Much like the major financial institutions closely following the lead of the Federal Reserve, health insurance carriers follow the lead of Medicare. Medicare is getting serious about filing medical claims electronically. Yes, avoiding hassles from Medicare is only one piece of the puzzle. What about the commercial carriers? If you are not fully utilizing all of the electronic options at your disposal, you are losing money. In this article, I will discuss five key electronic business processes that all major payers must support and how you can use them to dramatically improve your bottom line. We’ll also explore options available for going electronic.
Medicare recently began putting some pressure on providers to start filing electronically. Physicians who continue to submit a high volume of paper claims will receive a Medicare “request for documentation,” which must be completed within 45 days to confirm their eligibility to submit paper claims. Denials are not subject to appeal. The bottom line is that if you are not filing claims electronically, it will cost you extra time, money and hassles.
HIPAA is Your Friend
While there has been much groaning and distress over new rules and regulations heaved upon us by HIPAA (the Health Insurance Portability and Accountability Act of 1996), there is a silver lining. With HIPAA, Congress mandated the first electronic data standards for routine business processes between insurance carriers and providers. These new standards usher in a new era for providers by providing five ways to optimize the claims process.
Electronic Tool 1: Eligibility
Practitioners frequently accept insurance cards that are invalid, expired, or even faked. The Health Insurance Association of America (HIAA) found in a 2003 study that 14 percent of all claims were denied. Out of that percentage, a full 25 percent resulted from eligibility issues. More specifically, 22 percent resulted from coverage termination and/or coverage lapses. Eligibility denials not only create more work in the form of research and rebilling, but they also increase the risk of nonpayment. Poor eligibility verification increases the likelihood of failing to precertify with the correct carrier, which may then result in a clinical denial. Furthermore, time wasted because of incorrect eligibility verification can cause you to miss the carrier’s timely filing requirements.
Use of the HIPPA eligibility transaction allows practitioners to automate this process, increasing the number of patients and procedures that are correctly verified. This standard allows you to query eligibility multiple times during the patient’s care, from initial scheduling to billing. This kind of real-time feedback can greatly reduce billing problems. Taking this process even further, there is at least one vendor of practice management software that integrates automatic electronic eligibility into the practice management workflow.
Electronic Tool 2: Referral Request & Authorization
A common problem for many providers is unknowingly providing services that are not “authorized” by the payer. Even when authorization is given, it may be lost by the payer and denied as unauthorized until proof is given. Researching the issue and giving proof to the carrier costs you money. The situation is even more acute with HMOs. Without proper referral authorization, you risk providing free services by performing work that is outside the network.
The HIPAA referral request and authorization process allows providers to automate the requests and logging of authorization for many services. With this electronic record of authorization, you have the documentation you need in case there are questions about the timeliness of requests or actual approval of services. An additional benefit of this automated precertification is a reduction in time and labor typically spent getting authorization via telephone or fax. With electronic authorization, your staff will have more time to get more procedures authorized and will never have trouble getting to a payer representative. Additionally, your staff will more effectively identify out-of-network patients in the beginning and have a chance to request an exception. While extremely useful, electronic referral requests and authorizations are not yet fully implemented by all payers. It is a good idea to seek the assistance of a medical management vendor for support with this labor-intensive process.
Electronic Tool 3: Claim Submission
Submitting claims electronically is the most fundamental process out of the five HIPPA tools. By processing your claims electronically you receive priority processing. Your electronically submitted claims go directly to the payer’s processing unit, ensuring faster turnaround. By contrast, paper claims are processed only after manual sorting and batching.
Processing insurance claims electronically improves cash flow, reduces the expense of claims processing and streamlines internal processes allowing you to focus on patient care. A paper insurance claim typically takes about 45 days for reimbursement, where the average payment time for electronic claims is 14 days. The reduction in insurance reimbursement time results in a significant increase in cash available for the needs of a growing practice. Reduced labor, office supplies and postage all contribute to the bottom line of your practice when submitting claims electronically.
Electronic Tool 4: Claim Status
Continuous rebilling of unpaid claims creates denials for duplicate claims with each rebill processed by the payer – causing more work for you and the carrier. Using the HIPAA electronic claim status standard offers an alternative to paying your staff to spend hours on the phone checking claim status. In addition to confirming claim receipt, you can also get details on the payment processing status. The reduction in denials lets your staff focus on more productive revenue recovery activities. You can use claim status information to your advantage by optimizing the timing of your claim inquiries. For example, if you know that electronic remittance advice and payment are received within 21 days from a specific payer, you can set up a new claim inquiry process on day 22 for all claims in that batch that are still not posted.
Electronic Tool 5: Remittance Advice
HIPAA’s electronic remittance advice process can provide extremely valuable information to your practice. It does much more than just save your staff time and effort. It increases the timeliness and accuracy of postings. Reducing the time between payment and posting greatly reduces the occurrence of rebilling of open accounts – a major cause of denials.
Another major benefit from electronic remittance advice is that all adjustments are posted. Without this timely information, you data entry personnel may fail to post the “zero dollar payments,” resulting in an overly inflated A/R. This distortion also makes it more difficult for you to identify denial patterns with the carriers. You can also take a proactive approach with the remittance advice data and start a denial database to zero in on problem codes and problem carriers.
Thanks to HIPAA, nearly all major commercial carriers now provide free access to these electronic processes via their websites. With a simple Internet connection, you can register at these websites and have real-time access to patient insurance information that used to be available only by phone. Even the smallest practice should consider registering to verify eligibility, request referral authorizations, submit claims, check status, receive remittance advice, download forms and update your provider profile. Registration time and the learning curve are minimal.
Software & Clearinghouses
Registering for free access to individual carrier websites can be a significant improvement over paper for your practice. The drawback to this approach is that your staff must continually log in and out of multiple websites. A more unified approach is to use a good practice management application that includes full support for electronic data exchange with the carriers. Depending on the type of software you use, your choices and costs may vary as to how you submit claims. Medicare provides the option to submit claims at no cost directly via dial-up connection.
Alternately, you may have the option to use a clearinghouse that receives your claims for Medicare and other carriers and submits them for you. Many software vendors dictate the clearinghouse you must use to submit claims. The cost is usually determined on a per-claim basis and can usually be negotiated, with prices starting around twenty-four cents per claim. While using billing software and a clearinghouse is an effective way to streamline procedures and maximize collections, it is important to closely monitor the performance of your clearinghouse. Providers should instruct their staff to file claims at least three times per week and verify receipt of those claims by reviewing the various reports provided by the clearinghouses.
How About a Good Scrub?
A powerful tool that you can use to maximize the percentage of “clean claims” that go out is called a claim scrubber
These systems automatically review electronic claims before they are sent out. They check for missing fields, misused modifiers, mismatched CPT and ICD-9 codes and generate a report of errors and omissions. The best systems will also check your RVU sequencing to ensure maximum reimbursement.
This process gives the staff time to correct the claim before it is submitted, making it far less likely that the claim will be denied and then need to be resubmitted. Remember, the carriers make money the longer they can hold on to your payments. A good claim scrubber can help even the playing field. All carriers use their own version of a claim scrubber when they receive claims from you.
The Bottom Line
With the mandates from Medicare and with all other carriers following suit, you simply cannot afford to not go electronic. All aspects of your practice can be enhanced by the use of the HIPAA standards of electronic data exchange. While the initial investment in hardware, software and training could cost tens of thousands of dollars, the proper use of the technology virtually guarantees a rapid return on your investment.