Revenue Recovery for Hospitals During the Pandemic

September 9, 2020


Revenue recovery for hospitals is always a top priority from the CFO on down and especially as COVID-19 continues to impact the bottom line. Some healthcare workers are working overtime while other hospital staff face layoffs. Reimbursements are expected but as determined by Medicare rates and transfer DRG strategies are getting more complex. We take a look at what’s been going on in the past couple of months.

COVID-19–related reimbursements expected. The Kaiser Family Foundation reported last Spring that “administration officials have said that hospitals would get reimbursed at Medicare rates, which are substantially lower than prices paid by private insurers.” The administration has not provided any cost estimates for this new policy other than to say that the funding will come from the $100B in the CARES Act. And that “hospital reimbursement for uninsured COVID-19 hospitalizations will range from nearly $14B to $42B accounting for a significant portion of the $100B slated for hospitals in the CARES Act.”

As of this July, the CDC shows a number of southern states still with high inpatient beds occupied by COVID-19 patients. Arizona shows 25% or more of beds occupied were due to COVID-19. Texas had 16.8%. Florida had 16%. Below is a map showing the impact of COVID-19 on hospital beds occupied in the US. It is an interactive map with data for each state shown upon hovering at the CDC page.

Hospitals are laying off staff. “Reports of hospitals reducing their workforce and reducing physician compensation continue to emerge as organizations attempt to overcome financial difficulties caused by COVID-19.” This news in a recent article at “RevCycle Intelligence” also quotes Utah-based Intermountain Healthcare’s chief physician executive Mark Briesacher, MD, noting that “Some staff are seeing extremely high demand because of COVID-19 but other physicians and APPs on work relative value unit (wRVU) contracts are seeing a reduction in clinical work between 30 and 50 percent.” This has been the experience of most of the nation’s hospitals as the same story goes on to note. And though mostly front-line nursing workers are getting hit with furloughs even financial team positions are feeling the impact. Johns Hopkins University (JHU), the umbrella organization which owns 50% of the Johns Hopkins Health System, announced in May the implementation of various cost-cutting measures including salary freezes for all staff and faculty.

Claim denial recovery can be increased using a new COVID-19 “condition code.” “ICD-10 Monitor” is advising that “A best practice would be to perform a review of some of your COVID-19–related claims before sending them out to ensure that the condition code is in place on the claim. Also monitor your claim denials closely to see if there are denied or returned claims due to a missing condition code.” This is because “without codes to specifically indicate COVID-19 (including those cases for which services were provided but the patient ultimately tested negative) the ability of payers to trigger special handling of institutional claims for COVID-19–related services has been significantly limited.”

Transfer DRG recovery efforts are complicated during the pandemic. The “Health Affairs” editors have done some thinking about COVID-19–related transfers from hospitals to designated nursing homes. They recommend first designating specific nursing facilities as “COVID-19 Skilled Care Centers,” then creating a “COVID-19 Capability Scorecard” that will help determine a share in transfer DRGs. How would it work? The measures used to determine capabilities would include “share in COVID-adjacent DRGs, share short-stay, total beds, nursing hours per patient-day and overall quality rating.” (“DRGs” stands for “diagnosis related groups” — Medicare’s payment categories.) The authors explain that the first two measures, the “share” measures, are estimated using Medicare claims data for 2016 and the remaining measures are constructed using current data from Medicare’s Nursing Home Compare database. There would be other parameters factored in as well, including standardizing “each measure by metro area” and creating a “weighted average score by assigning a 25 percent weight to share short-stay and evenly allocating the remaining 75 percent across the other four measures.” This sounds like a good way to free up hospital beds and avoid the problem of mixing COVID-19 patients with other nursing home patients but would it work out well for hospitals under Medicare post-acute transfer rules?

In Florida, exactly the opposite moves for patients are paying off for hospitals. “Tampa Bay–area hospitals are acting as nursing care facilities now that some positive COVID-19 residents are being evacuated from nursing homes and transferred to those hospitals and they can expect to be paid more for that service” explains the writers of an article in the “Tampa Bay Business Journal.” The article further explains that “Hospitals that accept transfers of COVID-19 patients from nursing homes can expect to get paid more during the pandemic through the federal Centers for Medicare and Medicaid Services. This allows hospitals to establish ‘swing beds’ and bill under a Medicare rate usually applied to skilled nursing facilities.”

It looks like continued flexibility and creative thinking are in order for revenue recovery for hospitals to pay off in these uncertain times. We will keep you posted on the latest tactics, strategies and thought leader advice for hospital revenue recovery throughout the year.

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