Update on Health Insurance Claims Processing Costs

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Paper versus Electronic

[By Matias Klein]

[Senior VP Technology Portico Systems Integrated Provider Management Solutions]

The average cost of processing a single, clean, paper-based or electronic claim can range from 85 cents to $1.58.

However, according to AHIP, nearly half of all claims (48 percent) were pended due to the submission of duplicate claims (35 percent), lack of complete information or other information needed to justify the claim (12 percent), or invalid codes (1 percent).

The manual adjudication of these duplicate or incorrect claim submissions increases the cost of administration to $2.05. The $2.05 scenario is a best case calculation. In our actual field experience the cost can be as high as $10.00 per claim.

Payment Delays

In addition to the increased administrative cost, one must not forget about the delayed payment to the provider. As stated by AHIP, a duplicate claim can take 9 days to remediate and missing information on a claim can take up to 11 days. This kind of delay damages the relationship between the provider and the health plan, which in terms of costs is priceless.

Enter ID Management

To solve this problem, some healthcare organizations are implementing Master Identity Management (IDM)—a valuable approach to creating an enterprise “source of truth” for provider identity information. But when it comes to payment integrity and claims processing, IDM without a Provider Information Management (PIM) system doesn’t work. Provider relationship and contract data are far too complex, and both types of data are needed to supplement provider identity data in support of claims administration.

Provider Information Management

When IDM is fully integrated with PIM, payers can successfully establish a single, accurate and effective source of truth. An integrated approach also:

  • Ensures quality – by standardizing, cleansing, cross-referencing and consolidating relevant data, while removing duplicate entries.
  • Mitigates risk – reducing the downstream impact of inaccurate data on all claims processing, contracting, credentialing, provider directory and connected systems.
  • Saves millions of dollars – by reducing duplicate entries by even a fraction of a percent, thus ensuring that claims are being processed in an efficient and effective manner.

Assessment

IDM plays a pivotal role in the future of healthcare. As new, collaborative and accountable care delivery models evolve, reliable provider identity management is absolutely critical. Combining IDM with PIM gives payers the most powerful solution for assuring payment integrity while improving provider identity and duplication management.

Conclusion

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Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

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Hospital Revenue Cycle Management

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Augmentation thru Technology Adoption

[By Karen White PhD, and Staff ]

Several major hospitals, or healthcare systems, have filed bankruptcy this fiscal quarter. These include a two-hospital system in Honolulu; one in Pontiac, MI; Trinity Hospital in Erin, Tennessee; Century City Doctors Hospital in Beverly Hills, and four hospital system Hospital Partners of America, in Charlotte. 

And so, since cash flow is the life blood of any healthcare revenue cycle management initiative, it is important for physician executives and healthcare administrators to appreciate the impact of modern health information technology systems on this vital function.

Functional Area Targets

Technology plays a key role across all health entity revenue cycle operations. By functional area, the following are key targets:

Patient Access

This is the front-end of a hospital’s revenue cycle. It is made up of all the pre-registration, registration, scheduling, pre-admitting, and admitting functions. Enhancing revenue cycles in this area requires the following:

  • a call center environment with auto dialing, faxing, and Internet connectivity to quickly ensure and verify all pertinent information that is key to correct and timely payment for services rendered;
  • Master Person Index software to eliminate duplicate medical record numbers and assist with achieving of a unique identifier for all patients;
  • registration and admission software that scripts the admission process to assist employees in obtaining required elements and check that insurer-required referrals are documented;
  • denial management definition, including focus on how to obtain all the correct patient information up front while the patient is in-house; and
  • imaging of data up front.

Health Information Management

This is the middle process of a hospital revenue cycle and is often still referred to as “Medical Records.” This area is made up of chart processing, coding, transcription, correspondence, and chart completion. Better control of revenue cycles requires the following recommended technology:

  • chart-tracking software to eliminate manual outguides and decrease the number of lost charts;
  • encoding and grouping software to improve coding accuracy and speed and improve reimbursement;
  • auto printing and faxing capabilities;
  • Internet connectivity for release of information and related document management tasks; and,
  • electronic management of documents.

Patient Financial Services

This is the back-end process of a hospital revenue cycle. The operations include all business office functions of billing, collecting, and follow-up post-patient care. Recommended technology to optimize these functions includes the following:

  • automated biller queues to improve and track the productivity of each biller;
  • claims scrubbing software to ensure that necessary data is included on the claim prior to submission; and
  • electronic claims and reimbursement processing to expedite the payment cycle.

Automation

Automation can lead to decreased paperwork, process standardization, increased productivity, and cleaner claims. In 2004, Hospital & Health Network’s “Most Wired Survey” found that the 100 most wired hospitals — including three out of the four AA+ hospitals in the country — had better control of expenses, higher productivity, and efficient utilization management. Today, these top hospitals tend to be larger and have better access to capital in these times of credit tightening.

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Assessment

The positive return on investment in technology increases allocation of funding to technology. This correlation is important because it begins to link the investment in information technology with positive financial returns in all areas of a hospital’s business, including the revenue cycle.

MORE: Rev Cycle Mgmnt

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Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

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