It Pays to Know Your Costs:
Why and How to Conduct an Effective
Cost Analysis
Webinar 3: Putting the Pieces Together for an
Effective Cost Analysis
July 19th, 2013
George “Gerry” Christie, Senior Partner, Health Policy Analysts
Emily Kinsella, MSPH, Unit Manager, Women’s Wellness Connection,
Colorado Department of Public Health and Environment
Intended Audience
Title X grantees and sub-recipient agency staff who are
new to cost analysis or in need of a refresher on how to
conduct and update a cost analysis
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Agenda
1. Brief Review of Webinars 1 and 2
2. Completing the Focused Cost Analysis Workbook
3. Interpreting the Focused Cost Analysis Results
4. Establishing your Family Planning Fees and Schedule of
Discounts
5. How to do a Cost Analysis Next Time
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Objectives
By the end of this training, participants will be able to:
1. Apply expense and utilization data to conduct an
effective cost analysis;
2. Utilize the focused cost analysis methodology to set
informed fees; and
3. Update the cost analysis annually.
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
George “Gerry” Christie,
Senior Partner, Health Policy
Analysts
Emily Kinsella, MSPH,
Unit Manager,
Women’s Wellness Connection
Colorado Department of Public
Health and Environment
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
BRIEF REVIEW OF WEBINAR 1
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
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.”
• The “unbundled cost” for each service.
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
The Cost Analysis
The cost of services in each program is driven by
two things:
Expenses
and
Utilization
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Determining Family Planning Costs
Option A
Use the “Cost Report”
to document allowable
costs for your family
planning program if the
program does not have
reports on hand
documenting costs.
Option B
Use the “Cost Pool
Calculation” if the
program already has
aggregated reports
documenting family
planning costs.
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Allocating Expenses
Salaries, wages and fringe benefits
Other direct expenses
Indirect costs including approved indirect cost
rate or administrative cost pool
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
BRIEF REVIEW OF WEBINAR 2 AND
HOMEWORK
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Relative Values Units
Set Relative Value Unit for each CPT code
Relative value unit indicates the “worth” of
a procedure in relation to other procedures
“Worth” does not relate to dollars
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Resource Based Relative Value Scale (RBRVS)
Consists of three elements:
• Physician (Clinician) work
• Practices (Overhead) expenses (net of malpractice
expenses)
• Cost of malpractice insurance
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Utilization Data
Determine and enter number of services/procedures
(use CPT codes) performed by agency in one year
Use same time period used for financial information.
Consider how you will include visits and procedures done by
referral at an off-site facility (such as IUD insertion).
Count CPT Codes that are accompanied by an ICD-9 V25 code as
the primary or secondary diagnosis.
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Questions / Discussion
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
COMPLETING THE FOCUSED COST ANALYSIS
(FCA) WORKBOOK
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Completing the Clinical Tab in the FCA Workbook
You will need:
• Completed Cost Report (Option A) or the Cost Pool Worksheet
(Option B)
• Completed Procedures tab resulting in relative Value Units
(RVUs) for your geographic area
• Utilization data from Clinic Visit Record, Patient Management
Program, lab logs, pharmacy logs, and other internal
documents (to populate Column C).
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Completing the Clinical Tab in the FCA Workbook
The cost for the medical services must be copied into the
Clinical Tab.
Cost Report – Use “Total Medical Costs”
Cost Pool Calculation – Use “Net Expenses”
Relative Value Units transfer automatically from the procedures tab.
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Completing the Clinical Tab in the FCA Workbook
• Using utilization data from your homework, complete
the utilization column C on the Clinical Tab
• Complete the utilization for lab services provided inhouse
• Columns E through H calculate automatically
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Completing the Clinical Tab in the FCA Workbook
•
Column H: gives you the agency cost to provide each
service during the timeframe.
•
Column I: used to enter your agency’s current full fee
for each service
•
Agencies can estimate the potential costs in the coming
year by adding a percent in the “COLA/Margin” (Cell C72)
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Questions / Discussion
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
INTERPRETING THE FOCUSED COST
ANALYSIS RESULTS
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Comparing Costs
•
Review the “Average Cost Per Service Unit” and
compare yours to the expected target range (0.85 –
1.25).
•
Compare the cost of providing each service (Column H)
to your fee for last year (Column I).
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Comparing Proposed Fees
Proposed Fee
Compare With
Adjusted Cost
Reimbursement
Rates
Review
Against
Standard Fees
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Review Market Rates
• What are the fees for 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 the same set of
services?
• What “discounts” are you offering and when?
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
ESTABLISHING YOUR TITLE X FEES AND
SCHEDULE OF DISCOUNTS
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Developing Fees
• The fee scale you establish will be based on the outcome
of the cost analysis.
• The cost analysis creates the “reasonable cost” of
providing services.
• The fee scale should generate sufficient income, along
with other sources of revenue, to maintain the program.
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Developing Fees
• For Title X, the fees represent
the full charge to clients (those
at or above 250% of the Federal
Poverty Level).
• The fee schedule should list
EVERY item that will result in a
charge.
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Determining Fees for Contraceptive Supplies,
Medications and Outside Labs
• This methodology only determines costs for
procedures and labs done in-house.
• Fees for supplies, medication and outside labs should
be based on the purchase price for the item, plus a
reasonable “handling charge.”
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Developing Fees
Fees
Reflect operational costs
Be competitive
Be reasonable
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Questions / Discussion
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
HOW TO DO A COST ANALYSIS
NEXT TIME
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
How to Do a Cost Analysis Next Time
Repeat the steps outlined in these three webinars
(and the FCA Manual) to:
•
Update expenses
•
Update RVUs
•
Update utilization data
Remember to use current data
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Questions / Discussion
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Check-In Poll:
Length of Webinar
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Revenue Cycle Management:
The steps Title X agencies must take to get
paid
Webinar 1
Revenue Cycle Management:
Before and During the Client Visit
July 24th, 2013
Lou Ann Wilroy, Business Strategies Consultant
RT Welter & Associates
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Upcoming NTC Training Activities
•
Quality Improvement Institute
In-person, 7/29/13
•
US Medical Eligibility Criteria Refresher
Webinar, 8/5/13
•
Revenue Cycle Management II: After the Client Visit
Webinar, 8/7/12
•
STI Series, Part 2: STI Update Q&A (Clinicians)
Webinar, 8/8/13
•
Integrating Male Reproductive Health Services: Lessons
From the Field
Webinar, 8/21/13
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs
Thank You!
National Training Center for Management and Systems Improvement
www.fpntc.org
Reesa Webb
Ann Loeffler
Tara Melinkovich
Caitlin Hungate
Jen Spezeski
Adrienne Christy
Paul Rohde
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
303-262-4300
www.jsi.com
Fami l y Pl an n i n g N at io n al Train in g Ce nte r fo r M an age me nt an d Syste ms Imp ro ve me nt · Su p p o rte d b y Off ice o f Po p u lat io n Affairs