Switching to single-source EDI billing slashes costs
On-site database tracks entire life of claim
Just as too many cooks can spoil the broth, so can too many applications clog up the billing process. Catholic Healthcare West (CHW) in Carmarillo, CA, once struggled with this first hand.
"We had a number of systems that we used to bill electronically," says Gigi Wallin, director of business services at CHW. "The cost was excessive."
CHW’s system was actually a combination of different independent software tools. Some terminals could only process Medicare claims; others processed only CHAMPUS claims. The incompatible formats of the machine-specific applications made it impossible to upload current data to the network or to access the data on line.
The system also "lost" an excessive number of claims each month. Some disappeared after payers rejected them. Payers claimed that others never arrived.
"We felt that the number of claims that the insurance companies were claiming that they weren’t receiving was excessive, considering the fact that they were being electronically billed," Wallin says.
Like all providers, CHW couldn’t afford the inefficiencies. Its billing office processes about 10,000 claims each month for inpatient and outpatient services provided at the 261-bed St. John’s Regional Medical Center in Oxnard, the 180-bed St. John’s Pleasant Valley Hospital in Camarillo, and a network of outpatient facilities.
It also serves a facility specializing in long-term care, a skilled nursing facility under contract with Medi-Cal (the Medicaid program in California), and three off-site therapy centers, each with different billing requirements. In addition, 60% of the claims processed by the 53-member office staff are billed to government payers, including Medicare, Medi-Cal, and CHAMPUS. Commercial payers, the largest of which is Blue Cross, account for the remaining 40% of claims billed.
Consolidating to a single source
In late 1997, CHW decided to try a single-source, electronic data interchange (EDI) solution. The application it chose, EDIMaster from EDIComm in Woodland Hills, CA, offered both EDI-enabling software and clearinghouse services. The system also included a data repository containing complete histories of claims data. This repository was placed on CHW’s local area network (LAN), making it accessible to any of the provider’s authorized staff.
"We took a multi-vendor situation that was not distributed on our LAN, and consolidated all these other systems into one vendor, residing on the LAN, and reduced our cost by about 60%," Wallin says.
Authorized staff throughout the health network can now submit traditional claims and encounter data, initiate claims status inquiries, receive and process electronic remittance advice, and perform automated secondary billing and patient eligibility verification on the system.
Overall, the new system captures more information electronically than the former one, which has allowed CHW to rearrange its work-flow patterns. The provider has cross-trained its billers to process any claim to any provider. The billers also can process the claims from their own desks, rather than going to a payer-specific terminal.
Once billers process the claims, the claims are checked for accuracy with payer-specific editing software within the system. "Billers like the editing portion because they can go in and edit their claims right away," Wallin says.
The system attaches an ancillary transaction file to each claim in the database. This file keeps an interactive on-line status of the claim, explains Gene Reed, chief operating officer of EDIComm.
When CHW daily transmits its processed and edited claims to the clearinghouse, the transaction files and database are automatically updated with information from payers about patient eligibility, claim status, and payment. By doing this daily, CHW has found that its electronically billed commercial payments arrive in 15 days — nine days less than with the former system.
Once the information from the payers has been received, the system provides CHW with daily reports of actual billings. In addition, if Medicare or Medi-Cal claims are rejected for any reason, an electronic notification arrives the following day along with suggested corrections. "The billers like to get a report showing their rejections and what they need to correct," Wallin says.
The results are in
Having all of the information about the life of claims available in one database allows staffs in billing offices to spend their time managing information as opposed to creating it, Reed says. Here are some of the results from consolidating to one system:
- CHW has significantly decreased the number of electronic claims that disappear after transmission. Using a tracking number supplied by the system, billers can verify transmission and receipt and determine whether claims were rejected or awaiting adjudication.
- In CHW’s skilled nursing facility, the time necessary to build claims in compliance with the special requirements imposed by Medi-Cal has been reduced by two-thirds. Before the new system was installed, billing codes had to be manually converted for the UB92, copied on paper, then keyed into the system.
Today, billers can retrieve claims from the system, verify the information, and insert an accommodation code. The patient’s name, Medi-Cal ID number, total charges, and total reimbursement are inserted automatically.
- Authorized personnel can retrieve archived UBs via any PC, review on screen, and print. Complete claims histories are similarly accessible by billing, collections, and customer service employees.
"We are able to retain UBs going back months, which we could not do on the [other] system, and reprint them at the desk," Wallin says. "That’s a benefit of having it on the LAN — we can request a copy of the UB right then and there."
- The new system provides comprehensive views of billing activity that weren’t available from its predecessor. "I can go in and pull reports and see everyone’s production on a monthly basis, weekly basis, and daily basis in terms of the number of claims that got processed," she says. "We can design all kinds of reports for management purposes, based on employee, age of claims, and things of that nature. There’s a lot of flexibility."
- CHW staff can now compile a risk-pool report of capitated claims sorted by insurance plan code. "We could not pull claims off the [old] system," Wallin says.
In the future, CHW will have the ability to receive and process electronic remittance advice in any format from any payer having that capability. The system will automate the posting of payment information to patient accounts, provide for automated secondary billing, as well as report potential fraud and abuse violations. Also to be implemented in the future is an application with which CHW employees will be able to capture eligibility status, claim status, and other data directly from payers, such as Blue Cross.
The capability of EDI shows the importance of its implementation into billing functions, Wallin says. "I think that as an industry we used to think of EDI as a value-added type of thing. But now we’ve been moving into this century and realized it’s a necessity, an added benefit, because anything that we can do to expedite out payments is a benefit."
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