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Managed Care Transactions Gain Some Ground |
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By Greg Gillespie, Managing Editor,
Health Data Management |
With the rise of managed care, administrative staffs
have become the gatekeepers for provider organizations.
When a patient comes in for treatment, it’s the
responsibility of administration to confirm basic but
crucial information before a clinical encounter.
Eligibility, treatment authorization, pre-certification
and referral status, for example, must be confirmed
before health services are provided. If they aren’t,
provider organizations face the daunting task of
tracking down information for denied claims and
navigating the lengthy haggling process with managed
care organizations to determine how, why and if a doctor
is going to get paid.
“There is a lot of pain around managed care transactions
for both providers and payers,” says Doug Johnston, an
analyst in the health care e-commerce division of
Forrester Research, a Cambridge, Mass.-based research
firm. “These transactions are a big administrative sore
spot. It’s costing everyone too much money and time to
administer benefits.”
The disconnect between many payer and provider
organizations is acute. However, one ray of hope, many
experts contend, is the trend toward using the Internet
to process managed care transactions.
Payer organizations and health care information
technology vendors are rolling out Web-based systems
designed to provide quick and easy answers to
eligibility, referral and authorization questions, among
many other managed care transactions.
The impetus behind this trend is the need to simplify
the myriad and complex procedures surrounding health
care encounters and claims. Many payer organizations and
health care I.T. companies that are building or
marketing Internet-based managed care transactions
systems also offer—or plan to offer—more traditional
claims-oriented services via the Web, such as claims
status checks and claims editing.
“Managed care organizations are starting to migrate
significant parts of their business to the Web. They
want to automate these administrative functions to free
time to develop other types of services,” Johnston says.
“But, as is typical with the health care industry,
Internet-based transactions are developing in fits and
starts.”
No small task
Developing Internet-based systems for managed care
transactions, however, is not an easy task. Many payer
organizations operate legacy databases and mainframe
systems that often are difficult to integrate with
Internet-based systems. Further, provider organizations
must be convinced that conducting managed care
transactions via the Web is advantageous. Sometimes that
can be a tough sell, says Bruce Goodman, CIO at Humana
Inc., a Louisville, Ky.-based payer that covers more
than 2 million lives. Humana’s managed care information
systems feed eligibility, benefits and claims
information into a data warehouse each night. Registered
providers and patients then can access the database via
Humana’s secure Web site.
The project wasn’t simple, Goodman says. It took nearly
100 I.T. staff members over four months to build
interfaces and create standard online displays of the
information contained in Humana’s various legacy
databases.
“This was a very complex project.” Goodman says.
“Managed care transactions need to be performed in real
time, and the information has to be updated as it
changes.”
But while some payer organizations are quickly moving
managed care transactions online, others are hesitating
because they’re not convinced that providers will use
online services. Because there is limited functionality
available online, most provider organizations have not
changed their work processes to use the Internet on a
regular basis.
The online managed care transactions systems available
now are first-generation systems that often lack
interfaces and integration with other information
systems. Integration would go a long way in convincing
provider organizations to speed up the adoption of
Internet-based transactions systems, contends Bill Webb,
administrator at PrimeCare Family Practice, a Colonial
Heights, Va.-based group practice.
On the Internet
PrimeCare performs some managed care transactions
using an Internet-based system from Trigon Blue Cross
Blue Shield, Richmond, Va. Webb can check eligibility
for many patients via Trigon’s secure Web site. But the
eligibility information cannot be downloaded to his
practice management system to ensure he has in house the
up-to-date, correct patient eligibility information.
“I would love to have those systems integrated, or to
have eligibility information on new patients downloaded
automatically to our practice management system,” Webb
says. “While Trigon says it will be able to do so,
that’s kind of far off in the future.”
These initial forays into online transactions have the
potential to greatly reduce the administrative burden
for payers and providers. But many provider
organizations are waiting for more functionality before
they make a commitment to use Internet-based
transactions systems, industry observers say. Like
integration issues, the fragmented nature of the health
care industry is a hurdle to greater use of online
managed care transactions.
Provider organizations have contracts with numerous
payer organizations. If only a few have Internet-based
managed care transactions systems available, it may be
easier for the providers to continue to use telephones
for such transactions instead of trying to incorporate
the Internet into their workflow processes, experts say.
Emerging market
Regardless of hurdles, though, managed care
transactions are making their way onto the Internet.
Some managed care organizations are making the creation
of Internet-based transactions systems the first step in
convincing provider organizations to shift to a more
“self-service,” online approach.
Further, a number of health care I.T. vendors are
marketing Internet-based transactions services that
enable providers to perform managed care transactions
with multiple payers through a single Web site. In
addition, standard transaction formats mandated by the
Health Insurance Portability and Accountability Act of
1996 likely will speed up efforts to move managed care
transactions and other health care transactions to the
Internet, industry observers say.
“Many managed care organizations are doing
excruciatingly detailed cost/benefit analyses to try and
justify moving these transactions online,” says Terry
Povey, director of Web business development at Blue
Cross Blue Shield of South Carolina, Columbia.
“But the real cost is not being on the Internet. The
Internet is part of an overall strategy to simplify our
relationships with providers as well as patients. Having
these customers and partners stuck on the phone all day
doesn’t make us look good or feel good.”
The cornerstone of the current trend toward
Internet-based managed care transactions is online
eligibility checks, many experts say. The current state
of health insurance has pushed eligibility to the
forefront of online transactions that provider
organizations are seeking, says Stephen Lazarus,
president of Boundary Information Group, a Denver,
Colo.-based health care consulting firm. Lazarus also is
chair of the Workgroup for Electronic Data Interchange,
a Reston, Va.-based not-for-profit association that
promotes the use of EDI in health care.
The increasingly competitive market for health care
insurance has resulted in employers frequently switching
health insurance companies for less costly or more
comprehensive insurance for their employees. As a
result, patients are changing enrollment on an almost
annual basis. Consequently, provider organizations are
finding that the eligibility information they have in
their information systems is quickly outdated, Lazarus
says. Also, many managed care organizations are closing
down their Medicare HMO programs for senior citizens,
due to dwindling federal reimbursements. That means a
sizable population of patients is switching health
plans. These health insurance trends can wreak havoc
with a provider organization’s claims processing
systems, Lazarus adds.
“If a provider can’t verify eligibility before an
encounter and then sends a claim to the wrong payer, for
example, it enormously complicates the process,” he
says. “Not having the right eligibility information
before delivering services creates a whole host of
problems.”
The bottom line
The bottom line, Lazarus says, is that provider
organizations might get paid months later or not at all.
Concern about the bottom line, in fact, is the impetus
behind another Internet trend: Creating Internet-based
systems for checking claims status and performing claim
edits and online claims processing.
Getting paid the right amount also is increasingly
difficult because of the growth in different managed
care products and benefits, says Povey of Blue Cross
Blue Shield of South Carolina.
“Employers are customizing their benefit packages to
include what they want for their employers, and it’s
increasingly difficult for provider organizations to
figure out what the deductibles and co-payments are for
each patient, “ Povey says.
Blue Cross Blue Shield of South Carolina launched an
Internet-based managed care transactions system in
January 2000. Physicians can access the site to check
eligibility and benefits, deductible and out-of-pocket
expenses, and authorizations, and to create and check
referrals online. The most frequent transaction via the
site is eligibility checks, Povey says.
Business sense
Checking eligibility before rendering services “is
possible, but not practical” for the majority of
provider organizations relying on the telephone,
contends Webb of PrimeCare Family Practice.
“Because of the time it takes to confirm the status on
the phone, it’s hard to keep a patient standing there
while you’re on hold trying to check their eligibility,”
Webb says. “Checking eligibility for every patient is,
in my mind, a basic business practice. But it can’t
realistically be done in a timely manner using the
phone.” Webb checks eligibility for the majority of PrimeCare’s
patients by accessing online eligibility information on
Trigon Blue Cross Blue Shield’s Web site.
To access the patient eligibility information, the
practice’s staff connects to Trigon’s site using 128-bit
secure sockets layer encryption, which is built into
common Web browsers. They then enter a user name and
password. They access eligibility information on
specific patients by entering the physician number of
that patient’s primary care physician. “Being able to do
this in real time gives you a reasonable assurance
you’ll get paid,” Webb says.
In addition to ensuring patients get services and
physicians get paid, online eligibility checks also free
up time for hospital and physician office staff. These
staff members can spend hours each day on the phone with
managed care organizations to get answers to simple
questions, says Mina Harris, office administrator at
Neurological Associates, a Nashville, Tenn.-based
10-physician practice.
Getting even simple information, such as a patient’s
co-payment, can take a half-hour on the phone, Harris
says. In addition, Neurological Associates—like most
practices—deals with dozens of payer organizations. As a
result, the office staff has to struggle to keep track
of phone numbers and other contact information about
each payer, Harris says.
“Everyone in the office is overwhelmed by the amount of
red tape they must go through to get a patient treated,”
Harris says.
Neurological Associates uses an Internet-based managed
care transactions system to verify eligibility, review
patients’ explanation of benefits, and check referral
status and claims status online through a secure Web
site.
All 20 PCs at Neurological Associates have Internet
connections, which enable staff members to access the
web site. Users access the Web site using passwords and
digital certificates, encryption security technology
that’s loaded on the PCs.
The group practice’s staff uses special drop-down menus
built into the Web browsers to check on patients being
treated by the group’s physicians. The menus list the
names of the physicians. Staff can check patients’
eligibility by clicking on the icon on the screen for
each payer organization. They then can access patients’
eligibility information by entering a patient’s name or
Social Security number. Neurological Associates pays
about $150 per month for 150 to 200 transactions per
month, Harris says.
Online referrals
Eligibility checks are the most common
Internet-based managed care transaction. Another
transaction increasingly available to provider
organizations is online referrals.
Performed in the conventional, paper-based manner,
referrals are another simple managed care transaction
creating a bottleneck at many provider organizations.
This is especially true for primary care physicians,
whose offices must ensure that referrals are sent to and
received by a specialist in a timely manner, says Webb
of PrimeCare Family Practice.
The group practice uses an online application from
Trigon Blue Cross Blue Shield to create referrals and
send them electronically to specialists in the Trigon
network.
To issue a referral, administrative staff accesses an
online referral form from Trigon’s Web site. From
drop-down menus on screen, they can choose specialists
by name, specialty and geographic location. They then
key in the diagnosis code for the patient and the
reasons for the referral.
A copy of the referral is sent to the specialist via the
Internet. An authorization number is automatically
generated for the referral to ensure that the specialist
and staff at PrimeCare can track the referral
electronically. They also can view the status of the
referrals they’ve issued via the Web site.
“This is a big timesaver; it’s absolutely crucial for
primary care physicians because it speeds up the process
and ensures that the specialist has all the information
they need,” Webb says. “Online eligibility and referrals
have helped us simplify the process enormously.”
Into the breach
The trend toward moving managed care transactions
online also has created a growing market for health care
I.T. vendors who act as intermediaries between provider
and payer organizations.
These intermediaries typically create transactions
systems that enable provider organizations to perform
online managed care transactions with a number of
different payer organizations. The transactions systems
are delivered via the application service provider
computing model. Using intermediaries to create
Internet-based managed care transactions systems is more
efficient than payer organizations attempting to do it
on their own, according to a Forrester Research study.
Intermediaries already have created the infrastructure,
applications and in-house skills to deploy
Internet-based managed care transactions systems, says
Johnston, the Forrester analyst.
In addition, these intermediaries can ease the burden of
HIPAA compliance on payer organizations. Payers can
choose to rely on the intermediaries to be responsible
for translating specific transactions into HIPAA
compliant standards. Using intermediaries also could
help payer organizations spread the legal risks and
liabilities associated with HIPAA.
Further, because of market pressures to quickly provide
online services, intermediaries can help managed care
organizations quickly move transactions to the Internet.
At the same time, payers can focus on the larger
strategic plan of automating and streamlining their
relationship with providers and patients, says Jay
Levin, executive vice president of marketing and
strategy at Oxford Health Plans, a Trumbull, Conn.-based
payer organization that covers more than 1.45 million
lives.
Oxford plans to integrate its Internet-based
transactions system with practice management and
hospital information systems, Levin says. Eventually,
this integration will enable Oxford’s physician members
to perform managed care and claims-related transactions
and have those transactions automatically update their
information systems.
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