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HIPAA Transactions – Benefits are Slowly Emerging 

The promise of HIPAA was to dramatically expand electronic services and improved productivity for hospitals, physician offices, and payers.  Please recall that the initial reason for HIPAA was expanded electronic transactions – Privacy and Security were “add-ons”. 

Proponents of the new regulations painted glorious images of the “office of the future”, which would resemble a Star Trek spaceship.  Electronic transactions would be sent, automatically, for eligibility inquiries and claim status inquiries.  Automatic posting of remittance files would be possible for all payers, not just Medicare.  The cumbersome secondary claim process would be handled entirely electronically.  Office staff would be reduced and cash flow improved. 

Unfortunately, we are far from this vision.  Most of the last 15 months since the HIPAA deadline of October 2003 has been spent simply managing the conversion to the new claim formats.  This has brought few benefits for most practices.  In fact, some of the major clearinghouses have struggled to navigate the change, resulting in service disruption for vast segments of the industry. 

Yet, there are some emerging benefits in claim processing.  One example is the electronic secondary claim.  A small number of practice management software vendors are supporting this transaction.  It works best when using automatic remittance posting from the primary payer, which eliminates the requirement to manually populate the transaction.  Many payers are accepting this electronic secondary without the paper EOB.  Practices are able to eliminate the time consuming process of copying EOBs, printing a duplicate copy of the CMS-1500, and mailing the claim – it is all done automatically and electronically! 

Automatic remittance processing is also expanding.  Historically, Medicare was the only payer supporting automatic remittance processing.  More payers are now offering the ANSI 835 files, and practice management vendors and clearinghouses have begun to expand the list of payers they support.  Larger practices, and hospitals, are aggressively pursuing additional payers for automatic remittance processing. 

For Eligibility and Claim Status inquiry, most practices are doing one-at-a-time transactions via the payer web site.  Most large payers are offering these transactions on their web sites, and offering it free to practices.  This is a big step up from calling over the phone. 

However, watch this space for improvements with these transactions.  Slowly, clearinghouses are implementing these transactions with the payers, creating the opportunity for expanded functionality in the practice management software.  Eligibility will be integrated with scheduling for batch transactions, and claim status will be integrated with accounts receivable processing.  Medical Manager, for example, has offered the eligibility transaction integrated with their scheduling for years.   As clearinghouses expand their support for this transaction, eligibility will become a standard feature for practice management scheduling. 

For resellers, EDI transaction fees have historically, and still provide significant ongoing revenue opportunity.  Smaller clearinghouses seem to offer better service, and greater revenue sharing for VARs.  Also, clearinghouses are expanding their product offerings by implementing the new transactions in novel ways.  So if you haven’t checked lately, this would be a good time to explore what new capabilities and profit opportunities are available from the clearinghouses.

One word of caution.  The future clearly suggests tighter integration of these transactions with the practice management software.  In the past, the CMS-1500 print image was a “universal interface” which allowed 3^rd party clearinghouses to integrate with virtually any practice management software.  However, in the future world, there is no universal interface.  Clearinghouses will need to connect with the remittance processing module, the scheduling system and accounts receivable system.  Data needs to move in both directions, both out of and into the practice management software.  Because of the tight integration required, resellers may have less flexibility selecting their own clearinghouse and may have to use the one chosen by the software author. 

In conclusion, this is an evolving area.  Keep your eyes open for new electronic services which will please and delight your customers, and provide profit opportunities for you.  But be aware of the trend toward tighter integration as you consider your business partners.

For more information on HIPAA training for Medical VARs, e-mail Gary Pritts at: gpritts@eagleconsultingpartners.com

Gary Pritts is not affiliated with InvestMed; he is a healthcare, business and information systems consultant with 25 years of experience.  To contact Gary with questions about this article or HIPAA in general, visit his website at:  www.eagleconsultingpartners.com