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Home My WebLink AboutAgenda - 10-16-2012 - 5j 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date:October 16, 2012 Action Agenda Item No.5-j SUBJECT: Electronic Medical Record/Practice Management System Replacement DEPARTMENT:PUBLIC HEARING: (Y/N)No Health ATTACHMENT(S):INFORMATION CONTACT : Dr. Colleen Bridger,(919) 245-2412 PURPOSE: To approve the replacement of the Health Department’s Electronic Medical Record/Practice Management System with the purchase of the Patagonia Health Electronic Medical Record/Practice Management Systemwith existing Medicaid Cost Settlement funds. BACKGROUND: Three years ago, the North Carolina Departmentof Health and Human Services (DHHS) required adoption of HIS (Health Information System) as the Practice Management(PM) system for local health clinics. After roll-out and ongoing problems with the system resulting in significant efficiency and billing losses, counties petitioned the state to allow them to “opt out” of the system and purchase commercial PM systems like those used by private providers and hospitals – necessarily more developed as user-friendly and high- efficiency billing systems. There are significant problems with the current Practice Management/Electronic Medical Record (PM/EMR) billing/revenue/reporting systems.The ability to produce high-level reports isnot built into the system, making strategic decision-making difficult. Currently, Health Department staff working on rebilling of denied claims is over one year behind, making it difficult to catch repetitive errors in a timely fashion. Custom reports indicate the Health Department’sbilling efficiency is at around 40% of billable charges ($355,250 payments on $711,100 claims). This short-fall is largely due to a combination of (1) consistently inaccurate reporting, (2) non-existent data-checking before billing, (3) inefficient re-billing of denied claims and (4) a lack of high-level reporting tools to increase billing quality improvement. Bringing thebilling percentage to 70% of payments on billable services (from 40%) would yield an increase in additional revenue of $210,263in year two (see table below). As of 2012, counties are allowed to opt-out of HIS. Simultaneously, counties are recognizing the benefits of moving to electronic charting of not just the billing records (the “PM” piece), but also the clinical data Electronic Medical Record (EMR).A vendor search and rating project by GastonCounty, in conjunction with acollection of the state’s local health directors, vetted over fifty different hospital PM/EMRs by cost and features, as measured by user surveys and demonstrations. 2 From that process, five PM/EMRs stood out as highly recommended. The Orange County Health Department demonstratedthree of those five systems (Greenway, AllScripts, and Patagonia Health) with management and then again with all staff. Surveys were collected that assessed functionality of all three products.In consultationwith key Information Technologies staff, and after a comparative analysis of services and products offered, upfront costs, and implementation framework, the clear choice was Patagonia HealthPM/EMR. DHHS and multiple counties have already established a vendor relationship with Patagonia, meaning that state and federal forms are already built in and it complies with DHHS reporting requirements. User surveys for functionality and user-interface/ease of use were universally better for Patagonia. Patagonia is a national companyheadquartered in Cary, North Carolina. FINANCIAL IMPACT: Unlike many pieces of software, Patagonia is a subscription system based on the number of usersat an annual cost. After an initial start-up year cost of $98,713, estimated annual cost for years two to sixis between $60,000 and $70,000. This amounts to a total software cost of $430,202 for the first six years. The cost of the Patagonia system is expected to be offset by two sources: (1) annual, federal “meaningful use” incentives based on purchase of Patagonia (as a certified EMR - e-chart - software system); and (2) an increase in revenue from more accurate and efficient billingof services.With the implementation of the system, theHealth Department’s goal is to recoup at least 70% of potential billable revenue beginning next fiscal year(vs. historical average of 40% with the old system), and to increase the percentage of recoupment in subsequent fiscal years. Purchase of this system is intended to increase Health Department net revenue (add increased billing, add eligible incentives, less software cost) by $914,995 over the first six years.The table below represents these incentive reimbursements, software costs,and expected additional Health Departmentnet revenueincrease. Existing Medicaid Cost Settlement funds in the amount of $98,713 are available within the Medicaid Maximization Capital Project to cover the initial cost of the system in Year 1, which includes implementation, staff training, and ongoing support. On-going annual costs to Patagonia will also be covered by annual Medicaid Cost Settlement funds. Total ANNUAL CASH FLOWYear 1Year 2Year 3Year 4Year 5Year 6 2012-2017 MU1 Incentives (@ 3 providers) $ 63,750 $ 25,000 $ 25,000 $ Payment Patagonia $ (98,713) $ (61,543) $ (64,621) $ Net Software Cash Flow$ (34,963) $ (36,543)$ (39,621)$ (41,495)$ (43,423)$ (45,407)$ (241,452) Projected Revenue Increase (@70%)$ 105,132 $ 210,263 $ 210,263 $ 210,263 $ 210,263 $ 210,263 $ 1,156,447 Net Projected Cash Flow Increase$ 70,169$ 173,720$ 170,642$ 168,768$ 166,840$ 164,856$ 914,995 Table represents “Stage 1 Meaningful Use” – payments to Patagonia continue after 2017, but Stage 2 and 3 Meaningful Use correspond with different (and higher) federal software incentives. RECOMMENDATIONS: The Manager recommends the Board approve the purchase of the Patagonia Health Electronic Medical Record/Practice Management System with existing Medicaid Cost Settlement funds.