Tuesday, March 27, 2007

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.
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

Tuesday, March 6, 2007

Medicare Part D: "Financially Irresponsible"?

In a March 6 KaiserNetwork.org article, U.S. Comptroller General David Walker, head of the Government Accountability Office, is reported to have said in a segment on CBS' "60 Minutes" this weekend that the drug benefit "probably the most fiscally irresponsible piece of legislation since the 1960s ... because we promise way more than we can afford to keep." Walker said that $8 trillion would need to be invested immediately to cover the difference between what Medicare will take in and what it will owe to beneficiaries over the next 75 years. He cited the long-term financing problems Medicare will face because of the impending retirement of the baby boomer generation. Walker said that "when those boomers start retiring en masse, then that will be a tsunami of spending that could swamp our ship of state if we don't get serious."

Monday, March 5, 2007

Why Minnesota is a Leader in Privacy and Security Solutions

This writer has been a big fan of the efforts made by several states in the area of privacy and security. Obviously, my bias towards TN and our Vanderbilt Workshops is self-evident, as is my bias towards the effective and transparent processes conducted under Lisa Rawlins and colleagues in Florida.

But arguably the very best reads on this topic in the last year have come from James I. Golden and Colleagues from the Minnesota Department of Health. Their HISPC web site is a valuable resources cited by others. As examples:

The Privacy and Security Solutions National Meeting - Part 1

This writer had the chance to participate in the Privacy and Security Solutions National Meeting held in Bethesda. (He didn't attend many sessions, but he talked in the hallways and read the reports.) Although TN was not awarded a contract, 33 other states and 1 territory (Puerto Rico) were. And the results were very positive.

Perhaps the best that can be said is that now several hundred individuals are focusing on the main concerns surrounding privacy in a digital era. And what is clear is that the current state of affairs - in a world with little health information exchange - is chaos. Just as e-prescribing flushes out the real workflow patterns (e.g., office staff refilling prescriptions without formal documented prescriber consent), the emergence of health information exchanges will bring out many issues surrounding consent, access, and protection that have been long overlooked.

The emergence of a digital health environment is a national imperative. To realize the potential of such a transformation, much must change. At present, the health care industry, the public, and many national and state leaders are in a state of profound denial.

Linda Dimitropoulos has done an outstanding job of turning what could have been a chaotic process into a set of organized issues. She concluded with the organizational focus of the meeting into four areas:
  • Consent and authorization
  • Data security and quality
  • legal and regulatory
  • Interpreting and applying HIPAA

Earlier in her slide presentation, she noted:
  • Strong variations in policies and practices
  • Lack of trust (she mentions organizations, consumers, but it is also a distrust of government)
  • The burden of change from a financial and workflow perspective.

Ms Dimitropoulos points out that the sources of variations arise from without our laws as well as our practices, citing:
  • HIPAA privacy rule
  • HIPAA security rule
  • 41 CFR(2)
  • CLIA, ERISA, and other regs
  • State privacy laws that are non-existent, conflicting, fragmented, antiquated or not relevant.
Her presentation focuses on a few other critical issues:
  • the variability and confusion over patient consent and authorization
  • Variability in interpretation of the minimum necessary standard
  • Concerns over liability