Adapt or get left behind in processing world
Electronic submission the wave of the future
Many physicians are having a tough time adapting to third-party processing and electronic submission of claims, both of which are changing quickly because of cost-cutting pressures in the health care industry.
John McCormick, an information technology expert with consultants Frost & Sullivan in Mountain View, CA, says those who can’t adapt to the new environment will suffer. McCormick advises practices to implement electronic claim processing as soon as possible. Groups that plan to buy new software should make sure it integrates easily with the system they currently use, he adds.
If you’re considering using a third-party processor, make sure you don’t lock yourself into a long-term fixed processing fee, McCormick recommends. The reason: Competition among processors probably will drive the price down substantially before the end of the agreement.
The third-party medical claims process begins when a patient visits a health care provider. The visit is recorded in the form of a claim (fee-for-service) or an encounter (if the treatment is covered by a managed care agreement). The claim is then sent directly to either the third-party payer or to a clearinghouse, which edits and formats the claim and sends it to the third-party payer.
A major change in the claim-processing business is the move from manually processed claims to electronically processed claims, which cost an estimated 40% less, according to Frost & Sullivan.
Electronic transmission has not only cut the price, but the time needed to process claims, as well. "On average, a paper claim takes about 45 days to process, vs. 25 days for an electronic claim," says McCormick.
Trends affecting the claims processing market include Internet use, acceptance of electronic standards, and the rapid growth of managed care.
The clearinghouse claims processing market is the largest of the three market segments, says Frost. Revenues in 1996 were $948.4 million, or 74% of the market.
In 1996, the claims submission software market accounted for 15.5% of third-party medical claims, with $204.4 million in revenues. This segment is expected to undergo rapid growth for the following reasons:
• the increased popularity of electronically processed claims, which reduce costs and speed up payment turnaround;
• government regulations promoting the use of electronic claims;
• and advances in software applications such as graphical user interfaces that have made claims processing software easier to use.
However, the Health Insurance Portability and Accountability Act should increase acceptance of standard formatted claims, which will work against the clearinghouse claims processing market, as will new electronic data interchange (EDI) networks that link health care providers directly to third-party payers.
The clearinghouse claims processing market was created due to the lack of a universally accepted claims format. Many payers created proprietary formats for which special interfaces were needed. Clearinghouses allow providers to submit all their claims to a single site, which slashes the time and cost of processing claims.
"On networks with real-time connections, you will be able to quickly find out if a person really has the insurance they say they have or if a certain procedure is covered by the plan," notes McCormick. "There are four or five clearinghouses now experimenting with using the Internet to offer these services, which should be available in about a year."
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