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Bridging the Gaps between Pharmacy and Finance

Posted By Administration, Thursday, March 3, 2016

By Kathy Schwartz, Solutions Owner, AVP Strategic Messaging, Craneware

Healthcare industry trends are squeezing provider margins through payment cuts and value-based reimbursement models. In response, these providers’ clinical teams are recognizing the need to collaborate and communicate more closely than ever before with their business office, finance and revenue cycle counterparts.
The pharmacy and its purchase history and formulary data can be low-hanging fruit for organizations looking to better manage cost, improve charge capture, and reduce compliance risk. But where to start? Both Heidi Larson, Pharm.D, Pharmacy Business Manager for Hennepin County Medical Center in Minneapolis and Tara Hunuscak, Business Director of Pharmacy Service for OhioHealth’s network of 11 hospitals and other health services in Ohio chose to partner with Craneware to help address these challenges.  
Hennepin knew that there were gaps and issues going undiscovered because of silos in their organization. “Like many organizations, pharmacy was viewed as separate from the hospital and clinics,” said Larson. “People didn’t communicate regularly and frequently across departments. Information was scattered, duplicative and unclear. The electronic health record (EHR) information needed ongoing review to be clean, current and complete.”

Prior to OhioHealth embarking on a major health information system (HIS) conversion for 7 of its hospitals, outpatient clinics and owned physician practices, it took the opportunity to ensure its revenue cycle and pharmacy charge processes were operating as a cohesive unit to minimize financial risks.  “We recognized the need to align critical business functions for optimal financial performance and risk mitigation as 55% of pharmacy charges were impacted by the HIS conversion changing from charge on dispense to charge on administration. Effective checks and balances for ongoing accuracy was paramount considering the complexities inherent to the pharmacy chargemaster and the revenue loss and/or costly penalties if billing units or HCPCS code assignments are incorrect,” said Hanuscak.

People, Process, and Technology

Both Hennepin and OhioHealth saw the need for technology investment to gain visibility across pharmacy and finance, prevent gaps and manage exceptions. Both organizations chose Craneware as the vendor to help them achieve their goals.

Hennepin brought together teams to validate information and educate physicians and staff about compliance and financial aspects of care. With everyone understanding their part in the larger process, Hennepin County Medical Center was able to identify and remove redundancies, obsolete NDCs, and other mismatches. “The Pharmacy and Therapeutics team are helping to educate about the impacts of formulary choice and the best practices during the occasional industry-wide drug shortages,” said Larson. “Building pharmaceuticals correctly into the EHR, and validating NDCs, billable units, and HCPCS helps to keep Hennepin current with coding changes and to ensure that compliance requirements are met ongoing.

OhioHealth hired a pharmacy charge analyst to serve as the primary end user of the Craneware software, followed by a pharmacist coordinator to focus on work requiring clinical expertise (e.g. diagnosis coding/ treatment indications; reconciling orders, and medical necessity.) Customized HIS training was provided for these individuals to ensure full access to relevant pharmacy, charge analysis and revenue cycle functionality. Finally an enterprise-wide, multidisciplinary advisory committee was formed to ensure successful HIS conversion in both short- and longer-term perspective, and to enhance net operating income amidst industry shift from volume to value based reimbursement.  

“With representation from pharmacy, revenue cycle, compliance, charge analysis, finance, coding, information services, internal audit and nursing, our group served as the decision making forum addressing pharmacy revenue items impacting the HIS build, testing and go-live. Among our objectives were to standardize price updates, align charge methods across hospitals, and automate data integrity process controls throughout the HIS conversion. This pharmacy led team complemented the system-wide focus on revenue integrity and helped build momentum for pre and post go-live initiatives,” said Hanuscak.

Craneware’s pharmacy validation software helped Hennepin and OhioHealth identify common issues with pharmacy reimbursements that often remain hidden and unaddressed:  

  • Incorrectly Coded Drugs
    In order to receive proper reimbursement, a hospital must enter the correct procedure and revenue codes for the drugs. Doing that completely and correctly is nearly impossible manually. Further complicating the task are constant changes to coding rules. For example, Medicare changes its pharmacy coding rules quarterly, and Medicare rules do not always align with commercial payor rules. Missing, inaccurate and incomplete coding is a common source of both missing revenue and compliance risk. Charge items missing HCPCS codes often go undetected and can pose a serious but hard-to-detect reimbursement risk.

  • Charge Capture Issues
    Volume reconciliation analytics – whether purchased from a vendor or built in-house – can shed light on often significant differences between the volume of drugs purchased and the volume of the same drugs billed. In some cases there are good reasons for discrepancies, but large discrepancies are usually traced to issues in charge capture. For example, a typographical error in an automated dispensing cabinet would go undetected without some form of automation to provide visibility into the missed or incorrect charges. A recent survey by Craneware identified that fewer than 5% of health systems can perform volume reconciliation. This is mostly because the way hospitals bill for drugs and how they dispense drugs is very different.

  • Newly Purchased Drugs Missing from the Formulary or Chargemaster
    With the volume of specialty and new drugs coming onto the market, it is imperative for providers to have visibility into these purchases. A provider must be able to quickly and accurately identify these drugs: descriptions, procedural codes, revenue codes and billable units of measure all ideally would be integrated into the chargemaster. Purchases not identified in the formulary build often lead to missed charges.

  • Incorrect Multipliers
    One complexity that is unique to pharmacy is the need to calculate the correct units of measure (UOM.) Medication dosages administered to patients are rarely the same units of measure allowable on claims. Because of this fact, pharmacy charge items require multipliers that translate dosage units to the correct number of billing units. The validation of these calculations can be difficult to perform manually, particularly across different clinical order systems and staffs. Unless a hospital has an automated method of tracking those multipliers, maintaining and applying them requires manual calculations that can result in over or underpayments. Using automation, Hennepin uncovered two ocular drugs that had mismatched purchases compared to volumes dispensed – accounting for $384,641 in missed charges that would have been lost revenue.

  • Inappropriate NDCs Captured on Claims
    Purchase and use of medications is an important aspect of managing costs, and accurate National Drug Codes (NDCs) improve cost management and claims processing. Often formularies are set up with a default NDC but gradually become out-of-sync with purchases, and NDCs reported on claims eventually do not match the drugs purchased and administered. What is purchased and used often isn’t what is billed, creating a substantial compliance risk as well as undermining the quality of data used for clinical efficacies in population health management. “Inaccurate documentation can lead to a double loss for your hospital. If you are not charging for the medications administered, you are losing revenue. And if you are not able to track accumulations in a split billing system, you end up purchasing on the more expensive wholesale acquisition cost (WAC) account,” notes Larson. “For 340B facilities like ours, there needs to be close management and communication on purchase practices and formulary changes.”

With frequent pricing changes and new drugs always being added to the market, it is increasingly difficult for provider organizations to stay on top of pharmacy charges, and many organizations wind up leaving significant revenue on the table. It’s never too late to start bringing together the right people, ensuring those people clearly understand the processes involved, and providing them with the tools and support needed to proactively identify and fix issues. While pharmacy has unique challenges, correctly aligning costs and reimbursement in pharmacy is an important first step for small hospitals to a larger health systems in navigating the transition away from fee-for-service into value-based reimbursement.

Tags:  AHVAP  Craneware  formulary data  Healthcare  Hennepin  history  hospitals  Kathy Schwartz  Minneapolis  OhioHealth  pharmacy  Tara Hunuscak 

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The Medbuy Clinical Risk Rating Tool

Posted By Administration, Thursday, November 12, 2015

What do the nuclear power, airline and healthcare industries have in common?  All operate in complex, high-risk environments in which accidents can be expected.  The first two industries have successfully avoided failures resulting in catastrophic consequences by adopting the principles and organizational behaviors of High Reliability Organizations (HROs). Healthcare organizations have only recently begun the HRO journey, a fundamental shift in business practice which is urgently needed.
This culture change is based on the 3 principles of anticipation and 2 principles of containment articulated by Weick and Sutcliffe:

  1.  Preoccupation with failure.  What is the potential threat?
  2. Sensitivity to operations.   What is the organization’s situational awareness?
  3. Reluctance to simplify.  What is another way we could look at this problem?
  4. Commitment to resilience.  What do we do to prevent this problem in future?
  5. Deference to expertise.   What are the best controls?

Adopting these HRO principles and integrating risk anticipation and risk containment requires assessment of 3 questions:

  1.  Severity—If this product fails, could it result in the imminent death of a patient?
  2. Detectability—If this product fails, what is the likelihood of detection?
  3. Frequency of occurrence—What is the likelihood that this product will fail?

At Medbuy, a healthcare group purchasing organization (GPO) in Canada, we took these questions and created an algorithm that draws on the principles of anticipation and containment to measure and subsequently manage risk in a consistent structured fashion (figure).

This tool always starts with the first fundamental concern:   Is there a risk that the product will cause death?  If so, this product is assigned the highest risk of 1.  If not, we then address the ability to detect failure.  If so, this product is assigned a risk of 2.  Finally, we assess frequency of failure, assigning a risk level from 2 to 5.

This tool, the Medbuy Clinical Risk Rating Tool, has been in use for nearly 2 years, and has shown an interrater reliability of 100% over dozens of sourcing initiatives involving thousands of products.  As a result of this tool, we are now able to manage risk in a more structured manner, as well as measure organizational performance more consistently.
We welcome the use of this tool by all healthcare purchasing organizations, to allow better risk management and a better understanding by all parties as to how to prepare for issues of resilience.

As with risk tools in other businesses, this algorithm provides the foundation in value analysis to better understand and manage our business.

Reference:
Weick K, Sutcliffe K.   Managing the unexpected: Resilient performance in an age of uncertainty. 2007.  San Francisco, CA: Jossey Bass.

 Attached Thumbnails:

Tags:  Brenda Lambert RN MBA  Christopher M.B. Fernandes MD  clinical  culutre  healthcare  organizations  risk  tool 

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Do Your Surgeons Know the Price of Their Products?

Posted By Administration, Monday, February 2, 2015

by:  Sonja L. Glass, RN, BSN -Value Analysis Facilitator for Surgical Services Wake Forest Baptist Health

There was interest at our institution from Administration and Surgical Faculty to provide supply cost per procedure.  The hypothesis was that if we educated our Faculty on the price of products at the line item level that it would change practice.

As a result of this interest a “Surgical Case Cost Tracker” was internally developed by our Director of Supply Chain. This report is generated weekly for each surgeon and shows a summary of all of their cases for the previous week. 

The report provides case overviews related to details of the case number, date, OR suite, OR room, and the primary procedure name as well as the in-room time, OR time cost, and average time of all the Surgeons that perform cases including their total supply cost.  The cost shown is true to the unit level and all surgeons understand that pricing presented is confidential to our institution.

There has been a tremendous amount of positive feedback from our Faculty!  It is apparent our Surgeons are reviewing reports closely as there are many suggestions and comments such as “this product should be removed from my pick list, I didn’t realize that this product was that expensive, could you find a less costly alternative, had I known this product was this expensive I wouldn’t have used it, and I see we are using two different brands of these products therefore, can we get rid of the more expensive one and use only the more cost efficient product.”  When questions are raised, the Director will address or forward the information to Value Analysis Facilitator or other team members to research, answer, and address the concerns.

Writing the program was complex and initially there were some UOM issues such as a box of product instead of an each unit was reported.   Generating and sending the reports daily was initially very time consuming, but the current process of sending weekly summaries is more manageable.

End result, our surgeons are more engaged in the product selection and there is a new awareness of the importance of case cost.  Eventually our reports will share the per case cost of their colleagues that perform the same procedure.

Tags:  ahvap  AHVAP Conference  cost  health care  Healthcare  hospital  Hospitals  interprofessional sharing  Leading Practice of Value Analysis  Leading Practice of Value Analysis Health care int  materials management  Protocol  quality  quality patient care  Supply Chain  supply chain management  Surgical Services  value analysis  value analysis certification  Value Analysis Coordinator  value analysis professionals 

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AHVAP and SMI CONTINUE COLLABORATION

Posted By Administration, Monday, December 15, 2014

Submitted By:  Cheri Berri-Lesh, Group Health Cooperative

How exciting is this?   AHVAP continues to participate in the Strategic Market Place Initiative work on standard RFI’s and Value Analysis best practices.  Mary Beth Potter, Cheri Berri Lesh and Dee Donatelli are active in both groups along side industry partners and suppliers.

Dee Donatelli and Mary Beth Lang presented a collaboration of work from AHVAP and SMI at a breakout session at the October SMI Conference where feedback was shared and discussed.

The work will continue well into 2015 so keep an eye out for this information as it will be shared with AHVAP members and the board before finalization.

 

Tags:  AHVAP Conference  cost  Healthcare  hospital  interprofessional sharing  Leading Practice of Value Analysis  materials management  Protocol  quality  quality patient care  Supply Chain  Surgical Services  value analysis certification  Value Analysis Coordinator  value analysis professionals 

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AWESOME 2014 AHVAP CONFERENCE!

Posted By Administration, Friday, October 24, 2014

By:  Susan A. Toomey, CMRP Value Analysis Coordinator 

What an exciting AHVAP Conference (Oct. 15-17) in Tampa, FL this year. The Value Analysis attendees received excellent key information revolving around the collaboration and pathway to success of Value Analysis.  Many great speakers included Wini Hayes, Dr. Jimmy Chung, Kathy Chauvin, Michael Neely,Barbara Strain, Courtney Bohman, Kevin Valis, Wanda Lane and to top it if off with Future Best Practices In Value Analysis by Dennis Orthman, Mary Potter & Cheri Berri Lesh.  In addition, the AHVAP conference sponsors have expanded,   collaborated with AHVAP attendees, and have changed the traditional vendor business relationships into valuable sponsor partnerships.   

If you didn't get the opportunity to attend the 2014 AHVAP Conference, please plan on attending the AHVAP Conference next year as AHVAP does an awesome job in providing education, networking, and standardization opportunities to increase the "Value" of the Value Analysis Professional!   

Tags:  ahvap  AHVAP Conference  alue analysis  alue analysis certification  alue analysis professionals  aterials Management  Barbara Strain  cost  eading Practice of Value Analysis  ealth care  ealthcare interprofessional  HAI  haring  health care  Healthcare  hospital  Hospital Acquired Infections  Hospitals  HVAP Conference  implants  interprofessional sharing  Leading Practice of Value Analysis  Leading Practice of Value Analysis Health care int  materials management  ost  owens and minor  Practice  Protocol  quality  quality patient care  recalls  resources  rotocol  Supply Chain  supply chain management  Surgical Services  uality  uality patient care  upply Chain  value analysis  Value Analysis Coordinator  value analysis professionals  Welcome 

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VALUE ANALYSIS AND NATIONAL HEALTHCARE SUPPLY CHAIN WEEK

Posted By Administration, Monday, October 6, 2014

By: Julie Ware RN, BSN, CMRP- Implementation Manager

 

Each October, our nation’s healthcare industry recognizes healthcare supply chain professionals for their outstanding contributions to healthcare and the supply chain process.  This year, October 5 – 11 is National Healthcare Supply Chain Week and AHRMM, our collaborative partner, has chosen “Healthcare Supply Chain:  Integration Through Collaboration” as the celebration theme.   In most organizations, value analysis resides within the supply chain department and so many value analysis professionals will celebrate along with colleagues.

 

As I think about what we do every day in our world of value analysis and how we collaborate and connect with others, I really just want to say THANK YOU. I want to help honor you as our profession celebrates along with other supply chain professionals during National Healthcare Supply Chain Week. We have had another incredibly amazing year in healthcare supply chain and in AHVAP! The contributions you have made in your organizations through your value analysis processes are astounding.  Astounding, and yet humbling when you think about what it really means:  the impact you have made in the lives of people!  People, patients – those who come to your organization most often not out of choice.  I hope you feel appreciated for the very important role you play in their lives and in the delivery of high-quality, financially prudent patient care! 

 

I believe the ongoing changes in healthcare will provide us an even larger platform to “own” and collaborate with others in leading the redesign and efforts to improve patient health and organizational clinical and financial performance.  So our work never ends…. the journey continues. 

 

But for this week, for this month, smile a little bigger, stand a little taller, and KNOW you are making a difference TODAY in our world! 

Tags:  ahvap  AHVAP Conference  cost  health care  Healthcare  hospital  interprofessional sharing  Leading Practice of Value Analysis  materials management  Protocol  quality  quality patient care  Supply Chain  Surgical Services  value analysis  value analysis certification  Value Analysis Coordinator  value analysis professionals 

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AHVAP Panel Discussion - How Value Analysis is working for us! - Sept. 11th at 3:00 -4:300 ET

Posted By Susan A. Toomey, Lehigh Valley Health Network, Tuesday, September 23, 2014

By:  Mary E. (Beth) Potter, RN, BS, Director of Clinical Value Analysis                          Unity Point Health

If you were not one of the 42 members on the call, you missed a great presentation hosted by Hayes and presented by Kumbia Lewis, AHVAP Central Region Director, Dennis Mullins, MBA, CMRP Corporate Director, Supply Chain Integration, and Dr. Alan Weier, Medical Director of the emergency department at Baylor Regional Medical Center Plano, member of the system’s ED Council and member of the Baylor Quality Alliance ED sub-committee.

The Baylor Health Care System, based in Dallas, Texas and Scott & White Healthcare, based in Temple, Texas, formed a new organization in 2013 that combined the strengths of their two nationally recognized health systems. With 36,000 employees, 6,000 affiliated physicians, 500 patient care sites, 46 hospitals, 5216 licensed beds, and $5.8 Billion total net operating revenue, you can imagine the challenges Dr. Weier, Dennis, and Kumbia faced with the Product Line Standardization project.

Dr. Weier provided an overview of how he collaborated with the Value Analysis Team and Supply Chain Services to realize ED standardization while Dennis Mullins and Kumbia Lewis shared Baylor’s overview with Scott and White’s Value Analysis review including the decision steps that are navigated through the Supply Chain continuum.  The one statement that resonated for me was “If you are serious about hitting goals, you must have Administrative support.”

Cheri Berri-Lesh, AHVAP Western Region Director served as moderator for this very informative presentation.  A common theme in requests from members is for practical examples for application of Value Analysis processes.  This presentation certainly met that expectation.  Our thanks to Dr. Weier, Dennis, and Kumbia for sharing their experiences and lessons learned.

SAVE THE DATE: Next Regional Meeting is scheduled for December 11, 2:00-3:00 Central.

Tags:  ahvap  AHVAP Conference  cost  health care  Healthcare  interprofessional sharing  materials management  Protocol  quality  quality patient care  value analysis  value analysis certification  Value Analysis Coordinator  value analysis professionals 

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Is Your Value Analysis Program a Bridge or a Rope?

Posted By Susan A. Toomey, Lehigh Valley Health Network, Tuesday, June 24, 2014
Updated: Tuesday, June 24, 2014
By:  Wanda Lane
Clinical Value Analysis Coordinator


How many times have you heard “why should we bother evaluating a different product? Our opinions don’t matter anyway; it’s all about the dollar.” Or “why are we considering more products to solve a practice problem, can’t nurses just scrub the hub?” Maybe “clinically unacceptable or just not pretty enough…clinicians need to learn about costs.” If you have heard comments like these and others, your Value Analysis program probably feels less like a bridge and more like a rope in the healthcare tug of war. 

Bridging the gap between clinical and materials management worlds, Value Analysis professionals provide information to both sides that would otherwise be left open for interpretation. This unique understanding of the logistical and contract obligation language, coupled with clinical knowledge, enables the VA professional to communicate clearly with both sides of the equation. Patient care delivery and product features motivate clinicians, sometimes frustrating Materials Managers who are cost focused. Value Analysts walk freely in both worlds.

Value Analysts also step into the crossfire when the two worlds collide. Dwindling revenue streams, increasing costs and sicker patients put hospitals in a position of financial strain, forcing changes in practice and heightened cost awareness.  These changes frustrate clinicians and materials staff alike, but Value Analysis professionals can thrive in this environment if they follow a few simple rules.

1.      Acknowledge your personal internal conflict. Many VA professionals are clinicians, gifted with a unique perspective. We empathize with our clinical peers and understand the priority on patient care in a personal way versus an abstract concept. Yet, because we understand the financial side of the equation, we are obligated to hold clinicians more accountable for their fiscal awareness.

2.      Present both sides of the arguments fearlessly. Hospitals that survive in this economic environment are making adjustments. VA professionals who openly share the good, bad and ugly of every situation garner trust from both sides, thus improving cooperation.

3.      Use humor. Learn to laugh with, and at the situation. Listening to clinicians argue vehemently that the facility must pay six figures for a product because it is easier to use, while at the same time complaining about the need for more nurses is amusing, frustrating, but amusing. Watching a supply distribution technician explain politely that the facility does not have an in-house stock supply of that “blue clippie thing” can be funny. The situation may not be funny, but the behaviors are. It is all a matter of perspective.

4.      Accept what you cannot control. Clinicians will find work-arounds to the most robust processes. Materials managers will block excellent clinical initiatives because of hard costs. Value Analysis’ role is to provide information to both sides objectively and clearly. Neutrality enhances fairness and trust, elevating your credibility and value to the facility.

Healthcare is fraught with challenges, while also ripe with opportunity. Understanding both sides of the equation positions the Value Analysis professional as the go-to person. Use your unique perspective to advocate for the ultimate customer- the patient!

If you identify with this article, please leave a comment.

Tags:  AHVAP  Healthcare  Hospitals  materials management  Practice  Protocol  Supply Chain  Value Analysis  Wanda Lane 

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AHVAP Webinar: The Nuts and Bolts of Recalls with a Focus on Class One Recalls with Implants

Posted By Administration, Monday, June 16, 2014

If you missed the latest regional meeting on June 12th, you missed an excellent opportunity to learn about a well-structured recall process.  Sonja Glass, RN, BSN, Value Analysis Coordinator for Surgical Services, and AHVAP Eastern Director, and Carolyn Barnette, JD, Insurance and Risk Manager from Wake Forest Baptist Medical Center, provided a detailed overview of their Recall Process.  Following introductions by Cheri Berri-Lesh, Value Analysis Coordinator at Group Health Cooperative and Western Region Director, Sonja opened the session by defining the types of recalls, the tools used to track them, and the staff members to be included on the Recall team.  Next, Carolyn presented information about the process, legal requirements and rationale then offered examples of practical applications.  An effective process is important not only to the patients we serve but also effectively minimizes exposure to liability for your organization.  In light of the numerous recalls in recent years and heightened public awareness, it is critically important to establish a well-defined process. 

Following the presentation, participants had the opportunity to ask questions and share tips.  In response to requests for copies of the slide presentation, Cheri advised it will be posted on the AHVAP website along with a copy of the Recall Checklist.  There was also a request for a copy of the job description for the Recall Coordinator. There is a possibility the job description for the Recall Coordinator can be shared. Sonja offered to discuss the role with participants.  Sonja’s contact information is available to AHVAP members in the Member Directory on the AHVAP Website.  Our thanks to Sonja and Carolyn for the time they invested to share their expertise with us.  It was much appreciated!

Weren’t able to attend?  The slides and shared documents will be posted on the AHVAP website for members to access. 

Save the Date: The next quarterly call will be September 11, 2014 at 3 pm EST.

Tags:  AHVAP  healthcare  hospital  implants  recalls  resources  Surgical Services  value analysis  Value Analysis Coordinator 

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