Best Practices in Financial Management

1. Best Practices in Financial Management Presented by: Teri U. Guidi, MBA, FAAMA President Oncology Management Consulting Group

2. 3-Part Best Practice Series • Best practices in purchasing • Best practices in operations • Best practices in financial management

3. Why Is the Best Practice Series Important? • To determine if we can reduce costs • To determine if resources are used wisely • To review and identify steps in the revenue cycle process where improvements can be made • To improve financial stability in a complex healthcare market • To improve patient care

4. Target Departments of Best Practice Series • Finance and accounting • Payer contracts • Purchasing/procurement • Pharmacy • Oncology/infusion services

5. Program Overview • Formulary controls • Financial modeling • Accounting and reporting • Fiscal responsibility

6. Formulary Controls • Adding new products, removing or replacing existing products • Clinical criteria • FDA, Compendia • Clinical acceptance (pharmacy, clinicians) • Financial criteria • Cost to acquire, handle • Reimbursement (drug and administration) • Operational considerations • Special handling • Impact on service volumes • Indirect impact considerations

7. Formulary Controls cont. • Process • Therapeutics committee • Policy and procedure • Pharmacy • Use • Billing • Communication • “Fall out”

8. Financial Modeling • Top volume products • Top dollar products • Bottom dollar products • Regimen, not just units dispensed • Administration services

9. Item Description CPT/HCPCS Code Bill APC # 2005 Units Units Pmt Cycles APC Pmts Infusion - Chemo 96410 1 hour 1 $168.29 6 $1,009.74 Infusion - Non-chemo 90780 1 hour 1 $111.80 6 $670.80 Normal Saline 800 cc per cycle J7050 250 cc 4 $0.00 6 $0.00 Dexamethasone 10 mg per cycle J1100 1 mg 10 $0.00 6 $0.00 Granisitron 1 mg per cycle J1626 100 mcg 1 $16.20 6 $97.20 Lorazepam 2 mg per cycle J2060 2 mg 1 $0.00 6 $0.00 Cyclophosphamide 1500 mg per cycle J9070 100 mg 15 $2.77 6 $249.30 Doxorubicin 100 mg per cycle J9000 10 mg 10 $4.69 6 $281.40 Vincristine 2 mg per cycle J9370 1 mg 2 $0.00 6 $0.00 Total for Regimen $2,308.44 Examples* *All dollar figures except Medicare reimbursement rates are fictitious

10. Examples* *All dollar figures except Medicare reimbursement rates are fictitious

11. Financial Modeling • Cost and reimbursement • Payer differences

12. Examples* *All dollar figures except Medicare reimbursement rates are fictitious

13. Payer A Payer B Hypothetical Cost Hypothetical Charge APC Pmt Pmt Item Description per per 64% 85% per Unit Regimen per Unit Regimen Infusion - Chemo 65.00 390.00 130.00 780.00 499.20 663.00 $1,009.74 Infusion - Non-chemo 25.00 150.00 50.00 300.00 192.00 255.00 $670.80 Normal Saline 0.50 12.00 0.63 15.00 9.60 12.75 $0.00 Dexamethasone 0.01 0.60 0.01 0.75 0.48 0.64 $0.00 Granisitron 15.00 90.00 18.75 112.50 72.00 95.63 $97.20 Lorazepam 3.00 18.00 3.75 22.50 14.40 19.13 $0.00 Cyclophosphamide 5.00 450.00 6.25 562.50 360.00 478.13 $249.30 Doxorubicin 7.00 420.00 8.75 525.00 336.00 446.25 $281.40 Vincristine 32.00 384.00 40.00 480.00 307.20 408.00 $0.00 Total for Regimen $1,914.60 $2,798.25 $1,790.88 $2,378.51 $2,308.44 Examples* *All dollar figures except Medicare reimbursement rates are fictitious

14. Accounting and Reporting • Distinct cost/revenue center • Accounting for rebates and discounts • Expense variances or “what your CFO needs to understand” • Profit and Loss reports

15. Profit and Loss Reports

16. Fiscal Responsibility • Charge master maintenance • Content • Pricing • Auditing • Charge capture and entry • Coding and billing • Denials and appeals • Charity Care • PATIENT ACCESS

17. Fiscal Responsibility Meets Patient Access • Financial Coordinators • Drug replacement • Preauthorizations • ABNs • Prospective documentation • Applications for assistance

18. Fiscal Responsibility Meets Patient Access