Medicare spends on each element of care over the more than 90 days each patient is in the bundle. For example, for hip and knee replacement patients, nearly half of the spend goes toward post-hospital services such as a skilled nursing facility and home nursing visits. So the best opportunity to reduce the spend may be to reduce utilization of these services where appropriate.

 

For patients in the bundles for coronary artery bypass grafting and acute myocardial infarction treated with PCI, only about 10% of the total spend goes to post-hospital services. For these, it might be more effective to focus cost reductions on other things.

Each organization will need to make its own decisions regarding where to focus cost-reduction efforts across the bundle. For many of us, that will mean moving away from a focus on traditional hospitalist-related cost-containment efforts like length of stay or pharmacy costs and instead looking at the bigger picture, including use of post-hospital services.

Some Things to Watch

I expect there will be a number of side effects of these payment models that hospitalists will care about. Doctors in different specialties, for example, might change their minds about whether they want to serve as attending physicians for “bundle patients.” One scenario is that if orthopedists have an opportunity to realize a significant financial upside, they may prefer to serve as attendings for hip fracture patients rather than leaving to hospitalists financially important decisions such as whether patients are discharged to a skilled nursing facility or home. We’ll just have to see how that plays out and be prepared to advocate for our position if different from other specialties.

Successful performance in bundles requires effective coordination of care across settings, and I’m hopeful this will benefit patients. Hospitals and skilled nursing facilities, for example, will need to work together more effectively to curb unnecessary days in the facilities and to reduce readmissions. Many hospitals have already begun developing a preferred network of skilled nursing facilities for referrals that is based on demonstrating good care and low returns to the hospital. Your hospital has probably already started doing this work even if you haven’t heard about it yet.

For me, one of the most concerning outcomes of bundles is the negotiations between providers regarding how an upside or penalty is to be shared among them. I suspect this won’t be contentious initially, but as the dollars at stake grow, it could lead to increasingly stressful negotiations and relationships.

And, lastly, like any payment model, bundles are “gameable,” especially bundles for medical diagnoses such as congestive heart failure or pneumonia, which can be gamed by lowering the threshold for admitting less-sick patients to inpatient status. The spend for these patients, who are less likely to require expensive post-hospital services or be readmitted, will lower the average spend in the bundle, increasing the chance of an upside payment for the providers. TH

---

Dr. Nelson has been a practicing hospitalist since 1988. He is co-founder and past president of SHM, and principal in Nelson Flores Hospital Medicine Consultants. He is co-director for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. Write to him at john.nelson@nelsonflores.com.

The Centers for Medicare & Medicaid Services (CMS) has too many new payment models for a practicing doctor to keep up with them all. But there are three that I think are most important for hospitalists to know something about: hospital value-based purchasing, MACRA-related models, and bundled payments. Here, I’ll focus on the latter, which unlike the first two, influences payment to both hospitals and physicians (as well as other providers).

Bundles for Different Diagnoses

Bundled payment programs are the most visible of CMS’s episode payment models (EPMs). There are currently voluntary bundle models (called Bundled Payments for Care Improvement, or BPCI) across many different diagnoses. And in some locales, there is a mandatory bundle program for hip and knee replacements that began in March 2016 (called Comprehensive Care for Joint Replacement, or CCJR or just CJR).

These programs are set to expand significantly in the next few years. The Surgical Hip and Femur Fracture Treatment (SHFFT) becomes active in 2017 in some locales. It will essentially add hip and femur fractures requiring surgery to the existing CJR program. New bundles for acute myocardial infarction, either managed medically or with percutaneous coronary intervention (PCI), and coronary bypass surgery will become mandatory in some parts of the country beginning July 2017.

How the Programs Work

CMS totals all Medicare dollars paid per patient historically for the relevant bundle. This includes payments to the hospital (e.g., the DRG payment) and all fees paid to physicians, therapists, visiting nurses, skilled nursing facilities, etc., from the time of hospital admission through 90 days after discharge. It then sets a target spend (or price) for that diagnosis that is about 3% below the historical average. Because it is based on the past track record of a hospital and its market (or region), the price will vary from place to place.

If, going forward, the Medicare spend for each patient is below the target, CMS pays that amount to the hospital. But if the spend is above the target, the hospital pays some or all of that amount to CMS. Presumably, hospitals will have negotiated with others, such as physicians, how such an “upside” or penalty payment will be divided between them.

It’s worth noting that all parties continue to bill, and are paid by Medicare, via the same fee-for-service arrangements currently in place. It is only at the time of a “true up” that an upside is paid or penalty assessed. And hospitals are eligible for upside payments only if they perform above a threshold on a few quality and patient satisfaction metrics.

The details of these programs are incredibly complicated, and I’m intentionally providing a very simple description of them here. I think that nearly all practicing clinicians should not try to learn and keep up with all of the precise details. They change often! Instead, it’s best to focus on the big picture only and rely on others at the hospital to keep track of the details.

Ways to Lower the Spend

These programs are intended to provide a significant financial incentive to find lower-cost ways to care for patients while still ensuring good care. Any successful effort to lower the cost should start by analyzing just what Medicare spends on each element of care over the more than 90 days each patient is in the bundle. For example, for hip and knee replacement patients, nearly half of the spend goes toward post-hospital services such as a skilled nursing facility and home nursing visits. So the best opportunity to reduce the spend may be to reduce utilization of these services where appropriate.

 

For patients in the bundles for coronary artery bypass grafting and acute myocardial infarction treated with PCI, only about 10% of the total spend goes to post-hospital services. For these, it might be more effective to focus cost reductions on other things.

Each organization will need to make its own decisions regarding where to focus cost-reduction efforts across the bundle. For many of us, that will mean moving away from a focus on traditional hospitalist-related cost-containment efforts like length of stay or pharmacy costs and instead looking at the bigger picture, including use of post-hospital services.

Some Things to Watch

I expect there will be a number of side effects of these payment models that hospitalists will care about. Doctors in different specialties, for example, might change their minds about whether they want to serve as attending physicians for “bundle patients.” One scenario is that if orthopedists have an opportunity to realize a significant financial upside, they may prefer to serve as attendings for hip fracture patients rather than leaving to hospitalists financially important decisions such as whether patients are discharged to a skilled nursing facility or home. We’ll just have to see how that plays out and be prepared to advocate for our position if different from other specialties.

Successful performance in bundles requires effective coordination of care across settings, and I’m hopeful this will benefit patients. Hospitals and skilled nursing facilities, for example, will need to work together more effectively to curb unnecessary days in the facilities and to reduce readmissions. Many hospitals have already begun developing a preferred network of skilled nursing facilities for referrals that is based on demonstrating good care and low returns to the hospital. Your hospital has probably already started doing this work even if you haven’t heard about it yet.

For me, one of the most concerning outcomes of bundles is the negotiations between providers regarding how an upside or penalty is to be shared among them. I suspect this won’t be contentious initially, but as the dollars at stake grow, it could lead to increasingly stressful negotiations and relationships.

And, lastly, like any payment model, bundles are “gameable,” especially bundles for medical diagnoses such as congestive heart failure or pneumonia, which can be gamed by lowering the threshold for admitting less-sick patients to inpatient status. The spend for these patients, who are less likely to require expensive post-hospital services or be readmitted, will lower the average spend in the bundle, increasing the chance of an upside payment for the providers. TH

---

Dr. Nelson has been a practicing hospitalist since 1988. He is co-founder and past president of SHM, and principal in Nelson Flores Hospital Medicine Consultants. He is co-director for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. Write to him at john.nelson@nelsonflores.com.

Are you ready?

The Centers for Medicare & Medicaid Services (CMS) recently released new emergency preparedness requirements to ensure that providers and suppliers are duly prepared to adequately serve their community during disasters or emergencies. These requirements were stimulated by unexpected and catastrophic events, such as the September 11 terrorist attacks, the 2009 H1N1 pandemic, and innumerable natural disasters (tornados, floods, and hurricanes, to name a few). The CMS final rule issued “requirements that establish a comprehensive, consistent, flexible, and dynamic regulatory approach to emergency preparedness and response that incorporates the lessons learned from the past, combined with the proven best practices of the present.” In the rule, CMS outlines three essential guiding principles that any healthcare facility or supplier would need to preserve in the event of a disaster:

• Safeguard human resources.
• Maintain business continuity.
• Protect physical resources.

4 Ways to Be Prepared

What does having a comprehensive disaster preparedness program mean for hospitalists, regardless of site of practice? CMS recommends having four key elements for an adequate program:

1. Perform a risk assessment that focuses on the capacities and capabilities that are critical for a full spectrum of types of emergencies or disasters. This risk assessment should take into consideration the type and location of the facility as well as the disasters that are most likely to occur in its area. It should include at a minimum “care-related emergencies; equipment and power failures; interruptions in communications, including cyber attacks; loss of a portion or all of a facility; and interruptions in the normal supply of essentials, such as water and food.”

2. Develop and implement policies and procedures that support the emergency plan. Hospitalists should know about organizational policies and procedures that support the implementation of the emergency plan and how their team is factored into that plan.

3. Develop and maintain a communication plan that also complies with state and federal law. All the preparations in the world can be crippled without a robust and clear communication plan. The facility must have primary and backup mechanisms to contact providers, staff, and personnel in a timely fashion; this should include mechanisms to repeatedly update providers as the event evolves so that everyone knows what they are supposed to be doing and when.

4. Develop and maintain a training and testing program for all personnel. This includes onboarding and annual refreshers, including drills and exercises that test the plan and identify any gaps in performance. Hospitalists will undoubtedly be key members in developing, implementing, and receiving such critical training.

Expectations

There isn’t a single U.S. healthcare facility or provider that will not be affected by these provisions. An estimated 72,000 healthcare providers and suppliers (from nursing homes to dialysis facilities to home health agencies) will be expected to comply with these requirements within about a year.

In addition to hospitals, CMS also extended the requirements to many types of facilities and suppliers so that such providers can more likely stay open and provide care during disasters and emergencies, or at least can resume operations as soon as possible, to provide the very best ongoing care to the affected community. In most of these scenarios, the need for complex and varied care goes up, not down, further exacerbating gaps in basic care if ambulatory facilities and home care providers are unavailable.

CMS does acknowledge that these requirements will be more difficult to execute in facilities that previously did not have requirements or in smaller facilities with more limited resources. It also acknowledges that the cost of implementation could reach up to $279 million, which some argue is actually an underestimation. Despite these challenges, it is hard to argue against basic disaster preparedness for any healthcare facility or provider as a standard and positive business practice. While most acute-care hospitals have long had disaster preparedness plans and programs, gaps in these programs have become readily apparent during natural disasters such as Hurricane Katrina and Superstorm Sandy. CMS also stresses the need for a community approach to planning and implementation and that there is no reason during planning, or during an actual event, that facilities should operate in isolation but rather train and respond together as a community.

 

As hospitalists, regardless of site of practice, we should all be involved in at least understanding, if not developing and implementing, these basic requirements in our facilities. It is without a doubt that hospitalists will be a core group of physicians who will be called upon to serve within or outside healthcare facilities in the event of a disaster or emergency. In fact, in most recent disasters, we already have. It is better, of course, to be prepared and ready to serve than unprepared and regretful.

Reference

1. The Centers for Medicare and Medicaid Services. Medicare and Medicaid Programs; Emergency Preparedness Requirements for Medicare and Medicaid Participating Providers and Suppliers. Federal Register website. Accessed October 6, 2016.

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Dr. Scheurer is a hospitalist and chief quality officer at the Medical University of South Carolina in Charleston. She is physician editor of The Hospitalist. Email her at scheured@musc.edu.

Are you ready?

The Centers for Medicare & Medicaid Services (CMS) recently released new emergency preparedness requirements to ensure that providers and suppliers are duly prepared to adequately serve their community during disasters or emergencies. These requirements were stimulated by unexpected and catastrophic events, such as the September 11 terrorist attacks, the 2009 H1N1 pandemic, and innumerable natural disasters (tornados, floods, and hurricanes, to name a few). The CMS final rule issued “requirements that establish a comprehensive, consistent, flexible, and dynamic regulatory approach to emergency preparedness and response that incorporates the lessons learned from the past, combined with the proven best practices of the present.” In the rule, CMS outlines three essential guiding principles that any healthcare facility or supplier would need to preserve in the event of a disaster:

• Safeguard human resources.
• Maintain business continuity.
• Protect physical resources.

4 Ways to Be Prepared

What does having a comprehensive disaster preparedness program mean for hospitalists, regardless of site of practice? CMS recommends having four key elements for an adequate program:

1. Perform a risk assessment that focuses on the capacities and capabilities that are critical for a full spectrum of types of emergencies or disasters. This risk assessment should take into consideration the type and location of the facility as well as the disasters that are most likely to occur in its area. It should include at a minimum “care-related emergencies; equipment and power failures; interruptions in communications, including cyber attacks; loss of a portion or all of a facility; and interruptions in the normal supply of essentials, such as water and food.”

2. Develop and implement policies and procedures that support the emergency plan. Hospitalists should know about organizational policies and procedures that support the implementation of the emergency plan and how their team is factored into that plan.

3. Develop and maintain a communication plan that also complies with state and federal law. All the preparations in the world can be crippled without a robust and clear communication plan. The facility must have primary and backup mechanisms to contact providers, staff, and personnel in a timely fashion; this should include mechanisms to repeatedly update providers as the event evolves so that everyone knows what they are supposed to be doing and when.

4. Develop and maintain a training and testing program for all personnel. This includes onboarding and annual refreshers, including drills and exercises that test the plan and identify any gaps in performance. Hospitalists will undoubtedly be key members in developing, implementing, and receiving such critical training.

Expectations

There isn’t a single U.S. healthcare facility or provider that will not be affected by these provisions. An estimated 72,000 healthcare providers and suppliers (from nursing homes to dialysis facilities to home health agencies) will be expected to comply with these requirements within about a year.

In addition to hospitals, CMS also extended the requirements to many types of facilities and suppliers so that such providers can more likely stay open and provide care during disasters and emergencies, or at least can resume operations as soon as possible, to provide the very best ongoing care to the affected community. In most of these scenarios, the need for complex and varied care goes up, not down, further exacerbating gaps in basic care if ambulatory facilities and home care providers are unavailable.

CMS does acknowledge that these requirements will be more difficult to execute in facilities that previously did not have requirements or in smaller facilities with more limited resources. It also acknowledges that the cost of implementation could reach up to $279 million, which some argue is actually an underestimation. Despite these challenges, it is hard to argue against basic disaster preparedness for any healthcare facility or provider as a standard and positive business practice. While most acute-care hospitals have long had disaster preparedness plans and programs, gaps in these programs have become readily apparent during natural disasters such as Hurricane Katrina and Superstorm Sandy. CMS also stresses the need for a community approach to planning and implementation and that there is no reason during planning, or during an actual event, that facilities should operate in isolation but rather train and respond together as a community.

 

As hospitalists, regardless of site of practice, we should all be involved in at least understanding, if not developing and implementing, these basic requirements in our facilities. It is without a doubt that hospitalists will be a core group of physicians who will be called upon to serve within or outside healthcare facilities in the event of a disaster or emergency. In fact, in most recent disasters, we already have. It is better, of course, to be prepared and ready to serve than unprepared and regretful.

Reference

1. The Centers for Medicare and Medicaid Services. Medicare and Medicaid Programs; Emergency Preparedness Requirements for Medicare and Medicaid Participating Providers and Suppliers. Federal Register website. Accessed October 6, 2016.

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Dr. Scheurer is a hospitalist and chief quality officer at the Medical University of South Carolina in Charleston. She is physician editor of The Hospitalist. Email her at scheured@musc.edu.

Are you ready?

The Centers for Medicare & Medicaid Services (CMS) recently released new emergency preparedness requirements to ensure that providers and suppliers are duly prepared to adequately serve their community during disasters or emergencies. These requirements were stimulated by unexpected and catastrophic events, such as the September 11 terrorist attacks, the 2009 H1N1 pandemic, and innumerable natural disasters (tornados, floods, and hurricanes, to name a few). The CMS final rule issued “requirements that establish a comprehensive, consistent, flexible, and dynamic regulatory approach to emergency preparedness and response that incorporates the lessons learned from the past, combined with the proven best practices of the present.” In the rule, CMS outlines three essential guiding principles that any healthcare facility or supplier would need to preserve in the event of a disaster:

• Safeguard human resources.
• Maintain business continuity.
• Protect physical resources.

4 Ways to Be Prepared

What does having a comprehensive disaster preparedness program mean for hospitalists, regardless of site of practice? CMS recommends having four key elements for an adequate program:

1. Perform a risk assessment that focuses on the capacities and capabilities that are critical for a full spectrum of types of emergencies or disasters. This risk assessment should take into consideration the type and location of the facility as well as the disasters that are most likely to occur in its area. It should include at a minimum “care-related emergencies; equipment and power failures; interruptions in communications, including cyber attacks; loss of a portion or all of a facility; and interruptions in the normal supply of essentials, such as water and food.”

2. Develop and implement policies and procedures that support the emergency plan. Hospitalists should know about organizational policies and procedures that support the implementation of the emergency plan and how their team is factored into that plan.

3. Develop and maintain a communication plan that also complies with state and federal law. All the preparations in the world can be crippled without a robust and clear communication plan. The facility must have primary and backup mechanisms to contact providers, staff, and personnel in a timely fashion; this should include mechanisms to repeatedly update providers as the event evolves so that everyone knows what they are supposed to be doing and when.

4. Develop and maintain a training and testing program for all personnel. This includes onboarding and annual refreshers, including drills and exercises that test the plan and identify any gaps in performance. Hospitalists will undoubtedly be key members in developing, implementing, and receiving such critical training.

Expectations

There isn’t a single U.S. healthcare facility or provider that will not be affected by these provisions. An estimated 72,000 healthcare providers and suppliers (from nursing homes to dialysis facilities to home health agencies) will be expected to comply with these requirements within about a year.

In addition to hospitals, CMS also extended the requirements to many types of facilities and suppliers so that such providers can more likely stay open and provide care during disasters and emergencies, or at least can resume operations as soon as possible, to provide the very best ongoing care to the affected community. In most of these scenarios, the need for complex and varied care goes up, not down, further exacerbating gaps in basic care if ambulatory facilities and home care providers are unavailable.

CMS does acknowledge that these requirements will be more difficult to execute in facilities that previously did not have requirements or in smaller facilities with more limited resources. It also acknowledges that the cost of implementation could reach up to $279 million, which some argue is actually an underestimation. Despite these challenges, it is hard to argue against basic disaster preparedness for any healthcare facility or provider as a standard and positive business practice. While most acute-care hospitals have long had disaster preparedness plans and programs, gaps in these programs have become readily apparent during natural disasters such as Hurricane Katrina and Superstorm Sandy. CMS also stresses the need for a community approach to planning and implementation and that there is no reason during planning, or during an actual event, that facilities should operate in isolation but rather train and respond together as a community.

 

As hospitalists, regardless of site of practice, we should all be involved in at least understanding, if not developing and implementing, these basic requirements in our facilities. It is without a doubt that hospitalists will be a core group of physicians who will be called upon to serve within or outside healthcare facilities in the event of a disaster or emergency. In fact, in most recent disasters, we already have. It is better, of course, to be prepared and ready to serve than unprepared and regretful.

Reference

1. The Centers for Medicare and Medicaid Services. Medicare and Medicaid Programs; Emergency Preparedness Requirements for Medicare and Medicaid Participating Providers and Suppliers. Federal Register website. Accessed October 6, 2016.

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Dr. Scheurer is a hospitalist and chief quality officer at the Medical University of South Carolina in Charleston. She is physician editor of The Hospitalist. Email her at scheured@musc.edu.

I first became aware of measuring customer satisfaction when a service manager at a car dealership explained in an upbeat way that I would be getting a survey and that any response by me other than the highest rating would result in significant negative consequences. I can recall being pleased with the service right up to the point the manager tried to extract a promise from me that I would provide “top box” answers.

What started with a car dealership survey has become a near avalanche of surveys from my credit card, bank, airlines, hotels, and other businesses. Each starts by assuring me that it will take only a minute or two to complete the survey, but if I completed every survey sent my way, it would add up to a significant amount of time. So I’ve stopped responding to nearly all of them, not so much as a form of protest but as part of my overall time-management efforts.

I imagine many of our patients see surveys from hospitals and other healthcare providers similarly: just another one to add to the pile. Patients in their 80s and 90s—a significant portion of hospitalist patients—probably interact a lot less with companies that send satisfaction surveys and so might be more attentive to ones from healthcare organizations. But I suspect that a reasonable portion of older patients rely on a family member to complete them, and this person, often a son or daughter, probably does get a lot of similar surveys. Surely, survey fatigue is influencing the results at least a little.

Healthcare Surveys: HCAHPS

For all the surveying going on, I find it pretty difficult to use HCAHPS results to guide patient-satisfaction improvement efforts. Sure, I can see how individual doctors or different physician groups score compared to one another and try to model my behaviors after the high performers. That is a really valuable thing to do, but it doesn’t get to the granular level I’d like.

One would hope the three physician-specific HCAHPS questions would support drilling down to more actionable information. But every hospitalist group I’ve seen always has the same pattern, scoring from lowest to highest as follows:

• How often did doctors explain things in a way you could understand?
• How often did doctors listen carefully to you?
• How often did doctors treat you with courtesy and respect?

So I don’t think the difference in scores on these questions is very useful in guiding improvement efforts.

Looking beyond HCAHPS

For a few years, our hospitalist group added a very short survey to the brochure describing the practice. I still think that was good idea to ensure accurate attribution and more granular information, but it didn’t yield much value in practice because of a low response rate. Ultimately, we stopped using it because of our hospital risk manager’s concern any such survey could be construed as “coaching” patients in their HCAHPS responses, something the Centers for Medicare & Medicaid Services forbids.

Mark Rudolph, MD, vice president of physician development and patient experience at Sound Physicians, told me about their experience with their employed RNs using tablet computers to survey every patient the day following hospital admission (i.e., while patients were still in the hospital). It seems to me this could be a really valuable tool to provide very granular feedback at the outset of a patient stay when there is still time to address areas in which the patient is less satisfied. They found that for about 30% of patients, the survey uncovered something that could be fixed, such as providing another blanket, determining what time a test was likely to be done, etc. I bet for most patients the fact that a nurse cared enough to ask how things are going and try to remedy problems improved their HCAPHS scores.

 

Yet after some experience with this approach, Sound Physicians found that, for a number of reasons, this wasn’t as valuable as hoped. They now survey a smaller sample of patients and sometimes adjust the questions based on the known or suspected strengths and weaknesses of individual providers. For one doctor, for example, the survey might ask whether the doctor spent enough time with the patient; for another, it might ask if the doctor spoke clearly, etc.

Dr. Rudolph thinks having someone such as the lead hospitalist observe the doctor while on rounds might ultimately prove more valuable than administering a survey. It will be interesting to see how his group and others around the country evolve their approach to better understand each provider’s strengths and weaknesses and most effective ways to improve patient satisfaction.

How to Improve Patient Satisfaction?

In my April 2012 column, I wrote about several things for hospitalists to consider including in their patient-satisfaction improvement plan. And, of course, there are a lot of additional sources of ideas available just by searching the Internet.

I find it difficult to consistently implement a bundle of multiple different habits, such as always sitting or always rounding with the patient’s bedside nurse, etc. I acknowledge these are proven valuable strategies to improve scores, but I still find it hard to do them consistently.

For some of us, it might be better to pick one thing to focus on. And while I don’t have research data to prove it, I think the single most valuable thing to improve patient satisfaction with hospitalists is to phone patients after discharge. It isn’t as difficult as most assume, and it often leads patients (or the family member you reach) to thank you profusely for the call. I think hospitalists can really benefit from more expressions of gratitude from patients and families, and these calls often provide it.

I’ve learned a few lessons about making post-discharge calls that are detailed in my August 2012 column. TH

---

Dr. Nelson has been a practicing hospitalist since 1988. He is co-founder and past president of SHM, and principal in Nelson Flores Hospital Medicine Consultants. He is co-director for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. Write to him at john.nelson@nelsonflores.com.

I first became aware of measuring customer satisfaction when a service manager at a car dealership explained in an upbeat way that I would be getting a survey and that any response by me other than the highest rating would result in significant negative consequences. I can recall being pleased with the service right up to the point the manager tried to extract a promise from me that I would provide “top box” answers.

What started with a car dealership survey has become a near avalanche of surveys from my credit card, bank, airlines, hotels, and other businesses. Each starts by assuring me that it will take only a minute or two to complete the survey, but if I completed every survey sent my way, it would add up to a significant amount of time. So I’ve stopped responding to nearly all of them, not so much as a form of protest but as part of my overall time-management efforts.

I imagine many of our patients see surveys from hospitals and other healthcare providers similarly: just another one to add to the pile. Patients in their 80s and 90s—a significant portion of hospitalist patients—probably interact a lot less with companies that send satisfaction surveys and so might be more attentive to ones from healthcare organizations. But I suspect that a reasonable portion of older patients rely on a family member to complete them, and this person, often a son or daughter, probably does get a lot of similar surveys. Surely, survey fatigue is influencing the results at least a little.

Healthcare Surveys: HCAHPS

For all the surveying going on, I find it pretty difficult to use HCAHPS results to guide patient-satisfaction improvement efforts. Sure, I can see how individual doctors or different physician groups score compared to one another and try to model my behaviors after the high performers. That is a really valuable thing to do, but it doesn’t get to the granular level I’d like.

One would hope the three physician-specific HCAHPS questions would support drilling down to more actionable information. But every hospitalist group I’ve seen always has the same pattern, scoring from lowest to highest as follows:

• How often did doctors explain things in a way you could understand?
• How often did doctors listen carefully to you?
• How often did doctors treat you with courtesy and respect?

So I don’t think the difference in scores on these questions is very useful in guiding improvement efforts.

Looking beyond HCAHPS

For a few years, our hospitalist group added a very short survey to the brochure describing the practice. I still think that was good idea to ensure accurate attribution and more granular information, but it didn’t yield much value in practice because of a low response rate. Ultimately, we stopped using it because of our hospital risk manager’s concern any such survey could be construed as “coaching” patients in their HCAHPS responses, something the Centers for Medicare & Medicaid Services forbids.

Mark Rudolph, MD, vice president of physician development and patient experience at Sound Physicians, told me about their experience with their employed RNs using tablet computers to survey every patient the day following hospital admission (i.e., while patients were still in the hospital). It seems to me this could be a really valuable tool to provide very granular feedback at the outset of a patient stay when there is still time to address areas in which the patient is less satisfied. They found that for about 30% of patients, the survey uncovered something that could be fixed, such as providing another blanket, determining what time a test was likely to be done, etc. I bet for most patients the fact that a nurse cared enough to ask how things are going and try to remedy problems improved their HCAPHS scores.

 

Yet after some experience with this approach, Sound Physicians found that, for a number of reasons, this wasn’t as valuable as hoped. They now survey a smaller sample of patients and sometimes adjust the questions based on the known or suspected strengths and weaknesses of individual providers. For one doctor, for example, the survey might ask whether the doctor spent enough time with the patient; for another, it might ask if the doctor spoke clearly, etc.

Dr. Rudolph thinks having someone such as the lead hospitalist observe the doctor while on rounds might ultimately prove more valuable than administering a survey. It will be interesting to see how his group and others around the country evolve their approach to better understand each provider’s strengths and weaknesses and most effective ways to improve patient satisfaction.

How to Improve Patient Satisfaction?

In my April 2012 column, I wrote about several things for hospitalists to consider including in their patient-satisfaction improvement plan. And, of course, there are a lot of additional sources of ideas available just by searching the Internet.

I find it difficult to consistently implement a bundle of multiple different habits, such as always sitting or always rounding with the patient’s bedside nurse, etc. I acknowledge these are proven valuable strategies to improve scores, but I still find it hard to do them consistently.

For some of us, it might be better to pick one thing to focus on. And while I don’t have research data to prove it, I think the single most valuable thing to improve patient satisfaction with hospitalists is to phone patients after discharge. It isn’t as difficult as most assume, and it often leads patients (or the family member you reach) to thank you profusely for the call. I think hospitalists can really benefit from more expressions of gratitude from patients and families, and these calls often provide it.

I’ve learned a few lessons about making post-discharge calls that are detailed in my August 2012 column. TH

---

Dr. Nelson has been a practicing hospitalist since 1988. He is co-founder and past president of SHM, and principal in Nelson Flores Hospital Medicine Consultants. He is co-director for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. Write to him at john.nelson@nelsonflores.com.

I first became aware of measuring customer satisfaction when a service manager at a car dealership explained in an upbeat way that I would be getting a survey and that any response by me other than the highest rating would result in significant negative consequences. I can recall being pleased with the service right up to the point the manager tried to extract a promise from me that I would provide “top box” answers.

What started with a car dealership survey has become a near avalanche of surveys from my credit card, bank, airlines, hotels, and other businesses. Each starts by assuring me that it will take only a minute or two to complete the survey, but if I completed every survey sent my way, it would add up to a significant amount of time. So I’ve stopped responding to nearly all of them, not so much as a form of protest but as part of my overall time-management efforts.

I imagine many of our patients see surveys from hospitals and other healthcare providers similarly: just another one to add to the pile. Patients in their 80s and 90s—a significant portion of hospitalist patients—probably interact a lot less with companies that send satisfaction surveys and so might be more attentive to ones from healthcare organizations. But I suspect that a reasonable portion of older patients rely on a family member to complete them, and this person, often a son or daughter, probably does get a lot of similar surveys. Surely, survey fatigue is influencing the results at least a little.

Healthcare Surveys: HCAHPS

For all the surveying going on, I find it pretty difficult to use HCAHPS results to guide patient-satisfaction improvement efforts. Sure, I can see how individual doctors or different physician groups score compared to one another and try to model my behaviors after the high performers. That is a really valuable thing to do, but it doesn’t get to the granular level I’d like.

One would hope the three physician-specific HCAHPS questions would support drilling down to more actionable information. But every hospitalist group I’ve seen always has the same pattern, scoring from lowest to highest as follows:

• How often did doctors explain things in a way you could understand?
• How often did doctors listen carefully to you?
• How often did doctors treat you with courtesy and respect?

So I don’t think the difference in scores on these questions is very useful in guiding improvement efforts.

Looking beyond HCAHPS

For a few years, our hospitalist group added a very short survey to the brochure describing the practice. I still think that was good idea to ensure accurate attribution and more granular information, but it didn’t yield much value in practice because of a low response rate. Ultimately, we stopped using it because of our hospital risk manager’s concern any such survey could be construed as “coaching” patients in their HCAHPS responses, something the Centers for Medicare & Medicaid Services forbids.

Mark Rudolph, MD, vice president of physician development and patient experience at Sound Physicians, told me about their experience with their employed RNs using tablet computers to survey every patient the day following hospital admission (i.e., while patients were still in the hospital). It seems to me this could be a really valuable tool to provide very granular feedback at the outset of a patient stay when there is still time to address areas in which the patient is less satisfied. They found that for about 30% of patients, the survey uncovered something that could be fixed, such as providing another blanket, determining what time a test was likely to be done, etc. I bet for most patients the fact that a nurse cared enough to ask how things are going and try to remedy problems improved their HCAPHS scores.

 

Yet after some experience with this approach, Sound Physicians found that, for a number of reasons, this wasn’t as valuable as hoped. They now survey a smaller sample of patients and sometimes adjust the questions based on the known or suspected strengths and weaknesses of individual providers. For one doctor, for example, the survey might ask whether the doctor spent enough time with the patient; for another, it might ask if the doctor spoke clearly, etc.

Dr. Rudolph thinks having someone such as the lead hospitalist observe the doctor while on rounds might ultimately prove more valuable than administering a survey. It will be interesting to see how his group and others around the country evolve their approach to better understand each provider’s strengths and weaknesses and most effective ways to improve patient satisfaction.

How to Improve Patient Satisfaction?

In my April 2012 column, I wrote about several things for hospitalists to consider including in their patient-satisfaction improvement plan. And, of course, there are a lot of additional sources of ideas available just by searching the Internet.

I find it difficult to consistently implement a bundle of multiple different habits, such as always sitting or always rounding with the patient’s bedside nurse, etc. I acknowledge these are proven valuable strategies to improve scores, but I still find it hard to do them consistently.

For some of us, it might be better to pick one thing to focus on. And while I don’t have research data to prove it, I think the single most valuable thing to improve patient satisfaction with hospitalists is to phone patients after discharge. It isn’t as difficult as most assume, and it often leads patients (or the family member you reach) to thank you profusely for the call. I think hospitalists can really benefit from more expressions of gratitude from patients and families, and these calls often provide it.

I’ve learned a few lessons about making post-discharge calls that are detailed in my August 2012 column. TH

---

Dr. Nelson has been a practicing hospitalist since 1988. He is co-founder and past president of SHM, and principal in Nelson Flores Hospital Medicine Consultants. He is co-director for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. Write to him at john.nelson@nelsonflores.com.

One of the biggest complaints of hospital patients today is poor sleep, which is not conducive to healing or good health in general.

“The reason I’m interested, as a cardiologist, is that sleep disorders are associated with an increased risk of cardiovascular mortality,” says Peter M. Farrehi, MD, assistant professor of internal medicine at the University of Michigan and lead author of a recent sleep study published in The American Journal of Medicine.

Most information about sleeping in the hospital comes from ICU studies, he says.

Dr. Farrehi wanted to actually test an intervention rather than simply survey patients. All patients received an eye mask, ear plugs, and a white-noise machine, then were randomized to receive an education-based script on the importance of using these sleep-enhancing tools or a discussion about the general benefits of sleep.

“To avoid bias in the study both from the research staff and also hospital staff, I didn't want only the intervention to have the tools,” he says. “This was a double-blind, randomized control trial in the hospital, which is really unusual.”

Patients in the group that was taught about the sleep-enhancing tools had a statistically significant difference in their perceptions of fatigue and a trend toward improving their sleep and wake disturbances.

Dr. Farrehi suggests hospitalists talk to their patients complaining of poor sleep about these sleep tools. If they are not available in their hospital, hospitalists might refer their medical director to this paper to see if there is any interest in purchasing these sleep tools.

Reference

1. 1. Farrehi PM, Clore KR, Scott JR, Vanini G, Clauw DJ. Efficacy of sleep tool education during hospitalization: a randomized controlled trial [published online ahead of print August 23, 2016]. Am J Med. doi:10.1016/j.amjmed.2016.08.001.

One of the biggest complaints of hospital patients today is poor sleep, which is not conducive to healing or good health in general.

“The reason I’m interested, as a cardiologist, is that sleep disorders are associated with an increased risk of cardiovascular mortality,” says Peter M. Farrehi, MD, assistant professor of internal medicine at the University of Michigan and lead author of a recent sleep study published in The American Journal of Medicine.

Most information about sleeping in the hospital comes from ICU studies, he says.

Dr. Farrehi wanted to actually test an intervention rather than simply survey patients. All patients received an eye mask, ear plugs, and a white-noise machine, then were randomized to receive an education-based script on the importance of using these sleep-enhancing tools or a discussion about the general benefits of sleep.

“To avoid bias in the study both from the research staff and also hospital staff, I didn't want only the intervention to have the tools,” he says. “This was a double-blind, randomized control trial in the hospital, which is really unusual.”

Patients in the group that was taught about the sleep-enhancing tools had a statistically significant difference in their perceptions of fatigue and a trend toward improving their sleep and wake disturbances.

Dr. Farrehi suggests hospitalists talk to their patients complaining of poor sleep about these sleep tools. If they are not available in their hospital, hospitalists might refer their medical director to this paper to see if there is any interest in purchasing these sleep tools.

Reference

1. 1. Farrehi PM, Clore KR, Scott JR, Vanini G, Clauw DJ. Efficacy of sleep tool education during hospitalization: a randomized controlled trial [published online ahead of print August 23, 2016]. Am J Med. doi:10.1016/j.amjmed.2016.08.001.

One of the biggest complaints of hospital patients today is poor sleep, which is not conducive to healing or good health in general.

“The reason I’m interested, as a cardiologist, is that sleep disorders are associated with an increased risk of cardiovascular mortality,” says Peter M. Farrehi, MD, assistant professor of internal medicine at the University of Michigan and lead author of a recent sleep study published in The American Journal of Medicine.

Most information about sleeping in the hospital comes from ICU studies, he says.

Dr. Farrehi wanted to actually test an intervention rather than simply survey patients. All patients received an eye mask, ear plugs, and a white-noise machine, then were randomized to receive an education-based script on the importance of using these sleep-enhancing tools or a discussion about the general benefits of sleep.

“To avoid bias in the study both from the research staff and also hospital staff, I didn't want only the intervention to have the tools,” he says. “This was a double-blind, randomized control trial in the hospital, which is really unusual.”

Patients in the group that was taught about the sleep-enhancing tools had a statistically significant difference in their perceptions of fatigue and a trend toward improving their sleep and wake disturbances.

Dr. Farrehi suggests hospitalists talk to their patients complaining of poor sleep about these sleep tools. If they are not available in their hospital, hospitalists might refer their medical director to this paper to see if there is any interest in purchasing these sleep tools.

Reference

1. 1. Farrehi PM, Clore KR, Scott JR, Vanini G, Clauw DJ. Efficacy of sleep tool education during hospitalization: a randomized controlled trial [published online ahead of print August 23, 2016]. Am J Med. doi:10.1016/j.amjmed.2016.08.001.

Editor's Note: Listen to Dr. Smith share more of his views on the State of Hospital Medicine report.

Hospitalist groups and their stakeholders must continually adapt to evolving reimbursement models and their attendant financial foci on quality. Even in the midst of care models that rely less heavily on volume of care as a marker for reimbursement, the use of criteria by insurers to separate hospital stays into inpatient or observation status remains widespread. Hospitalist groups vary in the reimbursement model environment they work in, and different reimbursement models can drive hospitalist group behavior in different ways.

SHM’s 2016 State of Hospital Medicine Report revisits the issue of observation status utilization raised in previous surveys.1 The 2012 survey’s methodology reports admissions classified as observation status based on CPT coding.2 The 2016 survey continues the 2014 survey methodology of using discharges classified as observation status based on CPT coding, along with same-day admission and discharge reported as a third hospitalization status category. In groups serving adults only, observation discharges accounted for 21.2% of all discharges, which represents an increase from 16.1% in the 2014 survey3 and a general return to the 2012-reported percentage of 20%. If same-day admissions and discharges, many of which are likely classified as observation status, are added, then observation status use in the 2016 survey may be as high as 24% of all admissions. This represents a considerable increase from the combined 19.6% rate in 2014.

Changes in non-academic status hospitalist groups largely account for this increase. Academic hospitalist groups reported an observation status utilization rate of 15.3% of admissions in 2012 and 19.4% in 2014, with a subsequent decrease to 17.5% reported in the 2016 survey. Inclusion of same-day admission and discharge with reported observation status use also reveals a decrease from 22.8% in 2014 to 20.8% in the new survey. In contrast, non-academic hospitalist groups now report a substantial change in observation status utilization, up to 21.4% in the 2016 survey from 15.6% in 2014 and similar to the 2012 level of 20.4%. When same-day admission and discharge codes are also included, the totals for non-academic hospitalist groups also evidence an increase, to 24.3% in the new survey from 19.2% in 2014.

I postulated in 2015 that the comparative increase in observation status utilization by academic groups as compared with non-academic groups in the 2014 survey may have been associated with greater proficiency in documentation and related billing inherent in a bedside clinical workforce entirely composed of physicians who have completed postgraduate training. Other phenomena may now potentially explain the increase in observation status use we see in the 2016 survey. These include adoption of the two-midnight rule by the Centers for Medicare & Medicaid Services, use of readmission rates in hospitalist group incentive structures, sharing of cost savings between hospitalist groups and healthcare organizations mutually engaged in third-party bundled payment arrangements, or risk-avoidant strategies executed by clinicians and institutional coders perhaps in excess of their institutions’ needs for risk avoidance. For many of these events, the 2016 State of Hospital Medicine Report provides further benchmark data, in a national and regional context, to inform understanding for hospitalist groups facing challenges associated with observation status utilization.

---

G. Randy Smith Jr., MD, MS, FRCP(Edin), SFHM, is an assistant professor in the Division of Hospital Medicine at Northwestern University Feinberg School of Medicine in Chicago.

References

1. 2016 State of Hospital Medicine Report. Society of Hospital Medicine website. Accessed September 11, 2016.
2. 2012 State of Hospital Medicine Report. Society of Hospital Medicine website. Accessed September 11, 2016.
3. 2014 State of Hospital Medicine Report. Society of Hospital Medicine website.

   Accessed September 11, 2016.

Editor's Note: Listen to Dr. Smith share more of his views on the State of Hospital Medicine report.

Hospitalist groups and their stakeholders must continually adapt to evolving reimbursement models and their attendant financial foci on quality. Even in the midst of care models that rely less heavily on volume of care as a marker for reimbursement, the use of criteria by insurers to separate hospital stays into inpatient or observation status remains widespread. Hospitalist groups vary in the reimbursement model environment they work in, and different reimbursement models can drive hospitalist group behavior in different ways.

SHM’s 2016 State of Hospital Medicine Report revisits the issue of observation status utilization raised in previous surveys.1 The 2012 survey’s methodology reports admissions classified as observation status based on CPT coding.2 The 2016 survey continues the 2014 survey methodology of using discharges classified as observation status based on CPT coding, along with same-day admission and discharge reported as a third hospitalization status category. In groups serving adults only, observation discharges accounted for 21.2% of all discharges, which represents an increase from 16.1% in the 2014 survey3 and a general return to the 2012-reported percentage of 20%. If same-day admissions and discharges, many of which are likely classified as observation status, are added, then observation status use in the 2016 survey may be as high as 24% of all admissions. This represents a considerable increase from the combined 19.6% rate in 2014.

Changes in non-academic status hospitalist groups largely account for this increase. Academic hospitalist groups reported an observation status utilization rate of 15.3% of admissions in 2012 and 19.4% in 2014, with a subsequent decrease to 17.5% reported in the 2016 survey. Inclusion of same-day admission and discharge with reported observation status use also reveals a decrease from 22.8% in 2014 to 20.8% in the new survey. In contrast, non-academic hospitalist groups now report a substantial change in observation status utilization, up to 21.4% in the 2016 survey from 15.6% in 2014 and similar to the 2012 level of 20.4%. When same-day admission and discharge codes are also included, the totals for non-academic hospitalist groups also evidence an increase, to 24.3% in the new survey from 19.2% in 2014.

I postulated in 2015 that the comparative increase in observation status utilization by academic groups as compared with non-academic groups in the 2014 survey may have been associated with greater proficiency in documentation and related billing inherent in a bedside clinical workforce entirely composed of physicians who have completed postgraduate training. Other phenomena may now potentially explain the increase in observation status use we see in the 2016 survey. These include adoption of the two-midnight rule by the Centers for Medicare & Medicaid Services, use of readmission rates in hospitalist group incentive structures, sharing of cost savings between hospitalist groups and healthcare organizations mutually engaged in third-party bundled payment arrangements, or risk-avoidant strategies executed by clinicians and institutional coders perhaps in excess of their institutions’ needs for risk avoidance. For many of these events, the 2016 State of Hospital Medicine Report provides further benchmark data, in a national and regional context, to inform understanding for hospitalist groups facing challenges associated with observation status utilization.

---

G. Randy Smith Jr., MD, MS, FRCP(Edin), SFHM, is an assistant professor in the Division of Hospital Medicine at Northwestern University Feinberg School of Medicine in Chicago.

References

1. 2016 State of Hospital Medicine Report. Society of Hospital Medicine website. Accessed September 11, 2016.
2. 2012 State of Hospital Medicine Report. Society of Hospital Medicine website. Accessed September 11, 2016.
3. 2014 State of Hospital Medicine Report. Society of Hospital Medicine website.

   Accessed September 11, 2016.

Editor's Note: Listen to Dr. Smith share more of his views on the State of Hospital Medicine report.

Hospitalist groups and their stakeholders must continually adapt to evolving reimbursement models and their attendant financial foci on quality. Even in the midst of care models that rely less heavily on volume of care as a marker for reimbursement, the use of criteria by insurers to separate hospital stays into inpatient or observation status remains widespread. Hospitalist groups vary in the reimbursement model environment they work in, and different reimbursement models can drive hospitalist group behavior in different ways.

SHM’s 2016 State of Hospital Medicine Report revisits the issue of observation status utilization raised in previous surveys.1 The 2012 survey’s methodology reports admissions classified as observation status based on CPT coding.2 The 2016 survey continues the 2014 survey methodology of using discharges classified as observation status based on CPT coding, along with same-day admission and discharge reported as a third hospitalization status category. In groups serving adults only, observation discharges accounted for 21.2% of all discharges, which represents an increase from 16.1% in the 2014 survey3 and a general return to the 2012-reported percentage of 20%. If same-day admissions and discharges, many of which are likely classified as observation status, are added, then observation status use in the 2016 survey may be as high as 24% of all admissions. This represents a considerable increase from the combined 19.6% rate in 2014.

Changes in non-academic status hospitalist groups largely account for this increase. Academic hospitalist groups reported an observation status utilization rate of 15.3% of admissions in 2012 and 19.4% in 2014, with a subsequent decrease to 17.5% reported in the 2016 survey. Inclusion of same-day admission and discharge with reported observation status use also reveals a decrease from 22.8% in 2014 to 20.8% in the new survey. In contrast, non-academic hospitalist groups now report a substantial change in observation status utilization, up to 21.4% in the 2016 survey from 15.6% in 2014 and similar to the 2012 level of 20.4%. When same-day admission and discharge codes are also included, the totals for non-academic hospitalist groups also evidence an increase, to 24.3% in the new survey from 19.2% in 2014.

I postulated in 2015 that the comparative increase in observation status utilization by academic groups as compared with non-academic groups in the 2014 survey may have been associated with greater proficiency in documentation and related billing inherent in a bedside clinical workforce entirely composed of physicians who have completed postgraduate training. Other phenomena may now potentially explain the increase in observation status use we see in the 2016 survey. These include adoption of the two-midnight rule by the Centers for Medicare & Medicaid Services, use of readmission rates in hospitalist group incentive structures, sharing of cost savings between hospitalist groups and healthcare organizations mutually engaged in third-party bundled payment arrangements, or risk-avoidant strategies executed by clinicians and institutional coders perhaps in excess of their institutions’ needs for risk avoidance. For many of these events, the 2016 State of Hospital Medicine Report provides further benchmark data, in a national and regional context, to inform understanding for hospitalist groups facing challenges associated with observation status utilization.

---

G. Randy Smith Jr., MD, MS, FRCP(Edin), SFHM, is an assistant professor in the Division of Hospital Medicine at Northwestern University Feinberg School of Medicine in Chicago.

References

1. 2016 State of Hospital Medicine Report. Society of Hospital Medicine website. Accessed September 11, 2016.
2. 2012 State of Hospital Medicine Report. Society of Hospital Medicine website. Accessed September 11, 2016.
3. 2014 State of Hospital Medicine Report. Society of Hospital Medicine website.

   Accessed September 11, 2016.

Editor's Note: Listen to Dr. Smith share more of his views on the State of Hospital Medicine report.

2016 is the “Year of the Hospitalist,” a sobriquet meant as a proud nod to the specialty’s maturation as a fixture in hospitals across the country. Hospital medicine is no longer the new kid on the block as it has assumed care for the vast majority of hospitalized patients nationwide.

One could understand then if the ever-rising salaries hospitalists have commanded for 20 years might have finally plateaued, particularly as tightening budgets have C-suite administrators looking to trim costs.

Think again.

Median compensation for adult hospitalists rose 10% to $278,746 from 2013 to 2015, according to data from the Medical Group Management Association (MGMA). The compensation data from MGMA are wrapped into the 2016 State of Hospital Medicine Report (SoHM), which published this month. That double-digit increase continues the steady climb of hospitalist pay, which is up 30% since 2010.

“Growth suggests that there is still a huge demand,” says Leslie Flores, MHA, a partner in Nelson Flores Hospital Medicine Consultants and a member of SHM’s Practice Analysis Committee. “The demand for hospitalists still exceeds the supply, and so recruiting hospitalists, particularly to nonurban areas, is really challenging and is requiring more money.”

The SoHM is a biennial partnership between SHM and MGMA that provides HM group leaders and rank-and-file hospitalists a litany of benchmarks for salaries, workloads, and everything that informs those two topics. Call it the specialty’s empirical roadmap.

“Often, compensation information relative to staffing information is proprietary, so hospitalists are in a position where they are dependent upon their hospital stakeholders to have access to this information, but they are also the same stakeholders with whom they negotiate their contracts,” says G. Randy Smith, MD, MS, FRCP(Edin), SFHM, an assistant professor in the Division of Hospital Medicine at Northwestern University Feinberg School of Medicine in Chicago and a member of SHM’s Practice Analysis Committee. “The State of Hospital Medicine report by SHM provides an opportunity for hospitalists to have an independent view of the compensation and workforce distribution factors that can impact negotiations with their hospital stakeholders. It’s a very powerful tool.”

Compensation Data

Rachel Lovins, MD, SFHM, CPE, voraciously reads every SoHM report because she uses its keynote compensation data to benchmark what she should pay her staff.

“I make a promise to my group,” says Dr. Lovins, chief of hospital medicine and vice chair of the Department of Medicine at Middlesex Hospital in Middletown, Conn. “I promise them that we will always be at or above what is standard for our areas. So for me, I have to look every time.”

Promises like that are getting more expensive to keep.

Hospitalists in the East region earn a median compensation of $245,977, up 3.1% from the $238,676 figure reported in 2014. But the East, where the bulk of the country’s population lives and where competition for hospitalists is typically lessened, is by far the lowest-paid region.

Hospitalists in the South continue to earn the most, with a median compensation of $301,833, up a whopping 16.9% from $258,020 from 2013. Hospitalists in the West earned a median of $275,658 (up 10.3% from $249,894), while Midwestern hospitalists saw a median compensation of $285,213 (up 8.9% from $261,868).

In addition to year-over-year growth, HM is also seeing outsized growth as compared with family medicine physicians, according to MGMA data. From 2011 to 2015, family medicine hospitalists saw an average compensation increase of 4.7%, bringing the average salary to $285,213. During the same period, family medicine physicians who are not hospitalists and don’t practice obstetrics saw an average annual compensation increase of only 3%, bringing the average salary to $230,456.

 

“The hospitalist can save the hospital considerable amounts of money because of their ability to better manage the patient and improve the quality of care at the same time,” says David Gans, MSHA, FACMPE, MGMA’s senior fellow of industry affairs. “Hospitals, they have recognized that, and therefore, there is considerable competition for recruiting and retaining hospitalists.”

To that end, 96.3% of HM groups (HMGs) received financial support in addition to their professional fee revenue. That’s up from 89% of HMGs that relied last year on their host hospitals. The median support is $157,535 per full-time employee (FTE), up just 1%. Correspondingly, SoHM reported 8.5% of HMGs received enough income from professional fee revenue to cover expenses, up from 6% two years ago.

Industry watchers predicted that, in two years, fee revenue would have to rise to offset hospitals’ inability to pay. The early returns seem to show that bearing out.

“We’re pretty close to that breaking point,” Flores says. “When we go around the country and do consulting work, we are hearing many more hospital leaders telling us, ‘We’re concerned about how much money this program is costing us, and we are getting to the point where we can’t afford it.’”

Productivity Stalls

While compensation continues to climb, productivity flattened out in this year’s report.

Median relative value units (RVUs) dipped slightly from the figure reported in 2014, to 4,252 from 4,297. But the tally is still ahead of 2012’s total of 4,159. Median collection-to-work RVUs also ticked down from 2014’s tally, to $50.29 from $51.50 in 2013.

Flores largely attributes the falling metrics of productivity to the evolution of HMGs that have standardized their scheduling to the point that most HMGs now offer vacation time.

“So the number of groups that are working 182 days is fewer, and we see a lot more groups that are working something like 168 days or 172 days,” she says. “And if a hospitalist works fewer shifts, even if they see the same number of patients per shift, they’re going to generate less productivity over the course of the year, so that’s part of it.”

Andrew White, MD, SFHM, director of the HM service at the University of Washington Medical Center in Seattle, says the report’s value is in avoiding a myopic approach to how HMGs operate. For example, RVUs are an important metric of productivity, but not all shifts should be expected to produce the same.

For example, it’d be valuable to use the report to see how hard your nocturnists are working compared with other sites, says Dr. White, also a member of the Practice Analysis Committee.

“The fundamental issue with working at night is that not everybody wants to do it, and so you have to recognize that it’s a pain to do and you have to either pay those people more, have them work less, or acknowledge that they’re going to be less productive,” he says. “We use the survey to assess all three of those things and then can work with our nocturnists to reach an agreement about a fair approach to their job structure that’s actually informed by national benchmarks. That process has helped us to pick, for example, how many nights per year they should work or what their salaries should look like compared to the day hospitalists.”

Dr. White says that because the report is comprehensive and includes broad participation, he’s able to use it as a benchmark to make hiring and service structure decisions.

“It also helps me to keep abreast of some trends that may be occurring in the broader workplace that we aren’t participating in but maybe should be or should be thinking about,” he says.

 

The report’s subsections are also critical for comparing one HMG to others, Dr. White says.

“Obviously, there is the aggregate data there to look at the average program,” he says. “But really as a hospitalist group leader, you want to know what are other programs like mine doing, and it allows you to drill down into that data.”

Survey Limitations

Any hospitalist worth their weight in scrubs knows that any medical study is only as good as its limitations. And while SoHM is a trove of valuable data information, Flores always cautions against taking data points as gospel.

“People should understand what the numbers are telling us, what goes into those numbers, and take them not with a grain of salt but take them for what they are,” she says.

For example, Flores says, look at productivity metrics per shift. Day shifts have traditionally driven that figure, and those shifts are typically busy. But night shifts have fewer patients and less productivity.

“So as more and more hospitals get 24-hour in-house coverage and have doctors working low-productivity night shifts, that [productivity] number might fall,” she says.

That sort of nuanced analysis of productivity can’t be found anywhere else, says Dr. Lovins.

These are “data that we don’t normally get from our administration,” she says, “information on things like staffing and patient loads, and how much more the director makes than the people that work for the director, and how much more nighttime people make than daytime people make. There is no other way for me to get that information, and it’s very important to make sure that our program is fair.”

Aside from fair, the data points are essential talking points as HMGs negotiate contracts and other arrangements with their administrators.

“It’s a reference point so that everybody feels like we’re using data from a national source that everyone can agree upon as fair,” says Dr. White.

In Dr. White’s case, he doesn’t have many local academic programs to benchmark against. And comparing to private, for-profit hospitals isn’t the proverbial apples-to-apples comparison. Having vetted regional and national figures for comparison is incredibly valuable, particularly since he doesn’t have to compile the data.

“If I had to go call all those group leaders and figure out what they were doing, it would be pretty exhausting,” he says.

Alternative Payment Models

Dr. Smith says that one area where the report will become even more valuable over the next few years is addressing alternative payment models (APMs). In particular, HM leaders say they’re excited about being drivers in one of the largest APMs: the Bundled Payments for Care Improvement (BCPI) initiative. In short, the program covers 48 defined episodes of care, including medical and surgical, that could begin three days prior to admission and stretch 30, 60, or 90 days post-discharge.

Dr. Smith thinks it’s still a bit too early to see from the report how APMs have affected compensation.

“We’re still relatively in the early days of bundled-payment models, so in that regard, the State of Hospital Medicine Report still represents very much a starting point with regard to where hospital medicine groups will find themselves as they start to encounter challenges,” he says.

Perhaps more important, Gans doesn’t expect that the maturation of APMs will result in decreased compensation for hospitalists.

“In a hospital environment where the hospital is being reimbursed a set amount for a complete hospital admission and follow-up care and potential readmissions, that is an episodic payment already,” he says. “Consequently, the incentive is there today to better manage the patient and to attain the care coordination and care management necessary for that patient to be discharged and not readmitted.”

 

In fact, the SHM/MGMA data tell him that the basic economic theory of supply and demand continues to drive hospitalist compensation even 20 years after the field was given its name. He says rising compensation, even as more practices look to hire nurse practitioners or physician assistants as less expensive alternatives, shows no sign of letting up.

“I think demand will continue to be there,” Gans adds. “There may be in the long run some lessening of demand for hospitalists, but I don’t see that for years.”

---

Richard Quinn is a freelance writer in New Jersey.

Editor's Note: Listen to Dr. Smith share more of his views on the State of Hospital Medicine report.

2016 is the “Year of the Hospitalist,” a sobriquet meant as a proud nod to the specialty’s maturation as a fixture in hospitals across the country. Hospital medicine is no longer the new kid on the block as it has assumed care for the vast majority of hospitalized patients nationwide.

One could understand then if the ever-rising salaries hospitalists have commanded for 20 years might have finally plateaued, particularly as tightening budgets have C-suite administrators looking to trim costs.

Think again.

Median compensation for adult hospitalists rose 10% to $278,746 from 2013 to 2015, according to data from the Medical Group Management Association (MGMA). The compensation data from MGMA are wrapped into the 2016 State of Hospital Medicine Report (SoHM), which published this month. That double-digit increase continues the steady climb of hospitalist pay, which is up 30% since 2010.

“Growth suggests that there is still a huge demand,” says Leslie Flores, MHA, a partner in Nelson Flores Hospital Medicine Consultants and a member of SHM’s Practice Analysis Committee. “The demand for hospitalists still exceeds the supply, and so recruiting hospitalists, particularly to nonurban areas, is really challenging and is requiring more money.”

The SoHM is a biennial partnership between SHM and MGMA that provides HM group leaders and rank-and-file hospitalists a litany of benchmarks for salaries, workloads, and everything that informs those two topics. Call it the specialty’s empirical roadmap.

“Often, compensation information relative to staffing information is proprietary, so hospitalists are in a position where they are dependent upon their hospital stakeholders to have access to this information, but they are also the same stakeholders with whom they negotiate their contracts,” says G. Randy Smith, MD, MS, FRCP(Edin), SFHM, an assistant professor in the Division of Hospital Medicine at Northwestern University Feinberg School of Medicine in Chicago and a member of SHM’s Practice Analysis Committee. “The State of Hospital Medicine report by SHM provides an opportunity for hospitalists to have an independent view of the compensation and workforce distribution factors that can impact negotiations with their hospital stakeholders. It’s a very powerful tool.”

Compensation Data

Rachel Lovins, MD, SFHM, CPE, voraciously reads every SoHM report because she uses its keynote compensation data to benchmark what she should pay her staff.

“I make a promise to my group,” says Dr. Lovins, chief of hospital medicine and vice chair of the Department of Medicine at Middlesex Hospital in Middletown, Conn. “I promise them that we will always be at or above what is standard for our areas. So for me, I have to look every time.”

Promises like that are getting more expensive to keep.

Hospitalists in the East region earn a median compensation of $245,977, up 3.1% from the $238,676 figure reported in 2014. But the East, where the bulk of the country’s population lives and where competition for hospitalists is typically lessened, is by far the lowest-paid region.

Hospitalists in the South continue to earn the most, with a median compensation of $301,833, up a whopping 16.9% from $258,020 from 2013. Hospitalists in the West earned a median of $275,658 (up 10.3% from $249,894), while Midwestern hospitalists saw a median compensation of $285,213 (up 8.9% from $261,868).

In addition to year-over-year growth, HM is also seeing outsized growth as compared with family medicine physicians, according to MGMA data. From 2011 to 2015, family medicine hospitalists saw an average compensation increase of 4.7%, bringing the average salary to $285,213. During the same period, family medicine physicians who are not hospitalists and don’t practice obstetrics saw an average annual compensation increase of only 3%, bringing the average salary to $230,456.

 

“The hospitalist can save the hospital considerable amounts of money because of their ability to better manage the patient and improve the quality of care at the same time,” says David Gans, MSHA, FACMPE, MGMA’s senior fellow of industry affairs. “Hospitals, they have recognized that, and therefore, there is considerable competition for recruiting and retaining hospitalists.”

To that end, 96.3% of HM groups (HMGs) received financial support in addition to their professional fee revenue. That’s up from 89% of HMGs that relied last year on their host hospitals. The median support is $157,535 per full-time employee (FTE), up just 1%. Correspondingly, SoHM reported 8.5% of HMGs received enough income from professional fee revenue to cover expenses, up from 6% two years ago.

Industry watchers predicted that, in two years, fee revenue would have to rise to offset hospitals’ inability to pay. The early returns seem to show that bearing out.

“We’re pretty close to that breaking point,” Flores says. “When we go around the country and do consulting work, we are hearing many more hospital leaders telling us, ‘We’re concerned about how much money this program is costing us, and we are getting to the point where we can’t afford it.’”

Productivity Stalls

While compensation continues to climb, productivity flattened out in this year’s report.

Median relative value units (RVUs) dipped slightly from the figure reported in 2014, to 4,252 from 4,297. But the tally is still ahead of 2012’s total of 4,159. Median collection-to-work RVUs also ticked down from 2014’s tally, to $50.29 from $51.50 in 2013.

Flores largely attributes the falling metrics of productivity to the evolution of HMGs that have standardized their scheduling to the point that most HMGs now offer vacation time.

“So the number of groups that are working 182 days is fewer, and we see a lot more groups that are working something like 168 days or 172 days,” she says. “And if a hospitalist works fewer shifts, even if they see the same number of patients per shift, they’re going to generate less productivity over the course of the year, so that’s part of it.”

Andrew White, MD, SFHM, director of the HM service at the University of Washington Medical Center in Seattle, says the report’s value is in avoiding a myopic approach to how HMGs operate. For example, RVUs are an important metric of productivity, but not all shifts should be expected to produce the same.

For example, it’d be valuable to use the report to see how hard your nocturnists are working compared with other sites, says Dr. White, also a member of the Practice Analysis Committee.

“The fundamental issue with working at night is that not everybody wants to do it, and so you have to recognize that it’s a pain to do and you have to either pay those people more, have them work less, or acknowledge that they’re going to be less productive,” he says. “We use the survey to assess all three of those things and then can work with our nocturnists to reach an agreement about a fair approach to their job structure that’s actually informed by national benchmarks. That process has helped us to pick, for example, how many nights per year they should work or what their salaries should look like compared to the day hospitalists.”

Dr. White says that because the report is comprehensive and includes broad participation, he’s able to use it as a benchmark to make hiring and service structure decisions.

“It also helps me to keep abreast of some trends that may be occurring in the broader workplace that we aren’t participating in but maybe should be or should be thinking about,” he says.

 

The report’s subsections are also critical for comparing one HMG to others, Dr. White says.

“Obviously, there is the aggregate data there to look at the average program,” he says. “But really as a hospitalist group leader, you want to know what are other programs like mine doing, and it allows you to drill down into that data.”

Survey Limitations

Any hospitalist worth their weight in scrubs knows that any medical study is only as good as its limitations. And while SoHM is a trove of valuable data information, Flores always cautions against taking data points as gospel.

“People should understand what the numbers are telling us, what goes into those numbers, and take them not with a grain of salt but take them for what they are,” she says.

For example, Flores says, look at productivity metrics per shift. Day shifts have traditionally driven that figure, and those shifts are typically busy. But night shifts have fewer patients and less productivity.

“So as more and more hospitals get 24-hour in-house coverage and have doctors working low-productivity night shifts, that [productivity] number might fall,” she says.

That sort of nuanced analysis of productivity can’t be found anywhere else, says Dr. Lovins.

These are “data that we don’t normally get from our administration,” she says, “information on things like staffing and patient loads, and how much more the director makes than the people that work for the director, and how much more nighttime people make than daytime people make. There is no other way for me to get that information, and it’s very important to make sure that our program is fair.”

Aside from fair, the data points are essential talking points as HMGs negotiate contracts and other arrangements with their administrators.

“It’s a reference point so that everybody feels like we’re using data from a national source that everyone can agree upon as fair,” says Dr. White.

In Dr. White’s case, he doesn’t have many local academic programs to benchmark against. And comparing to private, for-profit hospitals isn’t the proverbial apples-to-apples comparison. Having vetted regional and national figures for comparison is incredibly valuable, particularly since he doesn’t have to compile the data.

“If I had to go call all those group leaders and figure out what they were doing, it would be pretty exhausting,” he says.

Alternative Payment Models

Dr. Smith says that one area where the report will become even more valuable over the next few years is addressing alternative payment models (APMs). In particular, HM leaders say they’re excited about being drivers in one of the largest APMs: the Bundled Payments for Care Improvement (BCPI) initiative. In short, the program covers 48 defined episodes of care, including medical and surgical, that could begin three days prior to admission and stretch 30, 60, or 90 days post-discharge.

Dr. Smith thinks it’s still a bit too early to see from the report how APMs have affected compensation.

“We’re still relatively in the early days of bundled-payment models, so in that regard, the State of Hospital Medicine Report still represents very much a starting point with regard to where hospital medicine groups will find themselves as they start to encounter challenges,” he says.

Perhaps more important, Gans doesn’t expect that the maturation of APMs will result in decreased compensation for hospitalists.

“In a hospital environment where the hospital is being reimbursed a set amount for a complete hospital admission and follow-up care and potential readmissions, that is an episodic payment already,” he says. “Consequently, the incentive is there today to better manage the patient and to attain the care coordination and care management necessary for that patient to be discharged and not readmitted.”

 

In fact, the SHM/MGMA data tell him that the basic economic theory of supply and demand continues to drive hospitalist compensation even 20 years after the field was given its name. He says rising compensation, even as more practices look to hire nurse practitioners or physician assistants as less expensive alternatives, shows no sign of letting up.

“I think demand will continue to be there,” Gans adds. “There may be in the long run some lessening of demand for hospitalists, but I don’t see that for years.”

---

Richard Quinn is a freelance writer in New Jersey.

Editor's Note: Listen to Dr. Smith share more of his views on the State of Hospital Medicine report.

2016 is the “Year of the Hospitalist,” a sobriquet meant as a proud nod to the specialty’s maturation as a fixture in hospitals across the country. Hospital medicine is no longer the new kid on the block as it has assumed care for the vast majority of hospitalized patients nationwide.

One could understand then if the ever-rising salaries hospitalists have commanded for 20 years might have finally plateaued, particularly as tightening budgets have C-suite administrators looking to trim costs.

Think again.

Median compensation for adult hospitalists rose 10% to $278,746 from 2013 to 2015, according to data from the Medical Group Management Association (MGMA). The compensation data from MGMA are wrapped into the 2016 State of Hospital Medicine Report (SoHM), which published this month. That double-digit increase continues the steady climb of hospitalist pay, which is up 30% since 2010.

“Growth suggests that there is still a huge demand,” says Leslie Flores, MHA, a partner in Nelson Flores Hospital Medicine Consultants and a member of SHM’s Practice Analysis Committee. “The demand for hospitalists still exceeds the supply, and so recruiting hospitalists, particularly to nonurban areas, is really challenging and is requiring more money.”

The SoHM is a biennial partnership between SHM and MGMA that provides HM group leaders and rank-and-file hospitalists a litany of benchmarks for salaries, workloads, and everything that informs those two topics. Call it the specialty’s empirical roadmap.

“Often, compensation information relative to staffing information is proprietary, so hospitalists are in a position where they are dependent upon their hospital stakeholders to have access to this information, but they are also the same stakeholders with whom they negotiate their contracts,” says G. Randy Smith, MD, MS, FRCP(Edin), SFHM, an assistant professor in the Division of Hospital Medicine at Northwestern University Feinberg School of Medicine in Chicago and a member of SHM’s Practice Analysis Committee. “The State of Hospital Medicine report by SHM provides an opportunity for hospitalists to have an independent view of the compensation and workforce distribution factors that can impact negotiations with their hospital stakeholders. It’s a very powerful tool.”

Compensation Data

Rachel Lovins, MD, SFHM, CPE, voraciously reads every SoHM report because she uses its keynote compensation data to benchmark what she should pay her staff.

“I make a promise to my group,” says Dr. Lovins, chief of hospital medicine and vice chair of the Department of Medicine at Middlesex Hospital in Middletown, Conn. “I promise them that we will always be at or above what is standard for our areas. So for me, I have to look every time.”

Promises like that are getting more expensive to keep.

Hospitalists in the East region earn a median compensation of $245,977, up 3.1% from the $238,676 figure reported in 2014. But the East, where the bulk of the country’s population lives and where competition for hospitalists is typically lessened, is by far the lowest-paid region.

Hospitalists in the South continue to earn the most, with a median compensation of $301,833, up a whopping 16.9% from $258,020 from 2013. Hospitalists in the West earned a median of $275,658 (up 10.3% from $249,894), while Midwestern hospitalists saw a median compensation of $285,213 (up 8.9% from $261,868).

In addition to year-over-year growth, HM is also seeing outsized growth as compared with family medicine physicians, according to MGMA data. From 2011 to 2015, family medicine hospitalists saw an average compensation increase of 4.7%, bringing the average salary to $285,213. During the same period, family medicine physicians who are not hospitalists and don’t practice obstetrics saw an average annual compensation increase of only 3%, bringing the average salary to $230,456.

 

“The hospitalist can save the hospital considerable amounts of money because of their ability to better manage the patient and improve the quality of care at the same time,” says David Gans, MSHA, FACMPE, MGMA’s senior fellow of industry affairs. “Hospitals, they have recognized that, and therefore, there is considerable competition for recruiting and retaining hospitalists.”

To that end, 96.3% of HM groups (HMGs) received financial support in addition to their professional fee revenue. That’s up from 89% of HMGs that relied last year on their host hospitals. The median support is $157,535 per full-time employee (FTE), up just 1%. Correspondingly, SoHM reported 8.5% of HMGs received enough income from professional fee revenue to cover expenses, up from 6% two years ago.

Industry watchers predicted that, in two years, fee revenue would have to rise to offset hospitals’ inability to pay. The early returns seem to show that bearing out.

“We’re pretty close to that breaking point,” Flores says. “When we go around the country and do consulting work, we are hearing many more hospital leaders telling us, ‘We’re concerned about how much money this program is costing us, and we are getting to the point where we can’t afford it.’”

Productivity Stalls

While compensation continues to climb, productivity flattened out in this year’s report.

Median relative value units (RVUs) dipped slightly from the figure reported in 2014, to 4,252 from 4,297. But the tally is still ahead of 2012’s total of 4,159. Median collection-to-work RVUs also ticked down from 2014’s tally, to $50.29 from $51.50 in 2013.

Flores largely attributes the falling metrics of productivity to the evolution of HMGs that have standardized their scheduling to the point that most HMGs now offer vacation time.

“So the number of groups that are working 182 days is fewer, and we see a lot more groups that are working something like 168 days or 172 days,” she says. “And if a hospitalist works fewer shifts, even if they see the same number of patients per shift, they’re going to generate less productivity over the course of the year, so that’s part of it.”

Andrew White, MD, SFHM, director of the HM service at the University of Washington Medical Center in Seattle, says the report’s value is in avoiding a myopic approach to how HMGs operate. For example, RVUs are an important metric of productivity, but not all shifts should be expected to produce the same.

For example, it’d be valuable to use the report to see how hard your nocturnists are working compared with other sites, says Dr. White, also a member of the Practice Analysis Committee.

“The fundamental issue with working at night is that not everybody wants to do it, and so you have to recognize that it’s a pain to do and you have to either pay those people more, have them work less, or acknowledge that they’re going to be less productive,” he says. “We use the survey to assess all three of those things and then can work with our nocturnists to reach an agreement about a fair approach to their job structure that’s actually informed by national benchmarks. That process has helped us to pick, for example, how many nights per year they should work or what their salaries should look like compared to the day hospitalists.”

Dr. White says that because the report is comprehensive and includes broad participation, he’s able to use it as a benchmark to make hiring and service structure decisions.

“It also helps me to keep abreast of some trends that may be occurring in the broader workplace that we aren’t participating in but maybe should be or should be thinking about,” he says.

 

The report’s subsections are also critical for comparing one HMG to others, Dr. White says.

“Obviously, there is the aggregate data there to look at the average program,” he says. “But really as a hospitalist group leader, you want to know what are other programs like mine doing, and it allows you to drill down into that data.”

Survey Limitations

Any hospitalist worth their weight in scrubs knows that any medical study is only as good as its limitations. And while SoHM is a trove of valuable data information, Flores always cautions against taking data points as gospel.

“People should understand what the numbers are telling us, what goes into those numbers, and take them not with a grain of salt but take them for what they are,” she says.

For example, Flores says, look at productivity metrics per shift. Day shifts have traditionally driven that figure, and those shifts are typically busy. But night shifts have fewer patients and less productivity.

“So as more and more hospitals get 24-hour in-house coverage and have doctors working low-productivity night shifts, that [productivity] number might fall,” she says.

That sort of nuanced analysis of productivity can’t be found anywhere else, says Dr. Lovins.

These are “data that we don’t normally get from our administration,” she says, “information on things like staffing and patient loads, and how much more the director makes than the people that work for the director, and how much more nighttime people make than daytime people make. There is no other way for me to get that information, and it’s very important to make sure that our program is fair.”

Aside from fair, the data points are essential talking points as HMGs negotiate contracts and other arrangements with their administrators.

“It’s a reference point so that everybody feels like we’re using data from a national source that everyone can agree upon as fair,” says Dr. White.

In Dr. White’s case, he doesn’t have many local academic programs to benchmark against. And comparing to private, for-profit hospitals isn’t the proverbial apples-to-apples comparison. Having vetted regional and national figures for comparison is incredibly valuable, particularly since he doesn’t have to compile the data.

“If I had to go call all those group leaders and figure out what they were doing, it would be pretty exhausting,” he says.

Alternative Payment Models

Dr. Smith says that one area where the report will become even more valuable over the next few years is addressing alternative payment models (APMs). In particular, HM leaders say they’re excited about being drivers in one of the largest APMs: the Bundled Payments for Care Improvement (BCPI) initiative. In short, the program covers 48 defined episodes of care, including medical and surgical, that could begin three days prior to admission and stretch 30, 60, or 90 days post-discharge.

Dr. Smith thinks it’s still a bit too early to see from the report how APMs have affected compensation.

“We’re still relatively in the early days of bundled-payment models, so in that regard, the State of Hospital Medicine Report still represents very much a starting point with regard to where hospital medicine groups will find themselves as they start to encounter challenges,” he says.

Perhaps more important, Gans doesn’t expect that the maturation of APMs will result in decreased compensation for hospitalists.

“In a hospital environment where the hospital is being reimbursed a set amount for a complete hospital admission and follow-up care and potential readmissions, that is an episodic payment already,” he says. “Consequently, the incentive is there today to better manage the patient and to attain the care coordination and care management necessary for that patient to be discharged and not readmitted.”

 

In fact, the SHM/MGMA data tell him that the basic economic theory of supply and demand continues to drive hospitalist compensation even 20 years after the field was given its name. He says rising compensation, even as more practices look to hire nurse practitioners or physician assistants as less expensive alternatives, shows no sign of letting up.

“I think demand will continue to be there,” Gans adds. “There may be in the long run some lessening of demand for hospitalists, but I don’t see that for years.”

---

Richard Quinn is a freelance writer in New Jersey.

As part of an emerging and rapidly growing specialty, academic hospitalists face unique challenges in career advancement. Key mentoring needs, especially developing reputation and relationships outside of their institution, often pose a challenge and were the inspiration for a new paper published in the Journal of Hospital Medicine.

“Increasingly, we are not having faculty who are going up for promotion and reliably running into challenges around mentorship, national reputation, and having a network outside of their local hospital that is critical for advancement,” says lead author Ethan Cumbler, MD, FHM, FACP, of the Department of Medicine at the University of Colorado School of Medicine. “Hospital medicine as a movement is built on a foundation of innovation, and so as a specialty, we have a mandate to not only innovate but to disseminate those innovations.”

The model of the visiting professorship described in the paper takes midcareer academic hospitalists and provides an infrastructure for reciprocal faculty exchanges. This provides a forum to increase professional networks.

“We found that both junior faculty and our visiting professors saw value in advancing those goals,” Dr. Cumbler says. “We also saw evidence of the spread of ideas and new shared scholarship derived from having these reciprocal visits.”

This has model relevance for nonacademic hospitals, too. For example, it’d be useful for hospital medicine groups to share ideas with one another, Dr. Cumbler says.

“This is a simple structure, but it’s just like a small pebble thrown into a large body of water can create ripples which affect distant shores—sometimes it’s very simple concepts that are worth pursuing,” he says.

Reference

1. Cumbler E, Herzke C, Smalligan R, Glasheen JJ, O’Malley C, Pierce JR Jr. Visiting professorship in hospital medicine: an innovative twist for a growing specialty [published online ahead of print June 23, 2016]. J Hosp Med. doi:10.1002/jhm.2625.

As part of an emerging and rapidly growing specialty, academic hospitalists face unique challenges in career advancement. Key mentoring needs, especially developing reputation and relationships outside of their institution, often pose a challenge and were the inspiration for a new paper published in the Journal of Hospital Medicine.

“Increasingly, we are not having faculty who are going up for promotion and reliably running into challenges around mentorship, national reputation, and having a network outside of their local hospital that is critical for advancement,” says lead author Ethan Cumbler, MD, FHM, FACP, of the Department of Medicine at the University of Colorado School of Medicine. “Hospital medicine as a movement is built on a foundation of innovation, and so as a specialty, we have a mandate to not only innovate but to disseminate those innovations.”

The model of the visiting professorship described in the paper takes midcareer academic hospitalists and provides an infrastructure for reciprocal faculty exchanges. This provides a forum to increase professional networks.

“We found that both junior faculty and our visiting professors saw value in advancing those goals,” Dr. Cumbler says. “We also saw evidence of the spread of ideas and new shared scholarship derived from having these reciprocal visits.”

This has model relevance for nonacademic hospitals, too. For example, it’d be useful for hospital medicine groups to share ideas with one another, Dr. Cumbler says.

“This is a simple structure, but it’s just like a small pebble thrown into a large body of water can create ripples which affect distant shores—sometimes it’s very simple concepts that are worth pursuing,” he says.

Reference

1. Cumbler E, Herzke C, Smalligan R, Glasheen JJ, O’Malley C, Pierce JR Jr. Visiting professorship in hospital medicine: an innovative twist for a growing specialty [published online ahead of print June 23, 2016]. J Hosp Med. doi:10.1002/jhm.2625.

As part of an emerging and rapidly growing specialty, academic hospitalists face unique challenges in career advancement. Key mentoring needs, especially developing reputation and relationships outside of their institution, often pose a challenge and were the inspiration for a new paper published in the Journal of Hospital Medicine.

“Increasingly, we are not having faculty who are going up for promotion and reliably running into challenges around mentorship, national reputation, and having a network outside of their local hospital that is critical for advancement,” says lead author Ethan Cumbler, MD, FHM, FACP, of the Department of Medicine at the University of Colorado School of Medicine. “Hospital medicine as a movement is built on a foundation of innovation, and so as a specialty, we have a mandate to not only innovate but to disseminate those innovations.”

The model of the visiting professorship described in the paper takes midcareer academic hospitalists and provides an infrastructure for reciprocal faculty exchanges. This provides a forum to increase professional networks.

“We found that both junior faculty and our visiting professors saw value in advancing those goals,” Dr. Cumbler says. “We also saw evidence of the spread of ideas and new shared scholarship derived from having these reciprocal visits.”

This has model relevance for nonacademic hospitals, too. For example, it’d be useful for hospital medicine groups to share ideas with one another, Dr. Cumbler says.

“This is a simple structure, but it’s just like a small pebble thrown into a large body of water can create ripples which affect distant shores—sometimes it’s very simple concepts that are worth pursuing,” he says.

Reference

1. Cumbler E, Herzke C, Smalligan R, Glasheen JJ, O’Malley C, Pierce JR Jr. Visiting professorship in hospital medicine: an innovative twist for a growing specialty [published online ahead of print June 23, 2016]. J Hosp Med. doi:10.1002/jhm.2625.

sSHM’s 2016 State of Hospital Medicine Report (SoHM) is now available, and it’s unquestionably the best source of detail regarding how hospital medicine groups are configured and operated.1

The SoHM is published in even years and combines data from two sources:

• Hospitalist data from Medical Group Management Association’s Physician Compensation and Productivity Survey. Within the SoHM, you will find the same figures for hospitalist compensation, production, and a few related metrics that are from the MGMA survey report.
• SHM’s survey of hospital medicine groups. This survey drills into significant detail on things like scope of clinical practice, staffing levels, work schedules, bonus metrics, CPT code distribution, roles for NPs and PAs, and the amount of financial support provided to the group.

There are several new topics in this year’s SoHM, including CME allowances, utilization of prolonged service codes, and charge capture methodologies being used by hospital medicine groups. My colleague, Leslie Flores, has been very involved in the survey for 10 years and has written a blog with more details.

One Caveat …

The mix of survey respondents varies and includes a much larger portion of hospital medicine groups employed by multi-state management companies than prior surveys. Even if a parameter hasn’t changed for any hospitalist group, the fact that responses come from different contingents of the hospitalist workforce can result in a different result from one survey to the next. It is difficult to be certain if variations across successive surveys reflect a real change in the marketplace or are a function of variation in the respondent population.

Now let’s review and analyze some of this year’s survey findings for hospital medicine groups caring for adults:

Financial Support Stayed Flat

The amount of financial support provided to a hospital medicine group per FTE has increased significantly in every prior survey. This money typically comes from the hospital that the hospital medicine group serves and is sometimes referred to as the “subsidy.” For hospital medicine groups serving adults, it was $139,000 in 2012 and $156,000 in 2014.

The current survey showed a median of $157,500, essentially unchanged from two years prior. This is either an aberration in the survey (e.g., a result of a different survey population) or an indicator that this amount has begun to level off. Clearly, there is an upper limit to the amount of financial support the marketplace can support, but from my experience working with hospitalist groups around the country, I haven’t seen evidence that we’ve reached that point. I suspect it is an aberration and future surveys will show a continued rising trend, though perhaps not as rapidly as in years past.

Compensation Method Is Evolving

A mean of 14.7% of compensation was tied to production, up from around 10% in prior surveys. And the portion tied to performance (e.g., patient satisfaction, quality metrics) was unchanged at 6%. It’s interesting that despite proliferation of pay-for-performance programs and increasing emphasis on quality and value, it is the productivity portion of compensation that increased. It’s hard to know if that is a meaningful trend.

Compensation Amount Continues to Increase

For hospitalists caring for adults, the median amount of compensation rose to $278,746, up from $253,000 in 2014, $234,000 in 2013, and $221,000 in 2011. These figures come from the MGMA survey, and the financial support figures above come from the separate SHM survey. That means it’s impossible to make firm conclusions about how the numbers do or don’t interrelate.

Don’t forget that surveys report all forms of compensation, including base, production, bonus, extra shifts, and other elements. This year’s $278,746 includes all the bonus dollars earned by each hospitalist in the survey. We can make a very rough guess at the bonus by multiplying the portion of total compensation tied to performance in the SHM survey (6%) by the total compensation ($278,746) from the MGMA survey, which comes to $13,397. But we still don’t know the portion of the total bonus dollars available that represents. My experience is that the total bonus dollars available is around $20,000 or more at most hospital medicine groups. Therefore, a doctor who earned $13,397 presumably didn’t meet all performance goals.

 

A Deeper Dive into Hospital Medicine Group Finances

It is really interesting to ponder where the dollars come from to fund higher hospitalist compensation if the financial support provided per FTE hasn’t increased. Perhaps hospitalists are generating more encounters, work relative value units (wRVUs), or professional fee collections?

Median professional fee collections were $213,000 this year, up from $151,000 in the prior survey two years ago. This increase could, in theory, fully fund the higher hospitalist compensation without the need for an increase in other sources of revenue.

So why are collections up? It could be because hospitalists are coding the average visit at a higher level: 2.02 wRVUs per encounter this year compared to 1.97 in 2014 and 1.91 in 2012. The survey can’t help distinguish whether this increase is because we’re seeing more complex patients or whether we’re improving our documentation to catch up with the complexity of the patients we’ve been seeing all along. I suspect it is both.

The increase in wRVUs per encounter, however, is offset by a continued downward trend in numbers of encounters: 1,684 this year compared to 1,850 in 2014 and 2,078 in 2012. The total wRVUs generated per hospitalist in a year stayed about the same at 4,247 compared to 4,298 in 2014.

The best explanation for why total collections are up would be that payor rates have increased. But Medicare, which accounts for about 60%–65% of the payor mix for most hospital medicine groups, hasn’t increased rates enough to explain this, and I’m not aware of other payor classes that have increased significantly. Another explanation could be that hospital medicine groups are simply doing a better job with billing and collections and other revenue-cycle management activities, resulting in increased revenue.

I guess it shouldn’t be surprising that some of the survey results don’t seem internally consistent. The data come from two different surveys, the response rate for each question varies, and other issues mean the survey just can’t provide that level of precision. We also need to keep in mind that analyses like I’ve provided here are only very rough explanations. But I think they’re still valuable to think about even if they don’t provide definitive answers. TH

Reference

1. 2016 State of Hospital Medicine Report. Society of Hospital Medicine website. Accessed August 9, 2016.

---

Dr. Nelson has been a practicing hospitalist since 1988. He is co-founder and past president of SHM, and principal in Nelson Flores Hospital Medicine Consultants. He is co-director for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. Write to him at john.nelson@nelsonflores.com.

sSHM’s 2016 State of Hospital Medicine Report (SoHM) is now available, and it’s unquestionably the best source of detail regarding how hospital medicine groups are configured and operated.1

The SoHM is published in even years and combines data from two sources:

• Hospitalist data from Medical Group Management Association’s Physician Compensation and Productivity Survey. Within the SoHM, you will find the same figures for hospitalist compensation, production, and a few related metrics that are from the MGMA survey report.
• SHM’s survey of hospital medicine groups. This survey drills into significant detail on things like scope of clinical practice, staffing levels, work schedules, bonus metrics, CPT code distribution, roles for NPs and PAs, and the amount of financial support provided to the group.

There are several new topics in this year’s SoHM, including CME allowances, utilization of prolonged service codes, and charge capture methodologies being used by hospital medicine groups. My colleague, Leslie Flores, has been very involved in the survey for 10 years and has written a blog with more details.

One Caveat …

The mix of survey respondents varies and includes a much larger portion of hospital medicine groups employed by multi-state management companies than prior surveys. Even if a parameter hasn’t changed for any hospitalist group, the fact that responses come from different contingents of the hospitalist workforce can result in a different result from one survey to the next. It is difficult to be certain if variations across successive surveys reflect a real change in the marketplace or are a function of variation in the respondent population.

Now let’s review and analyze some of this year’s survey findings for hospital medicine groups caring for adults:

Financial Support Stayed Flat

The amount of financial support provided to a hospital medicine group per FTE has increased significantly in every prior survey. This money typically comes from the hospital that the hospital medicine group serves and is sometimes referred to as the “subsidy.” For hospital medicine groups serving adults, it was $139,000 in 2012 and $156,000 in 2014.

The current survey showed a median of $157,500, essentially unchanged from two years prior. This is either an aberration in the survey (e.g., a result of a different survey population) or an indicator that this amount has begun to level off. Clearly, there is an upper limit to the amount of financial support the marketplace can support, but from my experience working with hospitalist groups around the country, I haven’t seen evidence that we’ve reached that point. I suspect it is an aberration and future surveys will show a continued rising trend, though perhaps not as rapidly as in years past.

Compensation Method Is Evolving

A mean of 14.7% of compensation was tied to production, up from around 10% in prior surveys. And the portion tied to performance (e.g., patient satisfaction, quality metrics) was unchanged at 6%. It’s interesting that despite proliferation of pay-for-performance programs and increasing emphasis on quality and value, it is the productivity portion of compensation that increased. It’s hard to know if that is a meaningful trend.

Compensation Amount Continues to Increase

For hospitalists caring for adults, the median amount of compensation rose to $278,746, up from $253,000 in 2014, $234,000 in 2013, and $221,000 in 2011. These figures come from the MGMA survey, and the financial support figures above come from the separate SHM survey. That means it’s impossible to make firm conclusions about how the numbers do or don’t interrelate.

Don’t forget that surveys report all forms of compensation, including base, production, bonus, extra shifts, and other elements. This year’s $278,746 includes all the bonus dollars earned by each hospitalist in the survey. We can make a very rough guess at the bonus by multiplying the portion of total compensation tied to performance in the SHM survey (6%) by the total compensation ($278,746) from the MGMA survey, which comes to $13,397. But we still don’t know the portion of the total bonus dollars available that represents. My experience is that the total bonus dollars available is around $20,000 or more at most hospital medicine groups. Therefore, a doctor who earned $13,397 presumably didn’t meet all performance goals.

 

A Deeper Dive into Hospital Medicine Group Finances

It is really interesting to ponder where the dollars come from to fund higher hospitalist compensation if the financial support provided per FTE hasn’t increased. Perhaps hospitalists are generating more encounters, work relative value units (wRVUs), or professional fee collections?

Median professional fee collections were $213,000 this year, up from $151,000 in the prior survey two years ago. This increase could, in theory, fully fund the higher hospitalist compensation without the need for an increase in other sources of revenue.

So why are collections up? It could be because hospitalists are coding the average visit at a higher level: 2.02 wRVUs per encounter this year compared to 1.97 in 2014 and 1.91 in 2012. The survey can’t help distinguish whether this increase is because we’re seeing more complex patients or whether we’re improving our documentation to catch up with the complexity of the patients we’ve been seeing all along. I suspect it is both.

The increase in wRVUs per encounter, however, is offset by a continued downward trend in numbers of encounters: 1,684 this year compared to 1,850 in 2014 and 2,078 in 2012. The total wRVUs generated per hospitalist in a year stayed about the same at 4,247 compared to 4,298 in 2014.

The best explanation for why total collections are up would be that payor rates have increased. But Medicare, which accounts for about 60%–65% of the payor mix for most hospital medicine groups, hasn’t increased rates enough to explain this, and I’m not aware of other payor classes that have increased significantly. Another explanation could be that hospital medicine groups are simply doing a better job with billing and collections and other revenue-cycle management activities, resulting in increased revenue.

I guess it shouldn’t be surprising that some of the survey results don’t seem internally consistent. The data come from two different surveys, the response rate for each question varies, and other issues mean the survey just can’t provide that level of precision. We also need to keep in mind that analyses like I’ve provided here are only very rough explanations. But I think they’re still valuable to think about even if they don’t provide definitive answers. TH

Reference

1. 2016 State of Hospital Medicine Report. Society of Hospital Medicine website. Accessed August 9, 2016.

---

Dr. Nelson has been a practicing hospitalist since 1988. He is co-founder and past president of SHM, and principal in Nelson Flores Hospital Medicine Consultants. He is co-director for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. Write to him at john.nelson@nelsonflores.com.

sSHM’s 2016 State of Hospital Medicine Report (SoHM) is now available, and it’s unquestionably the best source of detail regarding how hospital medicine groups are configured and operated.1

The SoHM is published in even years and combines data from two sources:

• Hospitalist data from Medical Group Management Association’s Physician Compensation and Productivity Survey. Within the SoHM, you will find the same figures for hospitalist compensation, production, and a few related metrics that are from the MGMA survey report.
• SHM’s survey of hospital medicine groups. This survey drills into significant detail on things like scope of clinical practice, staffing levels, work schedules, bonus metrics, CPT code distribution, roles for NPs and PAs, and the amount of financial support provided to the group.

There are several new topics in this year’s SoHM, including CME allowances, utilization of prolonged service codes, and charge capture methodologies being used by hospital medicine groups. My colleague, Leslie Flores, has been very involved in the survey for 10 years and has written a blog with more details.

One Caveat …

The mix of survey respondents varies and includes a much larger portion of hospital medicine groups employed by multi-state management companies than prior surveys. Even if a parameter hasn’t changed for any hospitalist group, the fact that responses come from different contingents of the hospitalist workforce can result in a different result from one survey to the next. It is difficult to be certain if variations across successive surveys reflect a real change in the marketplace or are a function of variation in the respondent population.

Now let’s review and analyze some of this year’s survey findings for hospital medicine groups caring for adults:

Financial Support Stayed Flat

The amount of financial support provided to a hospital medicine group per FTE has increased significantly in every prior survey. This money typically comes from the hospital that the hospital medicine group serves and is sometimes referred to as the “subsidy.” For hospital medicine groups serving adults, it was $139,000 in 2012 and $156,000 in 2014.

The current survey showed a median of $157,500, essentially unchanged from two years prior. This is either an aberration in the survey (e.g., a result of a different survey population) or an indicator that this amount has begun to level off. Clearly, there is an upper limit to the amount of financial support the marketplace can support, but from my experience working with hospitalist groups around the country, I haven’t seen evidence that we’ve reached that point. I suspect it is an aberration and future surveys will show a continued rising trend, though perhaps not as rapidly as in years past.

Compensation Method Is Evolving

A mean of 14.7% of compensation was tied to production, up from around 10% in prior surveys. And the portion tied to performance (e.g., patient satisfaction, quality metrics) was unchanged at 6%. It’s interesting that despite proliferation of pay-for-performance programs and increasing emphasis on quality and value, it is the productivity portion of compensation that increased. It’s hard to know if that is a meaningful trend.

Compensation Amount Continues to Increase

For hospitalists caring for adults, the median amount of compensation rose to $278,746, up from $253,000 in 2014, $234,000 in 2013, and $221,000 in 2011. These figures come from the MGMA survey, and the financial support figures above come from the separate SHM survey. That means it’s impossible to make firm conclusions about how the numbers do or don’t interrelate.

Don’t forget that surveys report all forms of compensation, including base, production, bonus, extra shifts, and other elements. This year’s $278,746 includes all the bonus dollars earned by each hospitalist in the survey. We can make a very rough guess at the bonus by multiplying the portion of total compensation tied to performance in the SHM survey (6%) by the total compensation ($278,746) from the MGMA survey, which comes to $13,397. But we still don’t know the portion of the total bonus dollars available that represents. My experience is that the total bonus dollars available is around $20,000 or more at most hospital medicine groups. Therefore, a doctor who earned $13,397 presumably didn’t meet all performance goals.

 

A Deeper Dive into Hospital Medicine Group Finances

It is really interesting to ponder where the dollars come from to fund higher hospitalist compensation if the financial support provided per FTE hasn’t increased. Perhaps hospitalists are generating more encounters, work relative value units (wRVUs), or professional fee collections?

Median professional fee collections were $213,000 this year, up from $151,000 in the prior survey two years ago. This increase could, in theory, fully fund the higher hospitalist compensation without the need for an increase in other sources of revenue.

So why are collections up? It could be because hospitalists are coding the average visit at a higher level: 2.02 wRVUs per encounter this year compared to 1.97 in 2014 and 1.91 in 2012. The survey can’t help distinguish whether this increase is because we’re seeing more complex patients or whether we’re improving our documentation to catch up with the complexity of the patients we’ve been seeing all along. I suspect it is both.

The increase in wRVUs per encounter, however, is offset by a continued downward trend in numbers of encounters: 1,684 this year compared to 1,850 in 2014 and 2,078 in 2012. The total wRVUs generated per hospitalist in a year stayed about the same at 4,247 compared to 4,298 in 2014.

The best explanation for why total collections are up would be that payor rates have increased. But Medicare, which accounts for about 60%–65% of the payor mix for most hospital medicine groups, hasn’t increased rates enough to explain this, and I’m not aware of other payor classes that have increased significantly. Another explanation could be that hospital medicine groups are simply doing a better job with billing and collections and other revenue-cycle management activities, resulting in increased revenue.

I guess it shouldn’t be surprising that some of the survey results don’t seem internally consistent. The data come from two different surveys, the response rate for each question varies, and other issues mean the survey just can’t provide that level of precision. We also need to keep in mind that analyses like I’ve provided here are only very rough explanations. But I think they’re still valuable to think about even if they don’t provide definitive answers. TH

Reference

1. 2016 State of Hospital Medicine Report. Society of Hospital Medicine website. Accessed August 9, 2016.

---

Dr. Nelson has been a practicing hospitalist since 1988. He is co-founder and past president of SHM, and principal in Nelson Flores Hospital Medicine Consultants. He is co-director for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. Write to him at john.nelson@nelsonflores.com.

Although effective palliative care has always been a must-have for patients and caregivers facing serious illness, it hasn’t always been readily available. With the emergence of value-based healthcare models—and their potent incentives to reduce avoidable readmissions—there is renewed hope that such care will be accessible to those who need it.

Palliative and end-of-life care have long been promoted as core skills for hospitalists. The topic has regularly been included at SHM annual meetings and other prominent hospital medicine conferences, in the American Board of Internal Medicine blueprint for recognition of focused practice in hospital medicine, and in a number of influential references for hospitalists. Still, as I look at hospitalist programs around the country, there is a clear need to improve hospitalists’ delivery of palliative and end-of-life care.

Care of patients with chronic illness in their last two years of life accounts for a third of all Medicare spending.1 As hospitalists, we encounter many of these patients as they are hospitalized—and often re-hospitalized. Palliative care, which can improve quality of life and decrease costs for patients while leading to increased satisfaction and better outcomes for caregivers, can help alleviate unneeded and unwanted aggressive interventions like hospitalization.2,3

In its 2014 report, Dying in America, the Institute of Medicine (IOM) identified several areas for improvement, including better advance care planning and payment systems supporting high quality end-of-life care.4 As I write this column in mid 2016, there are two notable achievements since the IOM report: two E&M codes for advance care planning and a substantial and growing number of hospitalist patients in alternative payment models like bundled payments or ACOs.5 I believe we are entering a time when the availability of good palliative care will be accelerated due to broader forces in healthcare that for the first time align incentives between patients’ wishes and how care is paid for.

Palliative Care Skills for Hospitalists

The following are key actions for physicians in addressing palliative care for the hospitalized patient. At the risk of oversimplifying the discipline, I offer a few key actions for hospitalists to keep in mind.

Identify patients who would benefit from palliative care. The surprise question—“Would I be surprised if this patient died in the next year?”—has the ability to predict which patients would benefit from palliative care. In one observation from a group of patients with cancer, a “no” answer identified 60% of patients who died within a year.6 The surprise question has previously been shown to be predictive in other cancer and non-cancer populations.7,8

Weisman and Meier suggest using the following in a checklist at the time of hospital admission as “primary criteria to screen for unmet palliative care needs”:9

• The surprise question
• Frequent admissions
• Admission prompted by difficult-to-control physical or psychological symptoms
• Complex care requirements
• Decline in function, feeding intolerance, or unintended decline in weight

Hold a “goals of care” meeting. A notable step forward for supporting conversations between physicians and patients occurred on Jan. 1, when the Centers for Medicare & Medicaid Services (CMS) announced the Advance Care Planning E&M codes. These are CPT codes 99497 and 99498. They can be used on the same day as other E&M codes and cover discussions regarding advance care planning issues including discussing advance directives, appointing a healthcare proxy or durable power of attorney, discussing a living will, or addressing orders for life-sustaining treatment like the role of hydration or future hospitalizations. (For more information on how to use them, visit the CMS website and search for the FAQ.)

What should hospitalists concentrate on when having “goals of care” conversations with patients and caregivers? Ariadne Labs, a Harvard-affiliated health innovation group, offers the following as elements of a serious illness conversation:10

 

• Patients’ understanding of their illness
• Patients’ preferences for information and for family involvement
• Personal life goals, fears, and anxieties
• Trade-offs they are willing to accept

For hospitalists, an important area to pay particular attention to is the role of future hospitalizations in patients’ wishes for care, as some patients, if offered appropriate symptom control, would prefer to remain at home.

Two other crucial elements of inpatient palliative care—offer psychosocial support and symptom relief and hand off patient to effective post-hospital palliative care—are outside the scope of this article. However, they should be kept in mind and, of course, applied.

Understand the role of the palliative care consultation. Busy hospitalists might reasonably think, “I simply don’t have time to address palliative care in patients who aren’t likely to die during this hospitalization or soon after.” The palliative care consult service, if available, should be accessed when patients are identified as palliative care candidates but the primary hospitalist does not have the time or resources—including specialized knowledge in some cases—to deliver adequate palliative care. Palliative care specialists can also help bridge the gap between inpatient and outpatient palliative care resources.

In sum, the move to value-based payment models and the new advance care planning E&M codes provide a renewed focus—with more aligned incentives—and the opportunity to provide good palliative care to all who need it.

For hospitalists, identifying those who would benefit from palliative care and working with the healthcare team to ensure the care is delivered are at the heart of our professional mission. TH

References

1. End-of-life care. The Darmouth Atlas of Health Care website. Accessed June 23, 2016.
2. Gade G, Venohr I, Conner D, et al. Impact of an inpatient palliative care team: a randomized control trial. J Palliat Med. 2008;11(2):180-190.
3. Morrison RS, Penrod JD, Cassel JB, et al. Cost savings associated with US hospital palliative care consultation programs. Arch Int Med. 2008;168(16):1783-1790.
4. Institute of Medicine. Dying in America: Improving Quality and Honoring Individual Preferences near the End of Life. 2014.
5. BPCI Model 2: Retrospective acute & post acute care episode. Centers for Medicare & Medicaid Services website. Accessed June 24, 2016.
6. Vick JB, Pertsch N, Hutchings M, et al. The utility of the surprise question in identifying patients most at risk of death. J Clin Oncol. 2015;33(suppl):8.
7. Moss AH, Ganjoo J, Sharma S, et al. Utility of the “surprise” question to identify dialysis patients with high mortality. Clin J Am Soc Nephrol. 2008;3:1379-1384.
8. Moss AH, Lunney JR, Culp S, et al. Prognostic significance of the “surprise” question in cancer patients. J Palliat Med. 2010;13(7):837-840.
9. Weissman D, Meier C. Identifying patients in need of a palliative care assessment in the hospital setting: a consensus report from the Center to Advance Palliative Care. J Palliat Med. 2011;14(1):17-23.
10. Serious illness care resources. Ariadne Labs website. Accessed June 24, 2016.

Although effective palliative care has always been a must-have for patients and caregivers facing serious illness, it hasn’t always been readily available. With the emergence of value-based healthcare models—and their potent incentives to reduce avoidable readmissions—there is renewed hope that such care will be accessible to those who need it.

Palliative and end-of-life care have long been promoted as core skills for hospitalists. The topic has regularly been included at SHM annual meetings and other prominent hospital medicine conferences, in the American Board of Internal Medicine blueprint for recognition of focused practice in hospital medicine, and in a number of influential references for hospitalists. Still, as I look at hospitalist programs around the country, there is a clear need to improve hospitalists’ delivery of palliative and end-of-life care.

Care of patients with chronic illness in their last two years of life accounts for a third of all Medicare spending.1 As hospitalists, we encounter many of these patients as they are hospitalized—and often re-hospitalized. Palliative care, which can improve quality of life and decrease costs for patients while leading to increased satisfaction and better outcomes for caregivers, can help alleviate unneeded and unwanted aggressive interventions like hospitalization.2,3

In its 2014 report, Dying in America, the Institute of Medicine (IOM) identified several areas for improvement, including better advance care planning and payment systems supporting high quality end-of-life care.4 As I write this column in mid 2016, there are two notable achievements since the IOM report: two E&M codes for advance care planning and a substantial and growing number of hospitalist patients in alternative payment models like bundled payments or ACOs.5 I believe we are entering a time when the availability of good palliative care will be accelerated due to broader forces in healthcare that for the first time align incentives between patients’ wishes and how care is paid for.

Palliative Care Skills for Hospitalists

The following are key actions for physicians in addressing palliative care for the hospitalized patient. At the risk of oversimplifying the discipline, I offer a few key actions for hospitalists to keep in mind.

Identify patients who would benefit from palliative care. The surprise question—“Would I be surprised if this patient died in the next year?”—has the ability to predict which patients would benefit from palliative care. In one observation from a group of patients with cancer, a “no” answer identified 60% of patients who died within a year.6 The surprise question has previously been shown to be predictive in other cancer and non-cancer populations.7,8

Weisman and Meier suggest using the following in a checklist at the time of hospital admission as “primary criteria to screen for unmet palliative care needs”:9

• The surprise question
• Frequent admissions
• Admission prompted by difficult-to-control physical or psychological symptoms
• Complex care requirements
• Decline in function, feeding intolerance, or unintended decline in weight

Hold a “goals of care” meeting. A notable step forward for supporting conversations between physicians and patients occurred on Jan. 1, when the Centers for Medicare & Medicaid Services (CMS) announced the Advance Care Planning E&M codes. These are CPT codes 99497 and 99498. They can be used on the same day as other E&M codes and cover discussions regarding advance care planning issues including discussing advance directives, appointing a healthcare proxy or durable power of attorney, discussing a living will, or addressing orders for life-sustaining treatment like the role of hydration or future hospitalizations. (For more information on how to use them, visit the CMS website and search for the FAQ.)

What should hospitalists concentrate on when having “goals of care” conversations with patients and caregivers? Ariadne Labs, a Harvard-affiliated health innovation group, offers the following as elements of a serious illness conversation:10

 

• Patients’ understanding of their illness
• Patients’ preferences for information and for family involvement
• Personal life goals, fears, and anxieties
• Trade-offs they are willing to accept

For hospitalists, an important area to pay particular attention to is the role of future hospitalizations in patients’ wishes for care, as some patients, if offered appropriate symptom control, would prefer to remain at home.

Two other crucial elements of inpatient palliative care—offer psychosocial support and symptom relief and hand off patient to effective post-hospital palliative care—are outside the scope of this article. However, they should be kept in mind and, of course, applied.

Understand the role of the palliative care consultation. Busy hospitalists might reasonably think, “I simply don’t have time to address palliative care in patients who aren’t likely to die during this hospitalization or soon after.” The palliative care consult service, if available, should be accessed when patients are identified as palliative care candidates but the primary hospitalist does not have the time or resources—including specialized knowledge in some cases—to deliver adequate palliative care. Palliative care specialists can also help bridge the gap between inpatient and outpatient palliative care resources.

In sum, the move to value-based payment models and the new advance care planning E&M codes provide a renewed focus—with more aligned incentives—and the opportunity to provide good palliative care to all who need it.

For hospitalists, identifying those who would benefit from palliative care and working with the healthcare team to ensure the care is delivered are at the heart of our professional mission. TH

References

1. End-of-life care. The Darmouth Atlas of Health Care website. Accessed June 23, 2016.
2. Gade G, Venohr I, Conner D, et al. Impact of an inpatient palliative care team: a randomized control trial. J Palliat Med. 2008;11(2):180-190.
3. Morrison RS, Penrod JD, Cassel JB, et al. Cost savings associated with US hospital palliative care consultation programs. Arch Int Med. 2008;168(16):1783-1790.
4. Institute of Medicine. Dying in America: Improving Quality and Honoring Individual Preferences near the End of Life. 2014.
5. BPCI Model 2: Retrospective acute & post acute care episode. Centers for Medicare & Medicaid Services website. Accessed June 24, 2016.
6. Vick JB, Pertsch N, Hutchings M, et al. The utility of the surprise question in identifying patients most at risk of death. J Clin Oncol. 2015;33(suppl):8.
7. Moss AH, Ganjoo J, Sharma S, et al. Utility of the “surprise” question to identify dialysis patients with high mortality. Clin J Am Soc Nephrol. 2008;3:1379-1384.
8. Moss AH, Lunney JR, Culp S, et al. Prognostic significance of the “surprise” question in cancer patients. J Palliat Med. 2010;13(7):837-840.
9. Weissman D, Meier C. Identifying patients in need of a palliative care assessment in the hospital setting: a consensus report from the Center to Advance Palliative Care. J Palliat Med. 2011;14(1):17-23.
10. Serious illness care resources. Ariadne Labs website. Accessed June 24, 2016.

Although effective palliative care has always been a must-have for patients and caregivers facing serious illness, it hasn’t always been readily available. With the emergence of value-based healthcare models—and their potent incentives to reduce avoidable readmissions—there is renewed hope that such care will be accessible to those who need it.

Palliative and end-of-life care have long been promoted as core skills for hospitalists. The topic has regularly been included at SHM annual meetings and other prominent hospital medicine conferences, in the American Board of Internal Medicine blueprint for recognition of focused practice in hospital medicine, and in a number of influential references for hospitalists. Still, as I look at hospitalist programs around the country, there is a clear need to improve hospitalists’ delivery of palliative and end-of-life care.

Care of patients with chronic illness in their last two years of life accounts for a third of all Medicare spending.1 As hospitalists, we encounter many of these patients as they are hospitalized—and often re-hospitalized. Palliative care, which can improve quality of life and decrease costs for patients while leading to increased satisfaction and better outcomes for caregivers, can help alleviate unneeded and unwanted aggressive interventions like hospitalization.2,3

In its 2014 report, Dying in America, the Institute of Medicine (IOM) identified several areas for improvement, including better advance care planning and payment systems supporting high quality end-of-life care.4 As I write this column in mid 2016, there are two notable achievements since the IOM report: two E&M codes for advance care planning and a substantial and growing number of hospitalist patients in alternative payment models like bundled payments or ACOs.5 I believe we are entering a time when the availability of good palliative care will be accelerated due to broader forces in healthcare that for the first time align incentives between patients’ wishes and how care is paid for.

Palliative Care Skills for Hospitalists

The following are key actions for physicians in addressing palliative care for the hospitalized patient. At the risk of oversimplifying the discipline, I offer a few key actions for hospitalists to keep in mind.

Identify patients who would benefit from palliative care. The surprise question—“Would I be surprised if this patient died in the next year?”—has the ability to predict which patients would benefit from palliative care. In one observation from a group of patients with cancer, a “no” answer identified 60% of patients who died within a year.6 The surprise question has previously been shown to be predictive in other cancer and non-cancer populations.7,8

Weisman and Meier suggest using the following in a checklist at the time of hospital admission as “primary criteria to screen for unmet palliative care needs”:9

• The surprise question
• Frequent admissions
• Admission prompted by difficult-to-control physical or psychological symptoms
• Complex care requirements
• Decline in function, feeding intolerance, or unintended decline in weight

Hold a “goals of care” meeting. A notable step forward for supporting conversations between physicians and patients occurred on Jan. 1, when the Centers for Medicare & Medicaid Services (CMS) announced the Advance Care Planning E&M codes. These are CPT codes 99497 and 99498. They can be used on the same day as other E&M codes and cover discussions regarding advance care planning issues including discussing advance directives, appointing a healthcare proxy or durable power of attorney, discussing a living will, or addressing orders for life-sustaining treatment like the role of hydration or future hospitalizations. (For more information on how to use them, visit the CMS website and search for the FAQ.)

What should hospitalists concentrate on when having “goals of care” conversations with patients and caregivers? Ariadne Labs, a Harvard-affiliated health innovation group, offers the following as elements of a serious illness conversation:10

 

• Patients’ understanding of their illness
• Patients’ preferences for information and for family involvement
• Personal life goals, fears, and anxieties
• Trade-offs they are willing to accept

For hospitalists, an important area to pay particular attention to is the role of future hospitalizations in patients’ wishes for care, as some patients, if offered appropriate symptom control, would prefer to remain at home.

Two other crucial elements of inpatient palliative care—offer psychosocial support and symptom relief and hand off patient to effective post-hospital palliative care—are outside the scope of this article. However, they should be kept in mind and, of course, applied.

Understand the role of the palliative care consultation. Busy hospitalists might reasonably think, “I simply don’t have time to address palliative care in patients who aren’t likely to die during this hospitalization or soon after.” The palliative care consult service, if available, should be accessed when patients are identified as palliative care candidates but the primary hospitalist does not have the time or resources—including specialized knowledge in some cases—to deliver adequate palliative care. Palliative care specialists can also help bridge the gap between inpatient and outpatient palliative care resources.

In sum, the move to value-based payment models and the new advance care planning E&M codes provide a renewed focus—with more aligned incentives—and the opportunity to provide good palliative care to all who need it.

For hospitalists, identifying those who would benefit from palliative care and working with the healthcare team to ensure the care is delivered are at the heart of our professional mission. TH

References

1. End-of-life care. The Darmouth Atlas of Health Care website. Accessed June 23, 2016.
2. Gade G, Venohr I, Conner D, et al. Impact of an inpatient palliative care team: a randomized control trial. J Palliat Med. 2008;11(2):180-190.
3. Morrison RS, Penrod JD, Cassel JB, et al. Cost savings associated with US hospital palliative care consultation programs. Arch Int Med. 2008;168(16):1783-1790.
4. Institute of Medicine. Dying in America: Improving Quality and Honoring Individual Preferences near the End of Life. 2014.
5. BPCI Model 2: Retrospective acute & post acute care episode. Centers for Medicare & Medicaid Services website. Accessed June 24, 2016.
6. Vick JB, Pertsch N, Hutchings M, et al. The utility of the surprise question in identifying patients most at risk of death. J Clin Oncol. 2015;33(suppl):8.
7. Moss AH, Ganjoo J, Sharma S, et al. Utility of the “surprise” question to identify dialysis patients with high mortality. Clin J Am Soc Nephrol. 2008;3:1379-1384.
8. Moss AH, Lunney JR, Culp S, et al. Prognostic significance of the “surprise” question in cancer patients. J Palliat Med. 2010;13(7):837-840.
9. Weissman D, Meier C. Identifying patients in need of a palliative care assessment in the hospital setting: a consensus report from the Center to Advance Palliative Care. J Palliat Med. 2011;14(1):17-23.
10. Serious illness care resources. Ariadne Labs website. Accessed June 24, 2016.

Receiving notice from a payor that you are being audited can be alarming. Questions will inevitably run through your mind, such as, Why? How? How much will this cost?

Understanding the types of payor audits and how to navigate the process can make answering those questions easier. In addition, advanced preparation and knowing when to engage legal counsel can be critical to a successful audit outcome.

Audit Types

There are three general types of audits that providers face: Medicare audits, Medicaid audits, and private payor audits.

Medicare audits: The agency responsible for Medicare audits is the Centers for Medicare & Medicaid Services (CMS). There are three types of Medicare audits. Comprehensive Error Rate Testing (CERT) audits focus on providers who deliver high-cost items or services, have high volume, and/or have atypical billing or coding practices. Private contractors perform Recovery Audit Contractor (RAC) program audits; these contractors are paid a percentage of the amount of any improper payment discovered. Finally, Zone Program Integrity Contractor (ZPIC) audits are the most serious of the three audit types. ZPIC audits are performed by CMS contractors who mine the provider’s data for compliance with Medicare coverage and coding policies, investigate fraud, and may prepare cases for civil or criminal referral to CMS or law enforcement agencies.

Medicaid audits: Medicaid audits evaluate compliance with both CMS and applicable state regulations and investigate fraud. Evidence of fraud will be reported to the state attorney general for further review and prosecution.

Private payor audits: Private payor audits consist of informal reviews and formal audits. These audits can be triggered by actual allegations or evidence of noncompliance, or they can be random, in which general compliance is assessed. Audit procedures are typically determined by contract or the payor’s provider handbook and in accordance with applicable state law. The process can consist of prepayment reviews, in which the sufficiency of a claim and its supporting documentation is determined before payment is made to the provider, or post-payment reviews, during which claims are analyzed after the provider has been paid to determine if an overpayment was made and the amount of such overpayment. In the event an overpayment is discovered, a recoupment will be sought from the provider.

Focus

Consistent billing by a provider of high volumes of certain high-level services, high volumes of evaluation and management services, or consistently referring patients for certain testing can create suspicion in mayors.

In recent years, the primary focus of audits has been medical necessity due to payor concerns about specific fraud and abuse issues. Documentation of medical necessity is required during an audit. However, proving medical necessity can be difficult as the definition of “medical necessity” can vary by payor and within a payor depending on the underlying plan. In addition, private payors often have arbitrary and vague guidelines for defining and determining medical necessity, particularly when dealing with physicians or ordering clinicians. For this reason, it is critical that providers read their payor contracts and manuals carefully. If those materials are unclear, it is best to confirm requirements with the payor.

Regardless of the definition, medical necessity is a precondition to coverage for all payors. Proof is required that the services were reasonable and necessary to diagnosis or treat a patient’s medical condition. To satisfy this standard, providers should document the diagnosis for all procedures performed and all diagnostic tests ordered. In the case of repeat procedures, providers should clearly note the outcome of the previous procedure and the basis for reordering.

Responding to an Audit Request

 

All audit requests must be taken very seriously. Payors tend to copy what other payors are doing, and a problematic audit with one payor can cause other payors to initiate their own audits. Therefore, it is critical to respond appropriately to each audit request. Also, auditors often only check a few billing records. If errors are found, they will then extrapolate those findings, and the provider may be penalized.

Upon receipt of an audit request, it is important to immediately engage legal counsel well-versed in handling payor audits. Having an attorney who understands the audit process and has experience responding to audit requests can help ensure the best possible audit outcome. A negative outcome could result in recovery of overpayments, civil and/or criminal penalties, and exclusion from government programs.

Providers should work with such legal counsel to review the audit request and supply everything reasonably requested. A concerted effort should be made to submit all information to the auditor at one time. If information is missing, the auditor may determine that a significant error rate exists, which could cause the auditor to review all CPT codes to calculate the overpayment made to the provider. If it is not possible to gather the requested material before the auditor’s deadline, an extension should be requested. Any extensions granted should be documented.

It is important that an audit response and supporting documentation be thorough, clear, and concise. It should be submitted in a manner that allows the auditor to quickly review the information and understand the provider’s arguments. It should clearly state what measures the provider has already taken to terminate existing problems and prevent future issues. Competent legal counsel will be able to address procedural, legal, or factual flaws in the auditor’s position.

Advanced Preparation

The best way to ensure compliance and audit readiness is to develop and implement a compliance plan well in advance of any audit. Experienced legal counsel should play a pivotal role in development of such plan. As always, periodic self-audits or independent audits are necessary to proactively identify compliance issues and mitigate their impact.

Finally, regular and periodic training and education should be conducted regarding audit response obligations and responsibilities. Performing these tasks will help ensure a smooth audit experience with minimal infractions and penalties. TH

Receiving notice from a payor that you are being audited can be alarming. Questions will inevitably run through your mind, such as, Why? How? How much will this cost?

Understanding the types of payor audits and how to navigate the process can make answering those questions easier. In addition, advanced preparation and knowing when to engage legal counsel can be critical to a successful audit outcome.

Audit Types

There are three general types of audits that providers face: Medicare audits, Medicaid audits, and private payor audits.

Medicare audits: The agency responsible for Medicare audits is the Centers for Medicare & Medicaid Services (CMS). There are three types of Medicare audits. Comprehensive Error Rate Testing (CERT) audits focus on providers who deliver high-cost items or services, have high volume, and/or have atypical billing or coding practices. Private contractors perform Recovery Audit Contractor (RAC) program audits; these contractors are paid a percentage of the amount of any improper payment discovered. Finally, Zone Program Integrity Contractor (ZPIC) audits are the most serious of the three audit types. ZPIC audits are performed by CMS contractors who mine the provider’s data for compliance with Medicare coverage and coding policies, investigate fraud, and may prepare cases for civil or criminal referral to CMS or law enforcement agencies.

Medicaid audits: Medicaid audits evaluate compliance with both CMS and applicable state regulations and investigate fraud. Evidence of fraud will be reported to the state attorney general for further review and prosecution.

Private payor audits: Private payor audits consist of informal reviews and formal audits. These audits can be triggered by actual allegations or evidence of noncompliance, or they can be random, in which general compliance is assessed. Audit procedures are typically determined by contract or the payor’s provider handbook and in accordance with applicable state law. The process can consist of prepayment reviews, in which the sufficiency of a claim and its supporting documentation is determined before payment is made to the provider, or post-payment reviews, during which claims are analyzed after the provider has been paid to determine if an overpayment was made and the amount of such overpayment. In the event an overpayment is discovered, a recoupment will be sought from the provider.

Focus

Consistent billing by a provider of high volumes of certain high-level services, high volumes of evaluation and management services, or consistently referring patients for certain testing can create suspicion in mayors.

In recent years, the primary focus of audits has been medical necessity due to payor concerns about specific fraud and abuse issues. Documentation of medical necessity is required during an audit. However, proving medical necessity can be difficult as the definition of “medical necessity” can vary by payor and within a payor depending on the underlying plan. In addition, private payors often have arbitrary and vague guidelines for defining and determining medical necessity, particularly when dealing with physicians or ordering clinicians. For this reason, it is critical that providers read their payor contracts and manuals carefully. If those materials are unclear, it is best to confirm requirements with the payor.

Regardless of the definition, medical necessity is a precondition to coverage for all payors. Proof is required that the services were reasonable and necessary to diagnosis or treat a patient’s medical condition. To satisfy this standard, providers should document the diagnosis for all procedures performed and all diagnostic tests ordered. In the case of repeat procedures, providers should clearly note the outcome of the previous procedure and the basis for reordering.

Responding to an Audit Request

 

All audit requests must be taken very seriously. Payors tend to copy what other payors are doing, and a problematic audit with one payor can cause other payors to initiate their own audits. Therefore, it is critical to respond appropriately to each audit request. Also, auditors often only check a few billing records. If errors are found, they will then extrapolate those findings, and the provider may be penalized.

Upon receipt of an audit request, it is important to immediately engage legal counsel well-versed in handling payor audits. Having an attorney who understands the audit process and has experience responding to audit requests can help ensure the best possible audit outcome. A negative outcome could result in recovery of overpayments, civil and/or criminal penalties, and exclusion from government programs.

Providers should work with such legal counsel to review the audit request and supply everything reasonably requested. A concerted effort should be made to submit all information to the auditor at one time. If information is missing, the auditor may determine that a significant error rate exists, which could cause the auditor to review all CPT codes to calculate the overpayment made to the provider. If it is not possible to gather the requested material before the auditor’s deadline, an extension should be requested. Any extensions granted should be documented.

It is important that an audit response and supporting documentation be thorough, clear, and concise. It should be submitted in a manner that allows the auditor to quickly review the information and understand the provider’s arguments. It should clearly state what measures the provider has already taken to terminate existing problems and prevent future issues. Competent legal counsel will be able to address procedural, legal, or factual flaws in the auditor’s position.

Advanced Preparation

The best way to ensure compliance and audit readiness is to develop and implement a compliance plan well in advance of any audit. Experienced legal counsel should play a pivotal role in development of such plan. As always, periodic self-audits or independent audits are necessary to proactively identify compliance issues and mitigate their impact.

Finally, regular and periodic training and education should be conducted regarding audit response obligations and responsibilities. Performing these tasks will help ensure a smooth audit experience with minimal infractions and penalties. TH

Receiving notice from a payor that you are being audited can be alarming. Questions will inevitably run through your mind, such as, Why? How? How much will this cost?

Understanding the types of payor audits and how to navigate the process can make answering those questions easier. In addition, advanced preparation and knowing when to engage legal counsel can be critical to a successful audit outcome.

Audit Types

There are three general types of audits that providers face: Medicare audits, Medicaid audits, and private payor audits.

Medicare audits: The agency responsible for Medicare audits is the Centers for Medicare & Medicaid Services (CMS). There are three types of Medicare audits. Comprehensive Error Rate Testing (CERT) audits focus on providers who deliver high-cost items or services, have high volume, and/or have atypical billing or coding practices. Private contractors perform Recovery Audit Contractor (RAC) program audits; these contractors are paid a percentage of the amount of any improper payment discovered. Finally, Zone Program Integrity Contractor (ZPIC) audits are the most serious of the three audit types. ZPIC audits are performed by CMS contractors who mine the provider’s data for compliance with Medicare coverage and coding policies, investigate fraud, and may prepare cases for civil or criminal referral to CMS or law enforcement agencies.

Medicaid audits: Medicaid audits evaluate compliance with both CMS and applicable state regulations and investigate fraud. Evidence of fraud will be reported to the state attorney general for further review and prosecution.

Private payor audits: Private payor audits consist of informal reviews and formal audits. These audits can be triggered by actual allegations or evidence of noncompliance, or they can be random, in which general compliance is assessed. Audit procedures are typically determined by contract or the payor’s provider handbook and in accordance with applicable state law. The process can consist of prepayment reviews, in which the sufficiency of a claim and its supporting documentation is determined before payment is made to the provider, or post-payment reviews, during which claims are analyzed after the provider has been paid to determine if an overpayment was made and the amount of such overpayment. In the event an overpayment is discovered, a recoupment will be sought from the provider.

Focus

Consistent billing by a provider of high volumes of certain high-level services, high volumes of evaluation and management services, or consistently referring patients for certain testing can create suspicion in mayors.

In recent years, the primary focus of audits has been medical necessity due to payor concerns about specific fraud and abuse issues. Documentation of medical necessity is required during an audit. However, proving medical necessity can be difficult as the definition of “medical necessity” can vary by payor and within a payor depending on the underlying plan. In addition, private payors often have arbitrary and vague guidelines for defining and determining medical necessity, particularly when dealing with physicians or ordering clinicians. For this reason, it is critical that providers read their payor contracts and manuals carefully. If those materials are unclear, it is best to confirm requirements with the payor.

Regardless of the definition, medical necessity is a precondition to coverage for all payors. Proof is required that the services were reasonable and necessary to diagnosis or treat a patient’s medical condition. To satisfy this standard, providers should document the diagnosis for all procedures performed and all diagnostic tests ordered. In the case of repeat procedures, providers should clearly note the outcome of the previous procedure and the basis for reordering.

Responding to an Audit Request

 

All audit requests must be taken very seriously. Payors tend to copy what other payors are doing, and a problematic audit with one payor can cause other payors to initiate their own audits. Therefore, it is critical to respond appropriately to each audit request. Also, auditors often only check a few billing records. If errors are found, they will then extrapolate those findings, and the provider may be penalized.

Upon receipt of an audit request, it is important to immediately engage legal counsel well-versed in handling payor audits. Having an attorney who understands the audit process and has experience responding to audit requests can help ensure the best possible audit outcome. A negative outcome could result in recovery of overpayments, civil and/or criminal penalties, and exclusion from government programs.

Providers should work with such legal counsel to review the audit request and supply everything reasonably requested. A concerted effort should be made to submit all information to the auditor at one time. If information is missing, the auditor may determine that a significant error rate exists, which could cause the auditor to review all CPT codes to calculate the overpayment made to the provider. If it is not possible to gather the requested material before the auditor’s deadline, an extension should be requested. Any extensions granted should be documented.

It is important that an audit response and supporting documentation be thorough, clear, and concise. It should be submitted in a manner that allows the auditor to quickly review the information and understand the provider’s arguments. It should clearly state what measures the provider has already taken to terminate existing problems and prevent future issues. Competent legal counsel will be able to address procedural, legal, or factual flaws in the auditor’s position.

Advanced Preparation

The best way to ensure compliance and audit readiness is to develop and implement a compliance plan well in advance of any audit. Experienced legal counsel should play a pivotal role in development of such plan. As always, periodic self-audits or independent audits are necessary to proactively identify compliance issues and mitigate their impact.

Finally, regular and periodic training and education should be conducted regarding audit response obligations and responsibilities. Performing these tasks will help ensure a smooth audit experience with minimal infractions and penalties. TH