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KH records $1.5 million in ‘meaningful use’ income

Posted: February 26, 2013 8:11 p.m.
Updated: February 27, 2013 5:00 a.m.

KershawHealth is recording $1.5 million in other operating income -- actually $1.67 million with 10 percent placed in reserve -- for meeting Medicare-related “meaningful use” criteria set by the American Recovery and Reinvestment Act of 2009.

Commonly known as the 2009 federal stimulus package, the Act provides funding for the adoption and use of certain health information technology. By meeting Stage 1 “meaningful use” requirements, KershawHealth is being paid the $1.67 million by the Centers for Medicare and Medicaid (CMMS).

“Meaningful use,” essentially, means that providers, including healthcare organizations such as KershawHealth, must show they’re using electronic health records, or EHRs, “in ways that can be measured significantly in quality and in quantity,” according to the CMMS website.

Stage 1 covers electronic capture and share data requirements connected to EHR use.

During a Feb. 21 finance-focus meeting of the KershawHealth Board of Trustees, KershawHealth Vice President and COO/CFO Mike Bunch said the hospital had met Health Information Technology for Economic and Clinical Health (HITECH) Stage 1 meaningful use criteria. Bunch said KershawHealth had done so by meeting 14 mandatory requirements and seven of 10 additional requirements. Hospitals must only meet five of the 10 additional requirements. Bunch said “meaningful use” addresses five national health policy goals:

• improving quality, safety and efficiency, and reducing health disparities;

• engaging patients and families;

• improving care coordination;

• improving patient population and public health; and

• ensuring adequate privacy and security protections for personal health information.

Bunch further explained that KershawHealth decided to place 10 percent, or $167,000, of the anticipated $1.67 million Medicare payment in reserve in anticipation of future audits, bringing the additional recorded income to the $1.5 million figure.

He said KershawHealth would be filing for similar Medicaid payments this month. According to a chart included in Thursday’s agenda, KershawHealth should be eligible for up to $1.18 million in Stage 1 meaningful use Medicaid payments during Fiscal Year (FY) 2013, which ends Sept. 30.

“We should be getting at least half of that $1.18 million now,” Bunch said, adding that the actual total amount could be higher or lower. “Part of that is getting statistics to help calculate what it actually is.”

KershawHealth is also projecting to be paid an additional $130,000 in Medicaid “meaningful use” funds in FY 2014, as well as another $1.25 million from Medicare. In all, through FY 2016, KershawHealth hopes to realize additional operating income of $5.48 million for meeting the first two HITECH stages, with 10 percent being placed in reserve. More money will be available for meeting Stage 3 by FY 2017.

Stage 2 covers quality and clinical process improvements while Stage 3 deals with improved outcomes and wellness.

In addition, Bunch reported that KershawHealth continues to attest for its ambulatory sites that are eligible for similar Medicaid-related payments.

“We have received $90,000 through 2012 and anticipate $260,000 in future years,” he said.

Bunch said KershawHealth has “laid out a lot money” during the last three to four years to reach meaningful EHR use.

“We’re getting reimbursements for money we’ve already spent, really, for the last eight to 10 years,” Bunch said.

He noted that while KershawHealth had exceeded Stage 1 requirements, CMMS continues to place more requirements for maintaining Stage 1 criteria.

“That’s why they split the payments (between fiscal years 2013 and 2014). They want to see if we’re sustaining it next fiscal year,” Bunch said.

KershawHealth will be spending more money to make sure it meets Stage 2 criteria. In fact, at Thursday’s finance-focus meeting, trustees voted unanimously to spend $1.556 million -- just a little more than the amount the hospital is receiving for meeting Stage 1 -- on several “modules” of its Meditech electronic medical record (EMR) system.

Specifically, KershawHealth will install an online patient portal, oncology module, a pharmacy initiative called bedside medication verification and a scanning solution. The investment will also include a complete overhaul of the healthcare organization’s WiFi infrastructure and update its picture archiving communication system, or PICS.

“We’re bringing forward this entire package rather than piecemeal because it helps prepare us for Stage 2 of meaningful use,” Bunch said.

He said the cost of the project will actually be split evenly between fiscal years 2013 and 2014. A physician portal project originally scheduled for FY 2013 will be deferred until at least FY 2014.

Bunch said KershawHealth wouldn’t have been ready to implement the physician portal until FY 2014 in any case because of the pending implementation of a regional health information exchange, which is supposed to allow different electronic records systems to communicate with each other.

Bunch took time to thank a number of people who contributed to KershawHealth’s meeting the Stage 1 requirements, including IT Medical Director Dr. Roy Smith, as well as Diane Arrants, Jerry Griffin, Cathy Hough, Sam Hogue, Sarah Wilkes, Gretchen Brown, Tammy Broughton, Patricia Beckham, Linda Payne and Chad Arrants.

Recognizing the $1.5 million Stage 1 funds did help KershawHealth’s bottom line for the month of January, helping to generate a total of $1.6 million in operating income and a $1.4 million increase in net assets. Without the payment, KershawHealth’s operating income would have only been around $100,000. Bunch reported that charity and bad debt write-offs were still above the prior year by $618,000 and above budget by $533,000. Meanwhile, surgical cases continued to drop off by 63 from the prior year and 26 below budget. Inpatient admissions dropped, 90 below the prior year and 46 below budget. Despite the boost in income from the Stage 1 payment, the number of days of cash on hand dropped two days from 111 to 109.

The decline in admissions were spread across a wide number of specialties: pediatrics, internal medicine, OB/GYN, family medicine, orthopedic, cardiology, ENT and urology. Surgeries decreased in OB/GYN, orthopedic, general surgery, ENT and urology. Bunch said admissions had decreased 11 percent while surgeries had decreased 13 percent from the prior year.

Another item affecting the healthcare organization’s financial for January is a continued rise in the use of the emergency department. Bunch noted that emergency room visits have experienced a “real surge.”

“It gets back to the demand on unscheduled visits,” he said, noting a rash of flu cases and other illnesses. “Clearly that’s an impact and it’s a national trend.”

During the monthly financial discussion, Trustee Derial Ogburn asked about the state’s decision not to include KershawHealth in its Medicaid Disproportionate Share (DSH) program. KershawHealth President and CEO Donnie Weeks said hospital administrators were still having trouble finding that out.

“We’re unable to get information out of the agency (S.C. Department of Health and Human Services) on exactly what criteria was used,” Weeks said. “But it’s a small issue compared to Medicaid expansion, and that’s not likely to happen this year because the governor’s position is not to accept federal dollars.”

Weeks likened the fight on Medicaid expansion in South Carolina to that of raising the cigarette tax which, he said, took some 15 years to succeed.

“They (the government) is doing things that affect the delivery of care and quality of care in South Carolina. They’re putting their money into free clinics and federal qualified places like Sandhills Medical Center. Some patients don’t have the ability to pay, so if they can expand access to healthcare, that’s good,” Weeks said.

Trustees also met in executive session to receive more information on KershawHealth’s work to create a surgical practice with doctors Ed Gill and Paul Christenberry. No action was taken.

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