breaking down barriers to electronic claims settlement

According to the Centers for Medicare and Medlcaid Services, $323 billion is spent each year on Healthcare administrative costs alone. Although controlling these costs is a perpetual challenge, providers do have some low-hanging fruit. Simple changes, such as transitioning from paper-based to electronic

Payers and providers understand the benefits of electronic funds transfer and electronic remittance advice; however, implementing an electronic approach to claims settlement can be challenging. In trying to integrate EFT and ERA into their operations, payers and providers have encountered several obstacles, often causing them to revert to paper checks and remittance advices. Fortunately, technological developments are helping to eliminate each barrier.

Obstacle: Lack of Standardized Reporting

Many payers can create ERAs, which are compliant with the 835 standard of the Health Insurance Portability and Accountability Act. However, providers have often found ERAs unusable because all payers use different coding practices to report reasons for claims adjustments to providers. Even if there were no other issues, this lack of standardized adjustment reporting can be significant enough to prevent some providers from posting payments electronically.

Current environment. For electronic claims settlement to be useful, it should enable the autopolling of payments-and a large obstacle to autoposting is inconsistent adjustment reporting. However, rather than waiting for a consistent approach to be implemented (which is unlikely to occur in the near future), payers and providers can work to "harmonize" adjustment codes in a commonly shared ERA format. This can be achieved by leveraging a third party as a "go between" that can bring all adjustment code lists together in an ERA, thus eliminating the adjustment code barrier to autoposting.

Obstacle: Cumbersome Bank Account Management

Payers that are ready to offer EFT have a large challenge of their own-the collection and maintenance of bank account information for all their providers. Imagine a payer with 20,000 providers in its community. Now imagine the effort to contact each of those providers, explain the purpose for the contact, acquire bank account information, store the information securely, and respond to requested changes on an ongoing basis. The task can appear daunting-perhaps daunting enough to kill an electronic settlement initiative before it ever gets started. As if this issue were not significant enough, the transition to the national provider identifier is looming, making provider enrollment appear even more challenging.

Current environment Payers wanting to transition to EFT might analyze the task to enroll providers and conclude that a significant investment would be required in people, systems, and procedures. If they view it only this way, most payers will conclude that the enrollment barrier to EFT is too great to overcome.

However, a change agent that can work outside payer constraints is available to overcome this obstacle. The best solution is to put control for enrollment in the hands of providers by giving them access to a secure multi-payer database, where they can take direct responsibility for registering bank account information and making any necessary changes in the future. For payers, this approach eliminates a key obstacle to EFT projects. For providers, the approach offers direct oversight of, and responsibility for, sensitive bank account data.

Obstacle: Fees

Providers are most likely reluctant to incur new fees to take advantage of electronic settlement. It is not surprising that some providers view electronic settlement as an additional service-with additional costs-offered by their payers.

Current environment. Payers are the ones who must take the initiative to offer electronic settlement; they are also the ones who should put processes in place to deliver that benefit. And although they see the opportunity to reduce settlement expenses, payers are also recognizing the chance to increase their level of service for their providers by offering EFTs and ERAs. For most payers, strategies to improve relations with providers rank high on the priority list. Consequently, more payers are making EFTs and ERAs available to their providers-and many are doing so without added cost to those providers.

Obstacle: Costs of Technology Investment

Past attempts by payers to offer EFT and ERA to their providers have required providers to purchase and implement new technology. Thus, providers were faced not only with the expense and inconvenience of installing a new system, but also with providing new staff training, developing new processes, and spending more on overhead. In addition, not all payers offering EFT and ERA used the same systems and procedures.

Current environment. By taking advantage of new systems and processes external to their offices, providers can obtain access to payment and remittance data via secure Internet portals. With an Internet browser, they can be alerted to payments via e-mail and directed to a secure Internet site to download ERAs for importation into their practice management or health information systems. Accessibility is the key.

Obstacle: Disjunction Between Payments and Remittance Information

Having funds flow electronically from payers to providers is a significant benefit-but not knowing what remittances are being paid by those funds is a significant complication. Unfortunately, in past attempts at implementing EFT and ERA, it was not easy to associate payments with remittance information. Manual intervention was required, often necessitating phone calls among payers, providers, and their banks.

Current environment. New EFT and ERA operations are now available to eliminate the mysteries caused by disassociated data. Every EFT can be directly connected with a unique ERA specific to that EFT, and ERAs can contain line-item details describing all claims and partial claims being paid. Also, payment information and corresponding remittance details can be retrieved from a secure archive based on either a payment reference number or a claim number.

Obstacle: A Different Bank for Every Payer

In the past, providers sometimes were asked to change banks in order to receive electronic settlements, resulting in much frustration. That frustration was compounded when other payers implementing EFT and ERA had the same requirement, but with a different bank. Clearly, any EFT/ERA solution that involves a firm bank commitment is not workable.

Current environment. New approaches to EFT and ERA are bank-independent, allowing providers and payers to keep existing banking relationships in place while still gaining access to electronic transactions from one or more payers.

Obstacle: Cumbersome Data Retrieval

When a question or dispute arises between a payer and a provider, each must access and review any pertinent payment and remittance data exchanged between them. In many instances, each goes to a filing cabinet or records warehouse to pull paper documents related to the dispute-a timely process that is often prone to errors. For disputes involving electronic transactions, the process hasn't been much better, largely due to questions about the location of electronic records or an inability to retrieve data from a known electronic archive.

Current environment. For electronic settlement to work, both payers and providers must have access to a secure archive that holds all payment and remittance information pertaining to claims settled between them. Today, the availability of secure archives provides payers and providers with instant, online access to all previous payment information. With access to relevant, consistent, and commonly shared data, payers and providers can quickly address questions and disputes.

Pulling Together

Many payers and providers faced seemingly insurmountable obstacles when first implementing electronic claims settlement. However, the environment has changed: Necessary standards have been developed, and enabling technology is now available to support a closed-loop electronic settlement process.

The time has arrived for payers and providers alike to take full advantage of practical, cost-effective, and attainable electronic settlement to improve their operations.