EDI standards - a year-end review.

As 1993 ends, it seems appropriate to assess what has been accomplished with respect to electronic data interchange (EDI) standards and what remains to be done. Exhibit 1 provides the names and designations of EDI standards for the claims process. The standards for electronic claim submissions

Many TPAs and PPOs are making necessary system enhancements to be able to receive electronic claims in the new Health Care Claim (837) format. For most payers, receipt of electronic claims represents a great opportunity to reduce clerical labor costs. The same opportunity exists in regard to electronic claim payments. HCFA is the major user of the Health Care Claims Payment (835) standard. It was made available to Part A providers in the fall of 1992 and to all Part B providers in the fall of 1993. Private payers are moving more slowly to convert checks to EDI. They face significant logistical problems as well as converting from a paper-based process to an electronic one. As providers look toward 1994, their EDI plans should take advantage of several new standards scheduled to be implemented next year.

Two of the more recent standards to emerge from the ANSI X12 approval process relate to eligibility determination. They are the Health Care Eligibility/Benefit Inquiry (270) and the Health Care Eligibility/Benefit Information (271) standards. Successful widespread implementation of these standards will require systems enhancements to be made by both payers and providers, but the economic incentives are excellent for both trading partners to use EDI for eligibility reporting. Currently, payers are overwhelmed with telephone calls that require staff to respond to providers' inquiries. Some payers have automated eligibility responses with interactive voice response products, and should be able to readily convert that information to the new EDI standard.

Providers, on the other hand, will have to automate a process that today is largely manual. It would make sense for providers' appointment scheduling software to generate an EDI inquiry (270) for many of the patients scheduled for visits. In time, this function will probably be part of the standard patient scheduling or admissions application program. Currently, however, many providers have to write an enhancement or rely on an electronic claims submission vendor to provide this function.

A similar set of incentives and barriers to implementation awaits EDI standards for claim status inquiry and response transactions that should be approved by June 1994. These EDI standards are called the Health Care Claim Status Request (276) and Health Care Claim Status Notification (277) transactions. Payers would love to automate a process that would free up their staff from responding to provider inquiries. Some provider claim tracking application programs generate follow-up letters or reminders for telephone inquiries. The time has come to add another option to such tracking systems. Some inquiries could be sent electronically, and the ensuing standard responses could be logged and processed by the tracking software. This is a function that is not widely supported today because the standards are new. As of late 1993, it may not even be part of the EDI plan for most providers. Soon, however, it should become a reality.

For those providers in markets where managed care is prevalent, two new standards under development are especially interesting. The standards are called Health Care Services Review Request (279) and Health Care Services Review Information (278). Utilization review consumes an enormous amount of time, and doing the job right can make the difference between a provider getting paid or not. While most providers would love to eliminate the "telephone tag" involved in utilization review, the challenge of using the new standard is that there may be no underlying application program that captures the information needed by the utilization review organization receiving the standard. Demographic information is readily available, but the clinical data that is part of the utilization review process may be on paper and would need to be transcribed before being transmitted.

Will those hospitals with the beginnings of a computer-based patient record be able to extract the data needed for utilization review? Will providers have software that can use the data returned by the utilization review firm electronically, or will they need to print it and use it in a paper format?

As financial managers make their plans for incorporating EDI into their operations, they should ask the following questions: Are providers incorporating EDI linkages into their plans to acquire related application programs? Can existing programs generate outgoing EDI transactions and receive incoming information? Do organizations' information system plans incorporate an EDI strategy? Do they have a strategy to manage both paper and electronic workflows?

The end of the year seems an opportune time for providers to adopt a resolution to plan for the implementation of additional EDI transactions in 1994.

James J. Moynihan is a principal of McLure, Moynihan & Associates, Sherman Oaks, Calif. He can be reached on America Online at JJMOYNEDI @AOL.COM.