PNC's e-Health Survey: The inefficiencies of claims

Two portions of a survey conducted by PNC financial services in February of 2006 are generating some interest by documenting the obvious.

• Follow this link for a two-page text summary

• Follow this link for a PowerPoint graphic presentation of the survey summary

Hospital executives and insurance executives were queried to determine the extent to which EDI was being used and the impact of EDI on the overall efficiency and cash flow of operations. Among the findings are a large number of re-filed claims and, according to some, lack of sufficient standardization among plans and intermediaries, and a cry for support for the capital investment required to improve the efficiency. As is the case with many clinical information systems issues, health care at times seems to be the only industry that literally requests more money to improve the quality and efficiency of services. This would suggest a lack of real competition (Porter is right), for in a real competitive market, those who are not efficient would be penalized. Indeed, it seems that this penalty is incurred by organizations who can't get claims out efficiently and hence suffer from the "float" of large accounts receivable. Whether this is the product of their own efficiency or that of the system as a whole is debatable.

Among the findings

Consensus on the scale of the problem.

• 90 percent of hospitals and 86 percent of insurance executives agree or strongly agree that making the claims remittance process more efficient industry-wide would help slow the rising cost of healthcare in the United States.
• 85 percent of hospitals and 74 percent of insurance executives agree that the nation’s health care costs would actually decrease if payers were required to publicly report the efficiency/performance of their remittance processes.
• Nine in ten hospitals say that the savings they would realize from a more efficient claims remittance process would be used to improve patient care. Three quarters say they would pass the savings on to patients, and two-thirds say the savings would be applied to charity care.

Transparency would help

• Eight out of ten (83 percent) insurance company executives agree or strongly agree that health plans should have to disclose information about the payment processes in the context of how these costs ultimately affect healthcare premiums.

The losses are significant

• Half of hospital executives and 38 percent of insurance executives surveyed say their organizations lose at least $1 million, and as much as $10 million a year, because of inefficiencies in the claims remittance process, and that they could save as much if the process were made more efficient.
• At least one hospital claim in 10 is denied or delayed. At 30 percent of hospitals surveyed, more than 20 percent of claims are denied or delayed in an average month. Two thirds of hospital executives say they must resubmit or rework a claim two or more times before it is paid. 21 percent of hospitals report resubmitting claims as many as 6 times.
• 84 percent of hospitals believe that lack of standards among payers is the “real” reason that most claims are delayed or denied, but patient ineligibility is the No. 1 reason given by payers for denying or delaying a claim.
• Nearly 90 percent of providers say they use Electronic Data Interchange (EDI) and Electronic
• Funds Transfer (EFT) to either submit or receive claims. But, they conduct business with only about half of their payers using EDI and only one-third using EFT.
• Nine in ten hospital and insurance executives alike say their organizations still rely on paper

This is going to happen, but a firmer hand will be required

• 79 percent of payers and 63 percent of providers feel that a federal standards to develop a set of regulations and standards, regardless of electronic payment methodology, would eliminate extraneous costs.
• Health insurance executives overwhelming agree that EDI will eventually be fully implemented throughout the industry, and 60 percent think the government should require adoption of EDI / EFT