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Simplified Cost Analysis Wisconsin. George H.W. “Gerry” Christie Health Policy Analysts 114 Dewberry Lane Syracuse, NY 13219 ghchristie@att.net. Agenda. Brief Background and Philosophy of the Cost Analysis Process The Cost Report A Time Study

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Simplified Cost Analysis Wisconsin


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    1. Simplified Cost AnalysisWisconsin

      George H.W. “Gerry” Christie Health Policy Analysts 114 Dewberry Lane Syracuse, NY 13219 ghchristie@att.net
    2. Agenda

      Brief Background and Philosophy of the Cost Analysis Process The Cost Report A Time Study CPT Codes, Relative Value Systems and Their Relevance to Cost Analysis
    3. Agenda

      Completing The Clinical Cost Center Form Completing The Laboratory Form Establishing Fees that Reflect Costs Ensuring the Program Meets the Operating Budget Questions, Answers and Discussion
    4. OBJECTIVES Explain the methodology for doing the simplified cost analysis Demonstrate how to correctly enter fiscal data onto the cost report Complete a time study for staff working in family planning
    5. OBJECTIVES Identify CPT codes and relative value scales pertinent to family planning services Establish fees that will cover the costs based on the cost analysis
    6. Brief Background and Philosophy of the Cost Analysis Process
    7. Why Do A Cost Analysis? Individual programs need to know the cost of providing services. To assist in negotiating rates with various rate payers. It is a good management tool and business practice.
    8. Knowing What It Costs to Provide a Service Is an Important Business Practice The cost analysis provides the knowledge needed to develop, implement and analyze efficiency in the program; Helps control costs.
    9. Fees Based on the Cost Analysis Should: Reflect the cost of operation; Be competitive to the local market.
    10. The Cost Analysis What do you want to know? The total cost to the program for putting each Clinical and laboratory service provided “out the door”. We want to know the “unbundled costs.”
    11. The Cost Analysis To complete the cost analysis you need: Total expenditures (cash or accrual) for the Cost Analysis period (calendar year, fiscal year). This will include in-kind and volunteer contributions. Utilization data for every procedure and lab service provided by the program for the same time frame.
    12. The Simplified Cost Analysis Methodology

    13. The Cost Report This was developed to assist agencies in distributing costs (expenses) associated with the provision of the services in a family planning program.
    14. The Cost Report Label the form with your agency name. Indicate the time period for the cost data provided. Use the most recent data possible. (View this on the computer)
    15. The Cost Report Begin by entering the total costs for your facility onto the numbered lines under each Cost Category. This can be for your total program. adjustments will be made for those costs are associated with the provision of family planning care.
    16. The Cost Report Alternatively, you can enter only the expenditures for the family planning program in the total cost column. The form will automatically calculate a total for each row and each category.
    17. The Cost Report Rates charged for each service should reflect all expenditures. They must include; direct, indirect and In-kind costs. If you have additional cost subcategories, use the blank rows under the relevant lettered category.
    18. Direct Costs Those expenses associated with providing a procedure or service. Personnel. Supplies. Materials. Other.
    19. Indirect Costs Those expenses incurred to support direct care. Administration Housekeeping Rent Security Other
    20. In-Kind Expenses Be sure to include the value of volunteers, donated goods, and donated services that are used by the agency. Provided to the agency by some other entity or individual. These are not paid for by the family planning program but are used in providing services.
    21. The Cost Report Enter all the cost data for your facility onto the numbered lines under each Cost Category. F. OTHER HEALTH SERVICES: G. OTHER: H. EMPLOYEE HEALTH & WELFARE: I. FACILITY COSTS: A. ADMINISTRATIVE: B. PATIENT TRANSPORTATION: C. MEDICAL: D. LABORATORY: E. PHARMACY:
    22. A. ADMINISTRATIVE: This includes the general administrative activities such as project management, policy and procedure development, evaluation, training, billing, and word processing that is not directly attributable to the health care services. May also include indirect costs allocated to the family planning program.
    23. B. PATIENT TRANSPORTATION: The provision of transportation services to clients. May include bus tokens and taxis.
    24. C. MEDICAL: The provision of "hands-on" medical services by physicians, mid-level practitioners, and nurses in delivering a family planning method to a patient. This includes the history, physical exam, determination of the method, the diagnosis and treatment of related problems, and initial patient education and “counseling”.
    25. D. LABORATORY: Costs associated with laboratory services provided by the family planning program to clients for on-site laboratory testing such as pregnancy tests, dipstick urines, wet mounts, etc. Also the activities associated with specimen collection and preparation for referral to outside reference laboratories.
    26. E. PHARMACY: The activities associated with purchasing, storing, and dispensing contraceptives and other medications.
    27. F. OTHER HEALTH SERVICES: Activities associated with health education, outreach and specialized counseling for the family planning program
    28. G. OTHER: All other activities related to the family planning program including family planning education, medical records expenses, insurance expenses, electronic health records, and any other expenses that has not been accounted for in earlier categories. (NOT Fringe Benefits or Facility costs)
    29. H. EMPLOYEE HEALTH & WELFARE: Fringe benefit expenses including FICA Tax, Workman's Compensation, Unemployment Insurance, Insurance, Pension, and other expenses.
    30. I. FACILITY COSTS: Costs related to the purchase/rent and maintenance of the facility. Costsinclude housekeeping and maintenance (including personnel); rent or mortgage payments; minor repairs on equipment; security (of both staff and the facility); supplies; utilities; depreciation and more.
    31. Allocation of Staff to the Family Planning Program The First Rule: Allocate each and every person who has worked in family planning during the reporting period into one or more of the cost center(s).
    32. Allocation of Staff to the Family Planning Program The Second Rule: Allocate each individual into as many cost centers as are appropriate (the number in which they have provided some level of family planning activity).
    33. Allocation of Staff to the Family Planning Program The best way to accomplish staff allocation is through a time study. Ideally, the time study should be done during two different points of time during the year. These should represent “typical” time periods.
    34. Allocation of StaffThe Time Study The file “Total Time Study.xls” has a simple time study that can be used. See also “Time Study allocation instructions-V4-10-11.pdf”. See sample on the Computer.
    35. Allocation of Staff to the Family Planning Program Remember to allocate those individuals that volunteer in your program or are donated by some other agency. If these individuals were not available you would: a) have to pay for those services on the open market or, b) have to do without their services.
    36. Allocation of Donated Goods and Services Includes personnel that are donated or volunteers that provide services to the agency. Be sure to include fringe benefits in determining the “fair market value”.
    37. Allocation of Donated Goods and Services Other donated items include: Equipment (or the depreciation on donated equipment), Supplies (contraceptive, educational), laboratory services, medical or clinical goods, office space (rent, utilities, janitorial).
    38. Discussion
    39. BREAK TIME
    40. LUNCH TIME!
    41. CPT Codes, Relative Value Systems and Their Relevance to Cost Analysis

    42. CPT Codes Current Procedure Terminology (CPT) of the American Medical Association is a listing of descriptive terms and five digit numeric identifying codes and modifiers for reporting medical services.
    43. Consistent Definitions Of Visit Types The goal is to establish a list of visit types which define your family planning services in terms that medical PAYORS recognize and accept. Definitions of these visit types will be governed by CPT codes, not traditional Title X definitions.
    44. CPT Codes If the program uses the same codes for other specialties (primary care, etc.), they must be able to identify when the code is used for family planning.
    45. Relative Values

      Relative Values Indicate How Much One Procedure Is “Worth” in Relation to Another Procedure .
    46. Resource Based Relative Value Scale (RBRVS)Consists of Three Elements Physician (Clinician) work Practices expenses (net of malpractice expenses) Cost of malpracticeinsurance
    47. Resource Based Relative Value Scale (RBRVS) These have been established over time and are updated on an annual basis. This Cost Analysis uses “Fully Transitioned, Non-Facility” RBRVS.
    48. Geographic Practice Cost Indices (GPCI)

      The Geographic Adjustment Factors Are Based Upon an Analysis of Fees in Various Areas And Government Studies of Variations in Economic Factors Among Localities. (These are also in the folder “Relative Values”)
    49. Geographic Practice Cost Indices (GPCI)

      The Sum of the Geographically Adjusted Components Is Multiplied by a Conversion Factor to Determine Payment for Medicare. The same factor can be used as the “constant” for the cost analysis.
    50. The Conversion FactorBrief Review of the“Procedures” Tab

    51. CPT CodesCross walk to traditional Family Planning Services Initial ……….............…..…99203/9938x Annual .....……..............…99214/9939x Intermediate/Problem…….99213 Brief ……............………....99212 Supply*…...............……….99211 Counseling* ...............……9940x
    52. Relative Values

      Relative Values Indicate How Much One Procedure Is “Worth” in Relation to Another Procedure .
    53. Resource Based Relative Value Scale (RBRVS)Consists of Three Elements Physician (Clinician) work Practices expenses (net of malpractice expenses) Cost of malpracticeinsurance
    54. Resource Based Relative Value Scale (RBRVS) These have been established over time and are updated on an annual basis. This Cost Analysis uses “Fully Transitioned, Non-Facility” RBRVS.
    55. Geographic Practice Cost Indices (GPCI)

      The Geographic Adjustment Factors Are Based Upon an Analysis of Fees in Various Areas And Government Studies of Variations in Economic Factors Among Localities. (These are also in the folder “Relative Values”)
    56. Geographic Practice Cost Indices (GPCI)

      The Sum of the Geographically Adjusted Components Is Multiplied by a Conversion Factor to Determine Payment for Medicare. The same factor can be used as the “constant” for the cost analysis.
    57. The Conversion FactorBrief Review of the“Procedures” Tab

    58. Completion of the Clinical Form The relative value for each of the CPT codes is inserted automatically from the “procedures” spreadsheet onto the Clinical Form in Column D. The cost for the medical services is brought forward from the cost report.
    59. The Cost Analysis The utilization information will be found in reports from your Clinic Visit Record, Patient Management Program, lab logs, pharmacy logs, and other internal documents. (Think where you might find needed information.)
    60. Completion of the Clinical Form Complete the utilization column on the Clinical Form using data for the same time frame as the fiscal data on the Cost Report. Count CPT Codes that are accompanied by an ICD-9 V25 code as the primary or secondary diagnosis. Complete the utilization for lab services provided In-house.
    61. Completion of the Clinical Form Be sure to count every service and in house lab you provided, including additional services at a visit (i.e. shot for Depo). The spreadsheet automatically calculates the rest of the columns. Agencies can estimate the potential costs in the coming year by adding a percent in the “COLA/Margin”.
    62. Completion of the Clinical Form If you do not have CPT code information, the following cross-walk from traditional FP visits may be used. Other services (IUD insertion or removal, diaphragm fitting, wart treatment, etc.) are clear cut and can be documented even if the program does not currently use CPT codes.
    63. View Completion of the Clinical Form
    64. Completion of the Outside Laboratory Form

    65. Completion of the Outside Lab Form Costs associated with laboratory services provided by the family planning program to clients for tests sent to an outside reference laboratory. Tests in this category are limited to those that are a direct part of the family planning program.
    66. Completion of the Outside Lab Form Most relative values are available through the Clinical Diagnostic Laboratory Fee Schedule. The “National Limit” value is used as the relative value for labs. When no “National Limit” is available, the rate for the state is used.
    67. Completion of the Outside Lab Form Complete the utilization column on the Outside Lab form using data for the same time frame as the fiscal data on the Cost Report. After you enter an utilization number on Column “C”, go to the corresponding cell on Column “I” and enter the cost, or average cost, you paid to the reference lab for that test last year.
    68. Completion of the Outside Lab Form If you do not have HCPCS code information or price information, it should be available on your lab reports or from special reports from your reference lab(s).
    69. Discussion
    70. Development of A Fee Scale The fee scale you establish will be based on the outcome of the cost analysis. It must generate sufficient income, along with other sources of revenue, to maintain the program.
    71. Establishing Fees Fees represent the amount to be charged clients and third party payers responsible for their care. The fee schedule should list EVERY item that will result in a charge.
    72. Establishing Fees You need to examine why it is costing so much to provide the service. This is a time to review efficiencies that can be implemented in the program and to ask critical questions. What happens if the fees that are established by the cost analysis are not affordable for the program clients?
    73. Establishing Fees What are the costs of comparable services in your area? Are you competitive? Do you offer more than, the same, or fewer services as other providers? Can you afford to continue offering these services? What “discounts”are you offering and when?
    74. Analyzing Breakeven Points Look at ALL sources of income. Are you maximizing third party income? How much can you set aside? What adjustments will you have to make?
    75. Questions and Discussion
    76. Adjourn

      Thank you for attending!