Recently, I was asked if there were any best practices or documents highlighting the potential impact of healthcare reform on echo labs—an excellent, forward-thinking question. Although healthcare reform and the impact it may have on echocardiography labs is largely unknown, there are several details we do know that can assist us in forecasting what the future may hold. First of all, cardiology is a target because of the costs associated with the disease process—total medical expenditures for cardiovascular disease are estimated at $503 billion in 2010 ($324 billion for direct costs and $179 billion for indirect costs). Imaging is targeted, in part, due to new imaging capabilities/technologies, which can promote a layering effect in cardiovascular imaging that warrants a reduction in utilization. With that in mind, let’s review a few other key facts and postulate the short term effects.
Insurance companies are the first to bear the consequences of healthcare reform. The timeline for healthcare reform implementation is incremental; however, a few major elements begin in 2010, with substantial changes in 2014 (Healthcare Reform). In 2010, due to caps on indirect costs, expanded coverage for young adults (up to 26), and new insurance rules (restrictions on annual limits, ban on rescinding coverage, and lifetime caps), we may see an increase in premiums, lack of coverage, and small businesses dropping coverage. As a result (short-term), volume within the echo lab may plateau, with projected volume growth lower than in previous years.
Payer mix is shifting with growing older population. Payer mix refers to the office/hospital percentage of patients with managed care, Medicare/Medicaid, and self pay (uninsured). For example, a facility may average 28 cents on the dollar for managed care, 13 cents on the dollar for Medicare, 5 cents on the dollar for Medicaid, and nothing for the uninsured. Let’s say that today, the facility’s patients are 50% managed care, 48% Medicare/Medicaid, and 2% uninsured, but tomorrow there is 2% shift from managed care to Medicare/Medicaid. The financial impact would be significant. Bottom line: regardless of the current percentage ratio, any increase in Medicare/Medicaid implies a significant reduction in revenue.
The recession and economic downturn have stalled or reduced volumes. Although the recession was reported to have ended July 2009 (pit of despair), many states are still feeling the effects of high unemployment rates, which can impact volumes within healthcare and in the echo lab. The overall volume may be small, but essentially a percentage of the managed care population who had jobs and lost them have now become uninsured. In the short-term, the impact can increase the percentage of self-pay patients seen in hospital settings.
There is always good news and bad news, but with healthcare reform the news is just challenging. Volumes in the short term may be softer than in previous years; however, in the long-term, there will be growth, with an increase in insured patients. Overall reimbursement will likely mirror that of Medicare, with the newly insured paying rates far lower than the insured of the past. Therefore, with sustained or increased volume growth and reduced reimbursement, the focus should be on cost control. Variable areas of cost control include efficiency, utilization, and labor. In order to improve efficiencies, the entire process should be analyzed for gaps, from registration to report turn-around time and billing. Improved efficiency may involve hiring a third party company to precertify patients, thereby reducing the amount of time and energy physicians and staff spend on precertification. Examining how and why studies have always been done can also identify areas for improved efficiency. For example, some facilities have four people in the room throughout a stress echo test (echo tech, RN, NP/physician, and stress tech); there may be an opportunity to improve efficiency. Currently, utilization is being reviewed on an inpatient basis by hospitals due the DRG payment structure. CMS plans to roll out outpatient DRGs which will eventually have an impact on clinics and the outpatient diagnostic volume. However, as long as productivity and staffing is optimized for core volume, labor should be the last area to look to for improvement. There are staffing models that look to staffing up as opposed to staffing down. Studies have shown that staff members prefer to be called in when needed as opposed to showing up and being sent home. Additionally, the staffing-up model would utilize more PRN and/or part-time staff, which may also be a financial benefit. Obviously, we have many challenges ahead of us, but as long as we are prepared the impact should be minimized.
Please visit the ASE Website, www.asecho.org , to read about the Sonographer Volunteer of the Month—Rita Novello.