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Administrative tasks simplified: Electronic transmission saves time, money
By Dr. Sol Lizerbram
January 2007
(Originally published on Managed Healthcare Executive – Archived PDF version)
There is no doubt about it – transmitting claims and other healthcare information electronically saves time and money.
Multiple research reports confirm this. A 2006 Milliman study found that electronic transactions can lower annual insurance administration costs by more than $42,000 per physician. As a smart alternative to paper, the study points out that costly insurance administration can be remedied simply through pain-free measures, which encompass electronic operations. Another study, "An Updated Survey of Health Care Claims Receipt and Processing Times, May 2006," by America's Health Insurance Plans also supports this trend. The report, based on aggregated data from nearly 25 million claims, processed by 26 large and small plans throughout the United States, finds that electronic submission of health insurance claims more than tripled in the last decade, reducing administrative costs, and allowed 98% of claims to be processed within 30 days of receipt. This study also confirms that the electronic way of doing business costs less and that the average cost of processing a clean electronic claim was 85 cents – nearly half the $1.58 cost of processing a clean paper claim.
Competition is another reason for providers to use electronic transactions. Experts in Managed Healthcare Executive's 2007 State of the Industry Survey said that "increasing efficiencies with technology" is the top method respondents will execute in 2007 to remain competitive in the market. In fact, 56% of those surveyed rated electronic transmission as one of their top three priorities, stating that lowering system complexity, eliminating duplication, integrating across varied and numerous "silos," and replacing aging systems will remain at the top of their agendas.
If neither cost reduction nor competition are enough reason for providers to "go electronic," the law might be a great incentive. The administrative simplification provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) now require health plans to accept and to respond to standard electronic transactions for basic insurance administration functions such as claims submission, referral, preauthorization requests, eligibility verification, claims status and payment information. These provisions remove barriers to technology-based claims processing and are an impetus for physicians to assess potential savings from greater use of electronic transactions.
Existing in an electronic environment
While there appears to be no debate over whether or not to use electronic transmissions, there are still some differences on how to operate best in this environment.
Part of this challenge remains with smaller physician practices, which by virtue of their size, have smaller operating budgets, smaller staff and less time for administrative functions. Historically speaking, many physician practices rely on practice management systems (PMSs) to streamline and automate the claims process, accepting the fact that in spite of their handsome fees, practice management systems are a cost of doing business.
These days, however, as small physician practices are faced with higher operating costs, they are seeking new practice alternatives and are beginning to review their dependence on large practice management systems for their claims submission and for other insurance functions. Some small physician practices have neither the manpower nor the budget required for a big practice management system, while other smaller practices just have less time. Many revenue cycle management consultants agree – checking eligibility status, remaining deductible and accurate copayment amounts are vital practices for offices of any size. Smaller offices, however, usually do not have the personnel resources to spend hours on the phone with insurance companies nor the information technology resources to maintain complicated systems.
New options
Today, new alternatives have emerged – some developed by frustrated practitioners themselves who are seeking simple ways to send electronic transactions but not rely on practice management systems. They want to exchange data with insurance companies on a real-time basis and their goal is to accomplish this business function more efficiently and more cost-effectively.
Now, with the use of Web-based solutions, small providers or solo practitioners' offices can achieve these goals in minutes. New systems now make managing claims and performing other administrative functions as easy as, or even easier than, using the Internet to order airplane tickets or purchase consumer goods by offering Internet-based solutions and smart user interfaces – both of which result in reduced costs and enhanced efficiency in healthcare transactions.
They also are easy to use. Their only basic requirement is a desktop computer with an Internet browser. Once a link is established, these Web-enabled components and communications services place dynamic administrative decision-making tools into the providers' offices at the point of care to automate key day-to-day activities such as verifying eligibility, submitting referrals, submitting claims and downloading and viewing remittance information.
Other benefits to these systems include:
- producing significant savings in time and costs;
- improving cash flow by accelerating the revenue cycle;
- reducing or eliminated errors in claim and referral submission;
- improving co-pay and deductible collections;
- eliminating of repetition in key day-to-day administrative tasks; and
- reducing, if not eliminating, calls and faxes to insurance companies.
As an ideal alternative to existing systems, a Web-based platform offers an independent process to improve management of the revenue cycle and key administrative activities within physician practices. The applications require 15 minutes of phone training to a staff person. There is no software to purchase and/or download, and transactions are completely HIPAA compliant. Offices can even submit bulk transactions, such as request the status of eligibility of all patients scheduled for next week. These answers, which come in an easy-to-read report, show up-to-date eligibility and in some cases, the remaining deductible. As an additional feature, online reports can show outstanding claims that can be sorted by patient name, payer, and even sort by the reason for nonpayment to date.
Providers no longer have to be dependent on large practice management systems or other costly devices to submit claims or process other health care insurance information. These days, the future of electronic transmission is with new online products, which offer independence, low costs and flexibility to providers. These new options enable providers to streamline and simplify complex transactions with the use of one computer, and access to the Internet.
Dr. Sol Lizerbram is chairman of HealthFusion, a privately held company based in San Diego County.