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By
Bruce Smiley, Sr. VP, Indiana Health Network
Direct electronic data interchange (EDI) transfer
of claims is something we are beginning to take for granted in the
health benefits arena. EDI, however, is an untapped resource in the
workers’ compensation arena that could revolutionize the ability to more
effectively utilize PPO networks. In a direct EDI setting the workers’
compensation claims manager receives and records the provider bill, then
extracts and posts key claim information on an Internet FTP site. The
managed care organization is then able to download the claim
information, reprice the claim and return it to the organization’s FTP
site in an encrypted, secured manner, generally within 24 hours. This
process provides the workers’ compensation managers more flexibility in
their use of PPO networks, which has resulted in significant increases
in cost savings.
The effect of HIPPA: The first viable option
available to payors and providers wishing to transfer claim data
electronically were the national clearinghouses. These remain the best
resources for many providers submitting claims to payors as the multiple
site connections can reach into the thousands. Payor to PPO/MCO
arrangements, however are more direct in nature and less numerous. This
provided an opportunity for direct electronic claim transfer thereby
eliminating the expense of the clearinghouse. However, even with the
growing Internet as a communication platform, the market place lacked a
common language with which to communicate.
It was not long ago that the health benefits
industry was faced with the federally mandated Health Insurance
Portability and Accountability Act (a.k.a. HIPPA) that required, among
other things, a standard format for EDI claims transfer. Although the
HIPPA “standard” has room for a degree of interpretation, it did create
a fairly uniform platform that allowed claims administrators and PPO’s a
format that was much more uniform and defined. Familiarity with the
common HIPPA format (or ANSI 837) promoted the ability for organizations
on different systems to communicate claims transfer. This transfer was
further assisted by the use of FTP or file transfer protocol sites via
the Internet. The cumulative effect has been to create a situation
where direct claims transfer is now fairly commonplace and can be
achieved without significant programming resources.
So why have we not seen the workers’
compensation industry embrace direct EDI? The issue revolves
primarily around the claims and management systems utilized by many of
the workers’ compensation managers. Workers’ compensation claims
systems are primarily “liability” claim systems. For instance, these
systems view a “claim” as an incident of injury as opposed to an
individual provider “bill”. Such claim may include other forms of
compensation than direct medical treatment. One result of this is that
the liability claims systems simply do not have the flexibility that
health claims systems have in their ability to interface with managed
care networks and pricing. Health claims systems made the transition to
allow fairly flexible interface with internally and externally repriced
managed care claims some years ago. The liability claims systems
utilized by workers’ compensation administrators are generally not this
flexible. Certainly there are exceptions to this, however these systems
often require a programming effort to literally build a program module
to administer and load each specific managed care arrangement with which
they interface.
What are the advantages of direct EDI transfer
to workers compensation administrators? Primarily, direct EDI
transfer allows the workers’ compensation management organization the
ability to significantly decrease their administrative costs, increase
accuracy, and allows the flexibility to utilize multiple networks in
order to maximize cost savings in specific geographic areas.
Administratively, there is a very direct savings in both programming
time and system maintenance. Workers’ compensation management
organizations have reported the need for up to 120 hours of programmer
time to implement a load a new PPO network option. Updates can easily
run to over 1000 field changes per month for a single state PPO. These
costs can be reduced or completely eliminated by an EDI claims transfer
as it places the repricing function back at the PPO. Repricing at the
PPO also increases accuracy. The intricacies of any given PPO’s fee
structures and provider arrangements are best understood and
administered by that PPO. This reduces the amount of claim corrections
and subsequently reduces customer service issues with the payor client
and providers.
Most significantly, however, the EDI process
provides the workers’ compensation industry a new degree of flexibility
with their PPO options. Currently the workers’ compensation
administrators and managers are tied into network arrangements that may
not be the best fit for them in all of their market places, but the
administrative cost of “building” a module for a new PPO vendor is cost
prohibitive. Direct EDI transfer of claims allows the claims
administrator the freedom to select from a variety of PPO options on a
national, regional or local basis that best fit their client’s needs and
maximize cost savings.
An example of
direct EDI at work:
The ASU Group
(Recovery Unlimited) is a workers’ compensation management organization
providing medical management, PPO management (bill review), and recovery
services to the workers’ compensation payor community. In early 2004,
ASU contracted with a workers’ compensation carrier that had network
needs in Indiana. The decision was made to implement the connection
with the network as a direct EDI claims transfer. In addition to the
advantages listed above, this was a major benefit simply in claim
handling. As in many situations the provider bill was often submitted
to the employer first, went to the carrier, then was forwarded to the
bill review agency (ASU). Interjecting another step in the process
would have complicated the process and caused a customer service delay.
The completion of the
direct EDI claims transfer was tested and implemented in under 30 days
resulting in: 1) the reduction of a step in the physical claim process,
2) reduction of overall administrative expense, 3) reduction in claim
processing time, and 4) increased cost savings by accessing a local
network that provides greater provider access.
The business of cost savings in the medical
arena moves very quickly to adopt technology but it sometimes takes some
time to move into all areas of our market place. The opportunities
presented by direct EDI claim transfer can work to revolutionize the
relationship between workers’ compensation managers and PPO’s.
Increasing the flexibility to use appropriate network choices and
decreasing administration efforts result in material and quantifiable
cost savings. Carriers and employers who are self-funded for their
workers’ compensation should consider the question of whether they are
really accessing the best PPO networks to maximize their savings or
simply utilizing what is “hard-wired” into their claims systems.
Technology has provided us better options.
For
more information about this article of Indiana Health Network please
contact Bruce Smiley at 317.284.7642 or via e mail at
bsmiley@ihnppo.com. You
can also visit their website at
www.ihnppo.com
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