volume 46 issue 6 fall 2013€¦ · april 2014. please contact me ... right then, it occurred to me...

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Volume 46 Issue 6 Fall 2013

Past President’s Dinner Dance

2013-2014 CORPORATE SPONSORS

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PAST PRESIDENT2011-2012 John I. Costa2010-2011 Edmund P. Schmidt, III, FHFMA2009-2010 Cynthia A. Strain, FHFMA2008-2009 Mary Kinsella, FHFMA2007-2008 Gordon Sanit, CPA, FHFMA2006-2007 Elizabeth Carnevale 2005-2006 Jane C. Florek, CPA 2004-2005 John M. Scanlan, FHFMA

EX-OFFICIOAll Past Presidents of the

Metropolitan New York Chapter, HFMADaniel Sisto,

President, Healthcare Association of New York StateKenneth E. Raske,

President, Greater New York Hospital AssociationKevin W. Dahill,

President & CEO, Nassau-Suffolk Hospital Council

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Chapter Officers and Board of Directors

Metro NY HFMA Newscast Schedule

Electronic Publication Date 1/23/14

Article Deadline for Receipt by Editor 12/19/13

OFFICERS 2013-2014President David EvangelistaPresident-Elect Wendy Leo, FHFMAVice President Meredith Simonetti, FHFMATreasurer David WoodsSecretary Joseph J. GuarracinoImmediate Past President Palmira M. Cataliotti, FHFMA, CPA

BOARD OF DIRECTORSClass of 2014

Martin Abschutz, CPA, CGMA Donna M. SkuraPaulette DiNapoli Robin ZieglerJames Petty, FHFMA

Class of 2015Ann M. Amato, CPA, MBA Diane McCarthy, CPA, CHFPMario DiFiglia Maryann J. ReganJason Gottleib

Newscast Committee

EDITORS:Marty Abschutz, CPA, CGMA, Editor

James G. Fouassier, JD, Esq., Assistant Editor

COMMITTEE MEMBERS:Kiran Batheja, FHFMAJoel DziengielewskiPaulette DiNapoli

James G. Fouassier, EsquireWilliam C. Hammond, CHFP

Phil HoltzmanMary Kinsella, FHFMAMichael Lamothe

Wendy Leo, FHFMAMike McGrath, FHFMA

Andrew NatkinEdmund P. Schmidt, III, FHFMA

Ken SheridanJohn Scanlan, FHFMACynthia Strain, FHFMAStephanie Welsher

President’s MessageDavid Evangelista, FHFMA .....................................................................................................Page 5

Editor’s MessageMarty Abschutz, CPA, CGMA...................................................................................................Page 7

Calendar of Events ...............................................................................................................Page 8

New MembersRobin Ziegler ..........................................................................................................................Page 9

Committee Listings 2013-2014 ........................................................................................Page 10

4 Steps to Managing Supply Chain in Labor and DeliveryKaren Wagner .......................................................................................................................Page 12

HFMA Metro NY Past President’s Dinner .......................................................Page 14, 18, 20, 23

Unintended Consequences and The Anti-Assignment ClauseJames G. Fouassier, Esq.......................................................................................................Page 15

Value Is In The Eye Of The Purchaser ..............................................................................Page 19

Sizing Up Economies of ScaleReprinted with permission of National HFMA .......................................................................Page 21

From Zero to 60, HFMA’s Career Center Helps Drive Your Career. ...............................Page 24

Nonprofit Investing: Mission ResponsibleWilliam M. Courson, Jason E. Terry ......................................................................................Page 26

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Autumn marks the transition from the summer into winter…just as we continue with the transition of the Health CareDelivery System. Transformational change must occur to deliver a new healthcare framework. There has always beenchange in Health Care, but never have we seen such pace of change. As my Hospital President/CEO always says…”it iscomplicated.” The top issues that we must address in 2013 – 2014 are the implementation of the Affordable Care Act (ACA),including the advent of the Healthcare Insurance Exchanges, the expansion of Medicaid coverage, Population HealthManagement, ICD-10 Preparation, patient centered care, price transparency…whew!

I originally planned to name this column “What the Metro NY Chapter Leaders did on Summer Vacation,” as the ChapterVolunteers were hard at work. The summer months were spent planning and setting up quality and timely seminars/webinarsto address the above described transition in health care. In mid-September, we held the Mid-Year Reimbursement Seminarwhich was very well attended. The two day Annual Region 2 Fall Academy was held at the Turning Stone Resort and Casino.The Chapter is building on the successful Metropolitan New York Chapter “Academies,” which will continue during the2013-2014-chapter year. The Fall Academy (aka the ICD-10 Academy) will take place on October 30th at the UniondaleMarriott. The focus will be on ICD-10 preparedness. Mr. Ralph Lawson, Immediate Past Chair National HFMA, and EVPand CFO of Baptist Health located in South Florida, will present our keynote address. He will offer his perspective onOBAMACARE and the industry's response to the ACA. On November 22nd, the Internal Audit/Compliance committee willpresent a seminar titled “The Current Compliance Environment: OMIG, OIG, HIPAA, Observation Status and more”. OnDecember 13th our Finance Committee will present its Accounting and Audit Update Seminar.

Please go to www.hfmametrony.org for a listing of all Chapter events, including other programs in Revenue Cycle, ManagedCare, Medical Group Management, Finance, HIM, and Compliance. Also, Chapter Volunteers are finalizing plans for ourAnnual Institute; it will be held on March 7th and 8th 2014 at the LaGuardia Marriott. Please make sure to mark yourcalendars. I urge you to take the time to attend an upcoming HFMA Education session.

I’m proud to announce the launch of the Metro New York Chapter Corporate Sponsor Webinar Series. Many of our CorporateSponsors are providing free educational webinars on important, relevant topics. National HFMA also offers many freewebinars to members. A calendar of Corporate Sponsor Webinars and Regional offering webinars can be found on theChapter website. A listing of National HFMA webinars can be found at www.hfma.org.

Our HFMA social calendar is in full swing. The Metropolitan NY HFMA Golf Classic held in September was once again thepremier golf event (hey, I’m biased). The Social Events Committee did a great job on the Past President’s Dinner Dance heldon October 5th 2013. This year we honored immediate Past President, Palmira Cataliotti. Our Day at the Races was held

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at Belmont Race Track on October 25th. Please check back with the Chapter website for updateson all social events.

In late October, a “Member Satisfaction Survey” will be distributed to you from National HFMA.The results of this survey are very important in measuring our Chapter’s performance. I urge youto take the time to complete the survey. I would expect and appreciate that you give our Chapterhigh marks in all applicable categories. If you have any issues with anything that we currently do or need to do in the future,please contact me directly at [email protected] or 718 206-6930. I promise that your input will be taken seriously andthat I will address any and all concerns directly. We will work hard to ensure that our Chapter continues to perform at thehighest level possible.

Metro NY Chapter’s Leadership is committed to our Certification Challenge and we challenge all members to take the HFMACertification exam. The chapter will reimburse the cost of the exam for the first twenty members who take the exam beforeApril 2014. Please contact me directly to discuss the Certification Challenge.

I would like to extend a sincere thank you to Corporate Sponsors and dedicated volunteers who make the Metro NY Chapterso successful. I look forward to seeing each one of you at an upcoming HFMA event.

David A. EvangelistaPresident 2013 – 2014

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By Marty Abschutz

Opportunity: It's Up to You

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I wonder why I start most columns with a reference to the weather. My best thought is that it is one thing we have incommon whether we live in the five boroughs or north, west or east of New York City. We have that in common whether weare part of a provider organization or a vendor organization. Regardless of where we live or work or what type of work wedo, we are all affected by the weather and the current healthcare environment.

By the time this edition is published, our Fall Academy would have been presented. The main focus of the Academy was oneof the biggest environmental changes that will occur for a long time to date: ICD-10. I expect that many of our educationcommittees are hard at work developing other ICD-10-related programs; they will show the many areas that will be affectedand how our members can meet those challenges.

One of HFMA’s strongest attributes over the more than 30 years I have been a member, is the ability of the members toidentify ways to meet the challenges that we all face AND to share those ideas and methods. I am reminded of a panel I wasa member of about 30 years ago. The panel dealt with the impending implementation of New York State’s waiver fromMedicare’s Inpatient Prospective Payment System (better known today as IPPS). The waiver methodology had its ownacronym (of course – we are a business marked with numerous acronyms): NYPHRM. For those who don’t remember or don’twant to remember or whose careers were subsequent, it stood for the New York Prospective Hospital ReimbursementMethodology; no wonder it quickly became known as NYPHRM.

The point I have taken so long to get to is that the panel contained representatives of several firms that provided advice toproviders on many issues. Back then, I was a relative newbie to the industry. (I think I had three years of previousexperience.) I was sitting next to someone that had been a well respected member of HFMA and our New York industry. Atone point in the time we were sitting up there, this well respected member leaned over to me and asked me a question aboutone of the technical details of the new methodology.

Right then, it occurred to me that the playing field had been significantly leveled with the implementation of a completelynew reimbursement method for New York State hospitals. What many (and I) saw as a significant challenge to their skillset had turned into a significant opportunity for me and other newbies like me.

That is my long-winded way of saying ICD-10 is an opportunity for any one of us that want to seize it as that. HFMA will beright there to help us seize that opportunity, providing many different education programs and tools to support us. Countme in…I hope I can count you in, too.

2013-2014 IMPORTANT DATES

November 22, 2013 The Current Compliance Environment Hofstra University

December 13, 2013 Accounting/Audit PLUS Update TBD

January 13, 2014 Annual Reimbursement Update TBD

January 25, 2014 Chinese New Year Flushing, NY

March 6/7, 2014 Annual Institute LaGuardia Marriott

A selection of FREE Webinars (Check www.hfmametrony.org for more):

November 1, 2013 Measuring Operational Performance Using Lean Methods

November 14, 2013 403(b) Issues and Answers

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HFMA Seminars provide timely, in-depth strategies and metrics to help you keep pace withthe healthcare finance topics you care about the most. Choose between 1, 2, and 3-dayoptions in two locations: San Antonio (November 11-13, 2013) and Chicago (December10-12, 2013). Earn up to 21 CPEs. View all upcoming HFMA Seminars and register atwww.hfma.org/seminars.

The Metropolitan New York Chapter of HFMA Proudly Welcomes the Following New Members!

By Robin Ziegler, Membership Committee Chair

MetroNY HFMA is pleased to welcome the following new members to our Chapter. We ask our current membership to rollout the red carpet to these new members and help them see for themselves the benefits of HFMA membership. Encouragethem to attend seminars and other Chapter events. We ask these new members to consider joining a Committee to not onlyhelp the Chapter accomplish its work, but to expand their networks of top notch personal and professional relationships.See the list of MetroNY HFMA Committee Chairs, along with their contact information, listed in this eNewsletter.

JULY 2013

Deborah Als

Kathy GarciaEpiscopal Health Services, Inc.

Christine HeitmanEpiscopal Health Services, Ins.

Margaret GrahamQUA INC

Pamela WilsonHealthcare Informatics

Margaret BeirneNorth Shore LIJ Health Systems

Christine StaufenbergCatholic Health Services of LongIsland

James P. McAndrews IIITatum

James GorayebDeloitte

Morris BreitsteinSelfhelp Community Services

Mariana Faustinelli LorenzoDeloitte

Enrique J RodriguezIcahn School of Medicine @ Mt.Sinai

Kean W Brooks

Cheryl DeSimoneMedical Risk Management, LLC

Jeffrey B OleskeBank of America

Rhodora DeDiosNYU Langone Medical Center

William D CundiffAtlantic Dialysis Management Services, LLC

AUGUST 2013

Robinson KoNew York Presbyterian Hospital

Alexander K BuchholzO’Connor Davies LLP

William SantayLumeris

Daivid GugliottaNY Queens Hospital

Kateryna PolyakovaBNY Mellon

Joshua C VogesNexera Inc.

Joseph L CostaConsultant

Andrew S CohenKaufman Hall & Associates

Scott E Corn

Meaghan SchachtelErnst & Young

Cheryl MakoskePeconic Bay Medical Center

SEPTEMBER 2013

Elizabeth McCannNorth Shore LIJ Health Systems

Lauren Follo

Rosalyn S FryMultiCare Consulting Services

Angela M RichInternational Recovery Associates,Inc

Brendan N MooneyMemorial Sloan Kettering CancerCenter

Ian C PikeBrennan & Pike

Karl Cerni

Melissa M HalleWeiserMazars LLC

Antonio D PilgrimSaint Peter’s Healthcare System

Sam WalterHuron Consulting Group

Kathleen DuffyNYU Langone Medical Center

Ken YormarkNavigant

Dylan M ConnorNavigant Consulting

Brad Corbin

Carolyn BernardNorth Shore LIJ Health System

Jeremy R MorrisKPMG

G Jamie BeerNavigant Consulting

Alfred F RomeoHealthfirst

Lauren MiloFTI Consulting

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Advisory CouncilPalmira Cataliotti

[email protected] (516) 663-2311

John [email protected] (516) 240-8147

Ed Schmidt [email protected]

(516) 572-4834

Cindy Strain [email protected] (516) 796-3700

55th AnnualInstitute

Maryann Regan [email protected]

(516-576-5601

Jason [email protected](212) 297-4549Christina Milone

[email protected](516) 509-0277

Bob [email protected](516) 616-0200 ext. 201

Emily [email protected]

(614) 263-1043

Jim Argutto [email protected](631) 761-1028

Cathy [email protected]

(516) 745-0161


(516) 745-0161

Annie Lemoine [email protected] (516) 326-0808 x3312

AuditingJohn Scanlan


Gordon Sanit [email protected](516) 918-7065

Al [email protected](914) 365-3508

Joe [email protected](718) 250-6755

BylawsJoe [email protected](718) 250-6755

Fred [email protected](516) 393-2250

David Evangelista [email protected] (718) 206-6930

CentralRegistration

Robin Ziegler [email protected](516) 338-1100 x314

Diane Masi [email protected]

(516) 551-5839

Palmira Cataliotti [email protected]

(516) 663-2311

CertificationCoaching

Jim Petty [email protected] (516) 876-6022

John Scanlan [email protected]

(718) 283-3911

Kiran Batheja [email protected]

(718) 604-5578

Art Cusack [email protected] (516) 546-4198

Certified MembersKiran Batheja


Michael McGrath [email protected]

(516) 656-5374

CommunityOutreach

Josephine Vaglio [email protected]

(516) 248-2422


Continuing CareSteven Stella


Corp. Compliance/Internal Audit

Ann Amato [email protected] (516) 632-3405

Lauri [email protected](516) 616-0200 ext 216

CPE’sJohn Scanlan


DCMS/BalancedScorecard


(516) 551-5839



Wendy [email protected]

(516) 454-0700

Exec. Comm.& Planning


Wendy [email protected]

(516) 454-0700

Finance/Reimbursement/Audit

Mario [email protected]

(516) 876-1386

Kwok Chang [email protected] (212) 979-4324

Rachele [email protected](646) 227-3156

Sean [email protected]

(516)

Founders AwardsPaulette DiNapoli


General Education

Donna Skura [email protected](516) 572-4498

Diane [email protected](631)391-7748/

HIM/URAnnie Lemoine

[email protected] (516) 326-0808 x3312

Stacey Levitt [email protected]

(646) 732-5052

Co-Chair: Diane [email protected]

(516) 551-5839

Co-Chair:Jason [email protected](212) 297-4549

Committee Name Chair Co-Chair Vice Chair 1 Vice Chair 2

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HistorianMichael McGrath


Paul Cheng, [email protected](347) 581-7573

Legal AffairsFred Miller


Christina [email protected]

(516) 509-0277 Peter Egan

Link CommitteeRich Nagy

[email protected](631)444-4175

Jason [email protected] 297-4549

Managed CareRich Nagy


James [email protected]

(631) 638-4012

Patrick [email protected]

(212) 430-6620

MSPKiran Batheja


Michael McGrath [email protected] (516) 656-5374

MembershipMarketing



(516) 551-5839

Medical Grp Mgmt.

Josephine Vaglio [email protected]

(516) 766-0521

Diane [email protected](631) 391-7748

Heather [email protected](631) 454-4081

Art Cusack [email protected] (212) 226-8866

MISJohn Mertz

[email protected]

Annie Lemoine [email protected] (516) 326-0808 x3312

Ann Amato [email protected] (516) 632-3408

NewscastMarty Abschutz

[email protected](732) 906-8700 ext 109

James [email protected]

(631) 638-4012

NominatingPalmira Cataliotti


Patient FinancialServices

Paulette DiNapoli [email protected]

(516) 576-5638


(516) 745-0161

Patrick [email protected]

(212) 430-6620

PPDDPalmira Cataliotti



Webmaster andPersonnelPlacement

Mary Long Kinsella [email protected] (212) 297-5445


Public Relations &Communications

Region 2

Emily [email protected]

(614) 263-1043

Michael [email protected]

(646) 227-2396Phil Holtzman

Region 2CollaboratonCommittee


Kiran Batheja [email protected]

(718) 604-5578


Meredith Simonetti [email protected]

(631) 465-6877

Diane [email protected](516) 630-3911


(516) 551-5839

Gordon Sanit [email protected](516) 918-7065

Ryan AwardPalmira Cataliotti


John [email protected] (516) 632-3170David Woods


Committee Name Chair Co-Chair Vice Chair 1 Vice Chair 2

Social EventsKiran Batheja



SponsorshipMichael McGrath



Yerger AwardDana Keefer


4 Steps to Managing Supply Chain in Labor and DeliveryBy: Karen Wagner

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Being responsive to the supply needs of a demanding department requires determining who can manage suppliesmost efficiently and what tools and storage methods can offer the greatest benefits. Here, Texas Children’sHospital shares four strategies for success.

Effectively managing a supply chain is an enormous undertaking for any healthcare organization, but add in theunpredictability of a labor and delivery environment and the challenges multiply. A case in point is the Pavilion for Womenat Texas Children’s Hospital, Houston. The 100-bed facility, opened last March, specializes in multiple births and high-riskpregnancies and can accommodate 5,000 births annually. Evidence of the unpredictable environment came one morninglast April: One minute, the hospital was quiet; the next, a patient was brought in who gave birth prematurely to sextuplets.

According to Rick McFee, Texas Children’s Hospital’s director of supply chain management, being ready for the unexpectedis the focus of his department, which also manages supplies for the 555-bed pediatrics hospital and a 24-bed pediatric acutecare facility on Houston’s west side.

“It’s very difficult to have any kind of consistent supply utilization. You may have three days where you have very low volumeactivity, and then you may have four days in which you’re really struggling with capacity,” McFee says. “You may have dayswhere supplies are barely used at all; then, you’ll have days where they’ve used everything we’ve got. So we’ve got to be verynimble. We’ve got to be able to respond very quickly.”

Determining Where to Focus

At the Pavilion for Women, McFee’s department manages supply functions for one four-suite surgery department, whereemergency C-sections and other OB/GYN surgeries are performed. The department also manages supplies for the two-suitelabor and delivery unit.

McFee says key steps for managing such a demanding supply chain include the following.

Remove supply chain functions from clinical staff. Previously, to replenish special-order, low-volume supply items, TexasChildren’s Hospital nurses would have to complete a purchase requisition and then follow up with the purchasing departmentto make sure the supplies were ordered and received. “We’ve tried to remove as much of that activity from our clinical usersas possible and have supply chain manage those items,” McFee says.

In preparation for opening the women’s pavilion, supply chain staff worked with physicians and nursing staff to understandneeds, select appropriate products, and determine par levels. The clinical and supply chain staff collaborated to identifyopportunities to standardize some items, such as surgical gloves, between the pediatrics hospital and women’s pavilion toreduce costs. Supply chain now manages these direct-purchase type items as if they were stocked, inventory items.

These items generally include those supplies that are infrequently used or not conducive to being stored in a warehouse-type facility because of temperature restrictions. A handful may be kept on a supply room shelf on a nursing unit or in anoperating room suite. The only difference between these items and other supplies managed by supply chain is that thedirect-purchase items are not stocked in the warehouse. Nurses are not aware of which item is a just-in-time purchase andwhich is a regularly stocked item. “All they know is it’s on the shelf and ready for them to use,” McFee says.

The process matches skill level to tasks, freeing clinical staff to focus on clinical tasks only, and can even reduce clinicalstaffing, McFee says.

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Provide immediate visibility into utilization. Because most deliveries are unexpected rather than planned, having up-to-the-moment visibility into supply usage is extremely important. “Using automated systems is an absolute must,” McFee says.Texas Children’s Hospital uses a bar-coded system to automatically inventory items as they are used. The bar-code systeminterfaces with the supply chain department’s enterprise resource planning system to automatically generate purchaseorders or inventory orders when items drop below a certain quantity. A supply clerk inventories items to validate quantityon the shelf versus quantity in the information system.

The automated ordering system removes many of the repetitive steps in the purchasing process, such as filling out andplacing purchase orders. Products have already been sourced and pricing is negotiated upfront, so that every item can beautomatically ordered. “That’s been our focus, to try and get as much of what we’re doing to be able to go out the doorelectronically without a lot of buyer involvement,” he says.

Makes supplies easily accessible for clinical staff. The Pavilion for Women has 42 supply stock rooms. The rooms themselvesare locked, but the supply bins are open for easy access. Using the scanner to scan the barcode on the item, nurses mustidentify themselves, the item that is being removed, and the patient. The system automatically charges the item to the unitor patient as applicable, and puts the item in a queue for reorder.

Although the open bins are easy to use, the downside is that compliance can be an issue because harried nurses can moreeasily grab an item without documenting that it was taken. This causes more work for supply chain staff, who must thenconduct additional cycle counts to ensure that the quantity on hand matches what is documented in the system.

When the bins were first installed, McFee says, only 46 percent to 52 percent of transactions were being captured. Twomonths later, after nurses became more attuned to the new system, rates improved to about 80 percent. What has alsoimproved compliance is informing nurses of the compliance rate and which products are in low compliance, he says. Nursesreceive reports generated by the bar-code system, showing such information as utilization, par levels, and items replacedversus items documented.

Adding Capacity, Not Staff

Maintaining a nimble-yet-sufficient supply chain in labor and delivery has its special challenges, but creating an overallenvironment that meets the fluctuating demands should enable clinicians to focus on what they do best—provide care.

For example, enhancing supply chain management in labor and delivery has had a positive impact on the supply chain’sability to take on more work. “We’ve been able to absorb an extreme increase in activity and volume with the same staff,”McFee says. With the addition of the women’s pavilion and the adult facility, volume increased 42 percent. “Because wewere able to get some of those commodity-type purchases to be more automated, it gave us the capacity to be able tohandle the additional workload,” he says.

Karen Wagner is a healthcare freelance writer, Forest Lake, Ill., and a member of HFMA’s First Illinois [email protected].

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Photos selected by Marty Abschutz

Unintended Consequences And The Anti-Assignment Clause

By: James G. Fouassier, JDA lengthier version of this article has been submitted for publication to the Suffolk Lawyer, the journal of the Suffolk County (NY) Bar Association., to which this author is a regular contributor.

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Health care providers that elect to join plan and payernetworks generally are precluded by their participationagreements from “balance billing” network members foreligible covered services. When a provider is not “innetwork” with a health insurer or plan, however, thesituation is entirely different. Privity is solely between theprovider and the patient; it is the patient in turn who mustsecure reimbursement by forwarding a claim form andsupporting documentation to his or her insurer or plan if theplan has “out of network” benefits and if the service is aneligible covered service under the terms of the benefitdesign. Under older indemnification models patients firstwere required to pay the providers before any policy benefitswould reimburse. As health care costs began to soar in the“60s and ‘70s, non-network providers of all kinds began torealize that unless they rendered treatment on account theywould drive away much of their business; most people simplycould not afford to pay directly. After all, that is the idea ofhaving a health plan in the first place. Thus developed overtime the idea that the patient could assign the right ofpayment to the non-network provider. The provider thenwould submit the claim, along with all supportingdocumentation, to the insurer or plan administrator andanticipate receipt of a check, whereupon it would “balancebill” the patient for the difference between the claim amountand the payment amount.1

The process was not without difficulties. First,notwithstanding the terms of the assignment and therequirements of the common law, plans and payers routinelytendered payment to their members rather than theprovider-assignees. Providers found themselves having tochase their patients for payment; not a particularly attractiveway to nurture a doctor-patient relationship. Anotherproblem presented when an error, omission or other glitchcaused the claim to be denied or “short paid”. When theprovider then “balance billed” the patient the response oftenwas, “Well, doctor, your office agreed to file the claim for meand your office mailed it late, so why should I have to payfor your mistake?” On the other hand, as a practical matternon-network providers had little choice but to engage theplans and payers almost as if they were the real parties ininterest if they expected to be paid for their services. This

situation became particularly acute when a claim wasdenied, in whole or in part, for clinical rather thanadministrative reasons.

Clearly, arguments addressed to sustaining clinical efficacyand necessity must be asserted by medical professionals.Lay people simply cannot carry the cudgels in the face ofclinical denials of their health care claims. Most planmembers are ill equipped and unable to maintain a thoroughand documented clinical appeal in the same manner as amedical provider. In an “in network” context this is not anissue; by virtue of their network agreements providers arereal parties in interest in the denials (especially since theycannot “balance bill” the patients) and are granted fullappeal rights. The issue presents in the “out of network”situation we have been discussing. The problem has beenacknowledged by our state legislature in effecting changes inthe Insurance and Public Health Laws expressly allowingproviders to appeal “adverse” claims determinations byhealth insurers and plans regulated by New York law,regardless of whether they are raised “in network” or “out ofnetwork”. The text of each statute is identical:

Ins Law § 4904. (a) An insured, the insured’s designee and, inconnection with retrospective adverse determinations, aninsured’s health care provider, may appeal an adversedetermination rendered by a utilization review agent.

The value of the provider appeal is evident not only toproviders and their patients but also to insurers and healthplans. Less provider participation in out-of-network claimsdenials means fewer successful appeals and fewer paymentdenial reversals. One way we have seen health insurers andplans (especially self-funded plans subject only to ERISA)address this perceived problem is by adopting in their benefitdesigns a provision commonly known as an “anti-assignment” clause. In brief, the typical anti-assignmentclause says that the member may not assign or transfer anybenefits established in the plan. Since health plans routinelyhonor claims submitted by out-of-network providers whensupported by an “assignment of benefits” regardless of anyanti-assignment provisions, however, the issue becomeswhether and to what extent out-of-network providers have

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standing to appeal claims denials, and subsequently toarbitrate or litigate if necessary.

Recently the federal district court in New Jersey entertainedthe question. In North Jersey Brain and Spine Center v. StPeter’s University Hospital, 2013 US Dist LEXIS 13840 (9-25-13), an out-of-network provider, as an assignee of“payment”, submitted its patient’s claims to theadministrator of the ERISA plan covering the patient. Theprovider engaged in a series of internal appeals and requestsfor reconsideration with plan representatives. Eventuallythe provider sued under ERISA, asserting standing as anassignee, alleging that the claims were improperly paidbecause of arbitrary reductions resulting from the plan’sfailures to process the claims according to the plan’s ownprocesses and procedures. The plan then sought dismissalbased on the ground, inter alia, that the provider derived nostanding because the plan benefit design prohibited anyassignment of “benefits”.

Addressing the validity of the anti-assignment clause, thecourt held that while such a prohibition may be subject tolimitations imposed by state law ERISA, being silent on theissue, leaves the matter to the agreement of the contractingparties. Citing to cases holding that as a general rule of lawwhere the parties’ intent is clear the courts will enforce non-assignment provisions, the court found that theanti-assignment clause was not contrary to public policy andtherefore was valid and enforceable.

Turning next to the argument by the provider that the plansomehow had waived its rights under the clause, the courtconsidered the course of conduct of the parties. The planadministrator engaged in direct discussions with theprovider over plan coverage, accepted direct submissions ofclaim forms, made direct payments to the provider, andengaged the provider in extensive communications on theissues raised by the provider. All of this documentedconduct, the court held, evidenced a “voluntaryrelinquishment of a known right” and demonstrated “clearacts showing the intent to waive” the protections of the anti-assignment clause.

So the case proceeds to trial.

On to the “unintended consequences” part. From theprovider perspective one issue with so-called “highdeductible” products was that the provider had to chase thepatient for a larger portion of the payment rate than withmore “traditional” products. In response more and moreproviders expected that “payment be made at the time of thevisit” and, barring genuine emergencies, would decline to

see patients who did not pay their share in advance. Evenmore bad news for those of us doing our best to keep abreastof developments in the rollout of the Affordable Care Act:each of the four “metal products” offered by the healthexchanges has different levels of deductibles, copaymentsand other coinsurance. Since we can expect that manypeople currently insured through “traditional” plans maygravitate (or be pushed by their employers) into exchangeproducts (one “unintended” consequence of Obamacare ?)providers will see even more patients with larger self payshares.

My concern is that if the holding in North Jersey Brain andSpine Center is adopted by other courts across the country,plans and payers of all kinds, especially ERISAadministrators,2 will decline to accept any claims from out-of-network providers out of concern that in so doing they willbe deemed to have waived whatever protections they havein the anti-assignment provisions of their respective benefitdesigns. Providers then may be expected to demand thattheir patients pay some or all of the estimated costs of theircare and treatment in advance, or else make other financialaccommodations that will secure payment to a greater extentthan at present.3 Provider collection costs certainly will riseas payers tender payment directly to their members ratherthan to the provider assignees and as patients default inpayment plans. Claims submissions and subsequent appealsby lay patients will evidence a much higher level of errorsand omissions, and the exchange of communicationsbetween providers and payers in advancing clinicaljustifications for covered services will be thwarted.

* * * * * * * * *Speaking of “unintended consequences”, on October 18th theAmerican Health Lawyers’ Association reported on a KaiserFoundation study that shows that some five millionuninsured adults may be excluded from both Medicaid andexchange products because of the SCOTUS decision inNational Federation of Independent Business v. Sebelius,132 S. Ct. 2566 (2012). The ACA intended that expandedMedicaid eligibility would allow those millions to be includedin Medicaid, thus there was no perceived need to providethem with tax credits and subsidies for exchange products.Surprise; the Supreme Court’s ruling made the expansion ofMedicaid optional, and some 26 states are not planning toimplement the expansion. But the law already is in place(and it isn’t likely that Congress will pass any kind ofexpansion of Obamacare !). So, in those states, over 5million poor, uninsured adults that have incomes abovecurrent Medicaid eligibility levels but below the federalpoverty levels find themselves in a “coverage gap” by earningtoo much to qualify for Medicaid but not enough to qualify for

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ACA marketplace premium tax credits. It certainly isinteresting how court decisions can have unintendedconsequences !!

James Fouassier, Esq is the Associate Administratorof Managed Care for Stony Brook University Hospital.His opinions and comments are his own and may notreflect those of Stony Brook University Hospital, theState University of New York or the State of New York.He may be reached [email protected]

Nothing contained in this article constitutes legal advice andthe same shall not be relied upon to any extent whatsoeveras legal advice. Legal advice only may be obtained fromlegal counsel engaged for that purpose pursuant to expressagreement.

Endnotes

1. The terms of assignments vary. Some, as with the casediscussed here, simply are assignments of the benefit of“payment”. Many more allow the provider to raise anyargument that would be available to the member-patientin pursuing the claim, including the right to appeal on themember’s behalf. Often the assignment form states thatif the claim ultimately is denied the provider may comeback against the member, but this writer questions thevalidity of such a reservation of rights. If the assignee“steps into the shoes” of the assignor it assumes not onlythe benefits but also the burdens of the assignor,including satisfying all of the clinical and administrativerequirements of the member’s contract with the insurer orplan. Having performed them poorly, or not at all, to theobvious prejudice of the member-patient, the providershould not then be allowed to “cover its bet” by goingback against a now remediless patient.

2. Some sixty percent of all insured persons are covered byhealth insurance or a health plan subject to ERISA.

3. We already see a number of financial institutions andbusinesses soliciting providers to inform their patientsthat “financing” is available for their anticipateduncovered or under-insured medical needs, or offering avariety of other alternatives to what otherwise would bethe unsecured debt of the patient.

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Value Is in the Eye of the Purchaser

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What is value in health care? The answer to this question lies in taking the perspective of the purchaser of care,according to the first report from HFMA’s Value Project.

If you had to pay $15 for a cheeseburger at a fast-food restaurant, you would probably not think you got good value. Butif you paid the same amount for a well-prepared filet mignon dinner, you would probably think you received value, just asyou might in a $3 hamburger. Value, in other words, is a concept of relative worth: a function of quality over the amountthe purchaser pays for a good or service.

Value is driving a fundamental reorientation of the healthcare system around the quality and cost-effectiveness of care.Patients, employers, government agencies, and health plans—the purchasers of health care—increasingly want to knowwhat they can expect to receive for what they pay for care. They are seeking out providers who will give them thisinformation and follow through with cost-effective care. They are, in other words, expecting to get value.

Through surveys of the industry and interviews with leading healthcare organizations, HFMA has found that:

Healthcare organizations are preparing for significant changes in the payment system. 35 percent oforganizations responding to HFMA’s survey have already begun investing in population health management capabilitiesor plan to do so within the next 1-2 years.

Value creation depends on clinician engagement and leadership. Leading organizations are developing “dyad”management models that combine clinical with financial and administrative leadership from the C-suite to the unit level.

The role of the healthcare CFO is changing to emphasize value. CFOs responding to HFMA’s survey are devotingabout 40 percent of their time spent on improvement initiatives to clinical quality improvement and patient safetyinitiatives.

To successfully manage the transition to value, HFMA recommends that healthcare organizations:

Organize efforts around driving value for purchasers of care: Improve the quality of care while reducing the totalamount paid by purchasers.

Develop four capabilities for value: These include people and culture, business intelligence, performanceimprovement, and contract and risk management.

Communicate value to purchasers: Work with patients, community employers, and other stakeholders to define keymetrics that provide meaningful information on the value of care provided.

More information on HFMA’s Value Project—including a downloadable version of the report and additional resources andtools—is available at www.hfma.org/valueproject.

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Sizing Up Economies of ScaleHow Mercy Health System Is Sizing Up Economies of Scale

Reprinted with permission of National HFMA

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One fast-growing health system is using economies of scale to standardize operations across dozens ofhospitals while introducing an innovative model of care, according to a recent article from HFMA’s Leadershipmagazine, excerpted below.

This past June, Mercy Hospital El Reno, a 48-bed hospital in central Oklahoma, went live with an electronichealth record (EHR) system, an achievement that at one time seemed impossible. Until three years ago, thefacility was called Parkview Hospital and it was staring at a $1.4 million estimated bill to meet the federalgovernment’s EHR/meaningful use mandate. “We had no idea where we were going to get that money,” saysDoug Danker, RN, the hospital’s administrator.

In fact, the hospital was struggling on many fronts. Sometimes the nursing staff worked short-handed becauseit could not fill positions. It was hard to succeed financially, in part because supplies were so expensive. Staffmorale was low.

In 2010, the public hospital, owned by the city of El Reno, entered into a lease agreement with Mercy HealthSystem, the sixth-largest Catholic health system in the country. That makes Mercy Hospital El Reno one of 31hospitals and more than 200 clinics in Mercy’s four-state service area.

Danker now has 38,000 Mercy coworkers, 90 of whom came to help when Mercy extended its EHR system toEl Reno. “I had no idea resources existed like this until we became part of a large system,” he says. “I trulybelieve that had we not been leased by Mercy that El Reno would no longer have a hospital.”

Mercy’s View of the Future

Since June 2011, Mercy has acquired three hospitals, added more than 70 clinic locations, and grown bynearly 300 integrated physicians. Last year, the St. Louis-based system announced a plan for expansion overthe next eight years that could amount to more than $4 billion. The money will be spent to advance Mercy’scentral strategy: success via economies of scale.

“Managing the cost of care is vital to future success,” says Michael McCurry, Mercy’s executive vice presidentand COO. “When you have a concentration of facilities in a given geographic area, it’s much easier to leverageyour administrative and back-office functions, such as billing and purchasing, for scale to serve thosefacilities.”

Examples of ways in which Mercy Hospital El Reno is benefitting from the economies of scale that come withbeing part of a large system include the following:

El Reno’s business office, formerly staffed with about 20 FTEs, now has one staff member on campusbecause most back-office functions are handled at a central business office in Missouri. El Reno has no local CFO; one Mercy finance leader is responsible for the system’s rural facilities inOklahoma. Transcription is outsourced, eliminating two FTEs, and El Reno shares medical coding services withother Mercy hospitals.

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Because of economies of scale, the benefits that Mercy El Reno Hospital gets from being part of a largeorganization do not translate into commensurately big costs for Mercy. According to an economic impact studythat Mercy commissioned, the system invested $252,000 in direct capital expenditures in El Reno in FY11 andprojected capital spending of $300,000 for FY12 and FY13, which includes the EHR implementation.

Read the complete article in the Fall/Winter issue of HFMA’s Leadership magazine, which features caseexamples of cross-disciplinary collaboration that fosters system change and leads to business success.

More Strategies for Achieving Economies of Scale

Reassessing ways to achieve economies of scale is one of the most common strategies that hospitalsinterviewed by HFMA’s Value Project are considering as they focus on ways to reduce costs while providingquality care. “For many, the question of possible mergers, alliances, and other forms of linkages betweensystems is a central determinant of future strategy and structure,” the Value Project states in its most recentreport, The Value Journey: Organizational Road Maps for Value-Driven Health Care. Read the report.

One method by which organizations achieve scale is consolidation. Learn about the new wave of hospitalconsolidation from an article by Moody’s Lisa Goldstein in hfm magazine. Get more information from two archived HFMA webinars:

Current Trends in Healthcare Mergers, Acquisitions, Consolidations, and AffiliationsCreating Sustainability Through New Business Models for Mergers and Acquisitions

Not an HFMA member? Get exclusive access to practical strategies and thought leadership from HFMA andother industry experts. Join today.

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From Zero to 60, HFMA’s Career Center Helps Drive Your Career

Develop your business and personal skills with tools created specifically for the healthcare finance professional. HFMA’snew Career Center is organized into distinct career levels to help you as you enhance and further your career path intohealthcare finance.

The Career Center is divided by levels, so whether you’re ready to begin your healthcare finance career or are activelysearching to identify the skill sets required to advance and manage your career, HFMA has the tools you need:

• Starting My Career is for people who are seeking their professional path into healthcare financial management.• Managing My Career focuses the drive to seek opportunity and take control of your career by acquiring andmaintaining skill sets, networking, and self-branding.

• Advancing My Career teaches how to accelerate your career by improving your ability to anticipate futureopportunities and by actively structuring and sequencing your work life.

Included in each career level are:• Assessments that provide a plan to further develop your skills by determining your level of knowledge, skills, andbehavioral competencies that are critical to current and future leadership needs in the industry.

• Educational and career resources to help you hone your core competency skills.

At some point in your career, it’s inevitable that you will also manage others, so Career Center coaching doesn’t stop atpersonal development, it also has a section for managers on how to develop their most valuable asset—their employees.

While you are on the page, check out the Job Search Tools: Job Bank listings, resumes, and a job-posting site.

Learn more and further your career at hfma.org/careercenter.

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Nonprofit Investing: Mission ResponsibleWilliam M. Courson Jason E. TerryPresident of Lancaster Summer AssociatePollard Investment Advisory Group Pollard Investment Advisory Group

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Sustainable and responsible investing, or as it is often called, socially responsible investing (SRI), has grown as moreinvestors desire to have their investment dollars channeled towards investments that reflect their own personal ororganizational values. In the case of nonprofit organizations, mission-related investments have become increasinglyimportant in the last 10 years.

SRI is generally accomplished by investing in a company or municipality that is in line with an investor’s own morals orby avoiding investments in companies that violate an investor’s specific beliefs. In the case of nonprofits, investmentswould be made or avoided according to its mission, which should be reflected in its investment policy statement.Therefore, it’s key for responsible investing that nonprofit boards view investments through a mission-critical lens.

Having an Impact

As of 2012, there were $3.74 trillion of responsible investments in United States�an amount equal to the 2011 GDP ofCanada and Brazil combined and an increase of more than 42% since 2003. Further, of the total U.S. assets undermanagement that are tracked by Thompson Reuters Nelson, 11.3% are engaged in sustainable and responsible investingpractice.1 That means about $1 out of every $9 under management can be classified as a sustainable and responsibleinvestment.

Typical motives for using a socially responsible approach in investing range from concerns over the environment,corporate governance or social well-being. SRI then can be broken down into three main areas�environmental orsocietal/corporate governance concerns (ESG), shareholder advocacy and community investing.

Basing investments on ESG concerns is what will usually come to mind when one thinks about SRI. This typicallyemploys a screening strategy in which potential investments are screened for acceptability against a specific set ofcriteria where agreeable business activities are deemed suitable for investment and offensive activities are shunned.Common positive screens include a desire for businesses that enact environmentally friendly policies, practicesustainability or are highly regarded for their treatment of employees. The negative screens would disqualify firms forinvestment based on those criteria. For example, an investor might not invest in companies that are not sensitive to the

B

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environment. There also are other negative screens that seek to deny investment dollars to firms that derive revenuefrom the manufacture or sale of disagreeable products or services. Examples of this type of negative screen might beavoiding investing in companies that manufacture chemical weapons or companies that sell tobacco products.

ESG investing is a distinct and subjective methodology of screening potential investments. It is a strategy that is defined onlyby the constraints assigned by an investor’s unique value system. While this leads to numerous investment opportunitiesbeing labeled as SRI, many of those same investments wouldn’t be an acceptable SRI investment to all investors.Shareholder activism is another area of SRI, but is focused on acquiring shares in a company that might not otherwisemeet the screening criteria so that the investor can influence corporate actions though shareholder activities. Thismethod allows an investor to benefit from stock price appreciation and any dividends that a company offers whileworking to change the company’s policies. In individually held investments, the investor would file shareholderresolutions and actively lobby for desired changes to business practices. In the case of SRI funds, however, the fundmanager would file resolutions on behalf of all of the fund shareholders pursuant with the stated goal of the fund. Theresolutions will typically focus on transparency in political activities, human rights and sustainability reporting. Theyalso can focus on the composition of the board of directors and executive pay.

Another segment of SRI is community investing, which is a small, but growing portion of SRI investments. This strategygenerally involves investors deploying capital to explicit geographic regions, both domestic and foreign, where access tolow cost capital for the purpose of community service investment is not readily available. Some examples of the type ofactivities supported are food and clean water access, education, health care, infrastructure development, affordablehousing, access to jobs and environmentally focused initiatives.

Putting Mission-Related Investing in Action

Nonprofit investors can focus on one particular SRI strategy or many in combination in order to accomplish their overallgoal of providing incentives for certain behaviors and disincentives for other behaviors. Overall, most investors tend tofall into either the ESG or the activist shareholder category. However, when the two coincide about 88% of the totalcould be considered to be ESG investing and 41% could be considered shareholder activism. When adjusted for theoverlap, the ratios look more like 68% and 31%, respectively.

The channels through which investors choose to direct their investment capital also vary depending on investorpreference and/or makeup. Historically, the majority of assets involved in SRI have been managed using a separatelymanaged account (SMA). Using a SMA allows the investor to customize their SRI requirements to reflect their specificvalues. If a SMA is not a viable option, there are a variety of mutual funds and exchange-traded funds (ETFs) available tofit a variety of values and beliefs. However, mutual funds and ETFs do not offer the same level of customization availablein SMAs.

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The additional layer of SRI oversight is not without cost. The average expense ratio for SRI funds can vary versus theircounterparts. According to Morningstar, SRI funds in its database have a 1.18% average expense ratio compared to anaverage 1.26% for funds that are not classified as SRI. It is important to note, however, that the difference in expensesmay stem from the fact that SRI funds are usually underrepresented in some of the most costly categories. Mostly, SRIfunds will have higher expenses than their counterparts due to the higher internal costs of maintaining a screened fund;however, there are funds in the SRI universe that do have relatively low expense ratios, some of which can go well below1%. Finding the right fund that meets an investor’s SRI directive while contributing to the balanced performance of aportfolio can be achieved with a bit of diligence, information gathering and a clear purpose for the investment. There are abundant options in the marketplace for nonprofit investors that would like to incorporate some type of SRIinto their portfolio. It’s important to keep in mind that not all options will fit into the criteria of all investors. Completingadequate diligence before deciding when, how and into what to invest is critical to achieving the investment goals. Abroad and ongoing discussion amongst SRI investors will lead to a better understanding of the benefits of sustainableand responsible investing. A good place to start is a qualified investment consultant with experience in that very uniquefield. Further information on SRI can be found at:

The Forum for Sustainable and Responsible Investment�www.USSIF.org.The United Nations’ Principles for Responsible Investment �www.unpri.org.Social Funds�www.socialfunds.com.FS insight�www.fsinsight.org.Green Money Journal �www.greenmoneyjournal.com.1 “2012 Report on Sustainable and Responsible Investing Trends in the United States.” US-SIF Foundation. www USSIF.org.

William M. Courson is the president of Lancaster Pollard Investment Advisory Group in Columbus. He may bereached at [email protected].

Jason E. Terry, a 2013 summer associate with Lancaster Pollard, is a recent MBA graduate from the Universityof Chicago’s Booth School of Business. He may be reached at [email protected].

volume 46 issue 6 fall 2013€¦ · april 2014. please contact me ... right then, it occurred to me...

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