July 25, 2007
Highly fragmented manual processes for posting and reconciling payments generate significant administrative costs and fees for providers. Transitioning these paper-based processes to electronic ones has the potential to save as much as $35 billion and 2.5 billion pieces of paper annually by some estimates. To realize such benefits, providers are searching for new opportunities to eliminate paper from the revenue cycle, especially in payment and reconciliation.
In this highlight of a recent HFMA roundtable discussion, sponsored by Emdeon Business Services, senior financial executives from several hospitals and a university-based physicians' practice association share practical advice for managing concerns such as obtaining accurate remittance data, linking payment information to corresponding remittance details, and training staff to manage electronic processes.
HFMA Moderator:
What are some of the challenges of the current paper-based payment process?
Toni Hatch, senior director, business office operations, for Triad Hospitals, Plano, Texas:
The sheer size of bulk paper remits is challenging. Some of our facilities get a weekly Medicaid check that is 350 pages long—an all-day job for one person to post. If we received that remit in electronic form, it would take maybe an hour to post. There are also balancing issues with paper remits. If you type $2.50 instead of $25.00, you have to check your whole batch to find the error.
Joyce Slater, senior director, revenue cycle operations, Johns Hopkins University Physicians, Baltimore:
We find that allowances on paper EOBs [explanation of benefits] are not always accurate, nor is the amount of the patient's responsibility.
Elise Lauer, director of patient accounting, Northwestern Memorial Hospital, Chicago:
It's also hard to derive trends from paper documents and manual processing. Because insurance companies have different remittance formats, the ability to quickly identify potential problems with billing or accurate claims adjudication within a single payer or across service lines is limited. Some payers may send checks directly to the bank and the paper remittance advices to the hospital, resulting in an extra step of making sure the deposit occurs before the remittance advice is processed.
Julie Blind, administrative director of business services for Sierra View District Hospital, Porterville, Calif.:
With one of our payers, we have to deal with the problem of paper checks that frequently get lost in the mail.
HFMA Moderator:
What are some of the biggest challenges to using electronic remittance advices and electronic fund transfers today?
Slater:
Since payers have merely mapped their legacy systems to HIPAA standards—instead of changing their legacy systems—there are no one-to-one matches of legacy rejection codes to HIPAA transaction codes. So unless we align them appropriately internally, we may be writing off dollars unnecessarily. Also, it's been disappointing that many payers don't have the capability to process the HIPAA 835 transaction set accurately, and that each payer interprets the HIPAA guidelines differently.
I question whether payers see the true benefits of electronic payments. Their goal is to reduce their costs, and the only way to do that is to stop processing paper remittances. But until we marry HIPAA transaction codes and rejection codes, we still need the paper remits. It's been a tremendous setback to all of us that payers haven't made electronic payments a top initiative.
Blind:
We still have a challenge with electronic Medi-Cal remits because our client server system isn't flexible enough to allow us to post the remit line by line as it is received. It's critical in this electronic world for you to know your system's limitations. Once you start putting Band-Aids™ on your system to accommodate electronic remittances, you need to evaluate whether it's time to find a new server system.
HFMA Moderator:
What are the benefits of implementing electronic remittance advices (ERAs) and electronic fund transfers (EFTs) versus maintaining a paper-based system?
George Lazenby, CEO, Emdeon Business Services, Nashville:
Once the ERAs are in good condition, they can be posted automatically, allowing cash-receipts personnel to spend their time working on exceptions instead of having to key in all of the payments. Plus, when providers receive the data electronically, they have a better understanding of their payments in relation to their contracts with payers. And the advantages to EFTs are that you don't have the potential for fraud and lost checks.
Lauer:
The information you get from ERAs [835s] is amazing. Providing everyone is using the standard ANSI codes accurately, one can see how claims are being adjudicated and how quickly and accurately payments are being made. We've created a database that allows us to examine our top denials and the reasons for those denials. In the paper world, most providers post at the claim level. In the electronic world, many of the payers able to process electronically are able to adjudicate at the line item level.
Hatch:
Electronic posting is far faster and easier than paper-based processes. Billing is more accurate, too, because we don't miss a contractual and send the patient a statement with the wrong balance on it. Timing of receipts is also accurate, so you have more predictability in your cash.
HFMA Moderator:
When moving from paper-based to electronic processes, providers must also focus on training and obtaining buy-in from staff regarding use of the new technologies. How has your organization done this?
Hatch:
When they saw that an electronic system could reduce a six-hour job of posting a Medicare or Blue Cross remit to one hour, they initially didn't know what to do with their time. It took a little while for them to realize that they now had an opportunity to take cash posting reimbursement to the next step by making sure that account balances are correctly stated and in the appropriate A/R [accounts receivables]category.
The buy-in from staff members came when they knew they would no longer have to waste an entire day searching for a 29-cent keying error from a 300-page paper remit. The most frustrating aspect of their job was gone. Now they want all of our remittance advices to be electronic instead of saying, 'We want to keep posting because it gives us job security.' They are able to plan their work day without feeling like the stack of checks is so high that they'll never get to the bottom.
Source:
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If you have questions or comments about HFMA Wants You to Know, contact editor Maxine Harrison.
HFMA Wants You to Know ISSN: 1540-0697. Volume VI, Issue 15. Copyright 2007, Healthcare Financial Management Association. All rights reserved.