Softheon Considers The Cost of Processing Claims
August 2005 | by John Andrews
When it comes to claims and revenue management, Medicare is usually the main topic of discussion. That's no surprise given that it's healthcare's predominant payer and nearly all program changes have a ripple effect on the industry.
But while Medicare gets most of the attention, commercial payers present their own set of claims filing challenges for provider billing departments - namely, subtle variations in coding and forms that result in automatic denials if even one character is out of place. In the still-prevalent world of paper claims, the same minor mistake made repeatedly can severely block revenue flow, causing a massive backup in accounts receivable and spiking days outstanding levels dramatically. Moreover, the provider won't know about it for weeks and rectification can take even longer..
"A big part of the problem is that people don't have good mechanisms for reporting (each payer's) requirements and managing the information," said Jim Riley, president of sales and marketing for Richmond, Va.-based Payerpath. "Medicare is fairly consistent across the country, but private payers have their own systems, their own rules."
Not only do paper claims cause nasty snarls in cash flow, electronic systems that use batch processing can suffer the same backlog if claims filing errors aren't caught immediately. Payerpath and other revenue management software vendors recommend using Web-based platforms for claims filing in order to monitor each claim in real time.
Payerpath's main clientele is made up of group practices, about 2,300 representing some 15,000 physicians natiowide. The company also has about 30 hospital customers and across the board system users report 97 percent first-time claims acceptance and a 35 percent improvement in accounts receivable levels. Chris Ford, associate director at George Washington University Medical Faculty Associates says that prior to implementing Payerpath last year, the practice's revenue stream was a series of fits and starts.
"We're a very fragmented multispecialty practice, with 15 different divisions," he said. "Whenever a claim was sent back there were a lot of mechanics involved ... it would have to be corrected, re-queued and [cash flow] would slow to a trickle."
With a centralized, Web-based server, claims can be transmitted at various times during the day, preventing backups. With fewer denials and faster claims turnarounds, the organization's DSO, or days outstanding, has dropped 15 days since implementation.
Perhaps Payerpath's biggest advantage for the George Washington group, however, is that it documents the time and date of each claims transaction, Ford said, because several of the practice's commercial payers impose filing deadlines. With paper claims, the provider often had no recourse if a claim mysteriously got "lost" in transit after the deadline elapsed.
"This system allows us to look at each claim's complete history from the time we downloaded to transmittal and acceptance by the payer," Ford said. "We can now prove that we filed a claim on time and that the payer acknowledged its receipt. That has helped us immensely."
When it comes to provider-payer relations, IMACS president Harriet Flowers agrees that claims management systems need a "trust but verify" function to keep payers honest. For too long, insurers had the upper hand and took advantage of providers' lack of business acumen, she said.
"It's a game and our goal is to level the playing field," said Flowers, who founded Dallas-based IMACS in 1990. "There is so much subterfuge and so many layers that even if the provider gets paid it's hard to tell if it's the right amount or not."
Providers have made a lot of progress in financial management since the early days of managed care, Flowers said, but keeping track of all the specifics and nuances of each contract remains a major undertaking.
"These contracts are getting more complex all the time so the hospital doesn't know what to expect and the payer doesn't have the system to figure it out," noted Keith Setzer, IMACS executive vice president for sales and marketing. The IMACS system helps bring clarity to the process, Setzer said.
The payer community is quick to point out that clean claims work in their favor as well, say representatives from Hauppauge, NY-based Softheon, which provides claims management software for insurers.
"It costs health plans an average of $2.50 to pay a clean claim whereas it costs $28 if the claim needs to be reworked," said Kathleen Rohrecker, Softheon vice president of marketing.
Also, the healthcare climate has reached a stage where payers are aggressively vying for provider participants, so a painless claims filing system offers a competitive edge, she said.
Instead of creating an entirely new operating system for payers, Softheon developed a product that sits atop established mainframes to enable electronic claims transactions.
"Many payer organizations have had archaic systems in place for many years and haven't changed despite the evolution of technology over the past decade," said Softheon CEO Eugene Sayan. "Our proposition is simple: Let us clean up and edit any information that comes from [electronic data interchange] or paper and address these issues without a lengthy correction cycle."
Minneapolis-based StoneBridge Group's StoneBridge Exchange system is being used by five of Minnesota's largest health systems and not only has it resulted in speedier claims turnaround and significantly fewer denials, it also has the capability to identify and relay each patient's coverage status.
"Because a lot of patients get admitted through the ER, it's not always easy to get their insurance information from them at the time they come in," said Mike Tressler, vice president of StoneBridge Group. "Even if a patient is listed as self-pay, our system can identify whether they will qualify for Medicaid."
This kind of information synergy is why Austin, Texas-based Vignette touts its suite of products as the answer for claims management as well as other business functions, said Bruce Milne, vice president and general manager of healthcare and insurance practice.
"What we've found is that there is no single silver bullet, but a convergence of technologies as the answer," he said. "Workflow crosses a combination of categories and all elements tie in together. We take a holistic view."