Part one of a three-part series
In recent years, particularly since 2004, when President Bush created HHS' Office of the National Coordinator for Health Information Technology, most of the federal focus on healthcare IT has been on promoting the adoption of clinical applications and the development of healthcare data exchange.
Computerized financial systems have taken a back seat.
Yet the increased interest in and adoption of clinical IT systems is leading some cutting-edge healthcare leaders to take a second look at their financial systems and make plans to replace or reconfigure them, according to industry experts.
One goal is to optimize the integration of their financial systems with their clinical systems, not only to enable more accurate and timely billing, but also to gain synergy for combined clinical and financial process improvement. Additionally, the advent of consumerism and the emphasis on transparency in healthcare pricing is driving needed adaptation of healthcare financial systems to produce information not only for chief financial officers, but also for patients.
Suzanne Lestina, technical manager of patient financial services and revenue cycle for the Healthcare Financial Management Association, says the advanced age of many of the financial systems in use is just one issue forcing finance executives to take stock of their computerized toolboxes. According to a recent analysis by HIMSS Analytics, the market research arm of the Healthcare Information and Management Systems Society, some billing systems in use at U.S. hospitals today date back to the '80s.
Lestina says another driver of change is the increased suspicion that current voluntary pay-for-performance schemes will become mandatory and force rapid adoption of clinical systems. It has given finance and IT executives an added concern: Clinical system installations are expensive and take years to complete and integrate. Will they overwhelm IT budgets, leaving little or no money for necessary and overdue financial system upgrades?
"They're taking a look at their IT needs, and those needs have substantially grown, and they might be significant compared to what they have budgeted," Lestina says. "Are there going to be competing values? Absolutely. In my experience, clinical always seems to win out over the financial. If there is a mandate that there has to be this EMR, it's going to shift the money to the clinical side."
Driven by consumerism
Executives have yet another shift to worry about regarding their financial IT systems: the trend by employers to pass on larger shares of their healthcare costs to their employees in the form of higher premium splits, deductibles, copayments and out-of-pocket caps. As a result, patients, even those in traditional group health plans, are at increased financial risk in the event of serious healthcare problems. Toss into the mix the slow increase in market penetration of high-deductible health plans tied to medical savings accounts, and that the financial risk to providers continues to rise in proportion to costs shifted from employers and health plans to consumers.
Lestina says one way the industry is trying to cope with these changes is through provider-side financial systems capable of electronically "pulling" eligibility and benefits information from insurance companies in "real time" and matching it with the provider's charge data to identify early on a patient's out-of-pocket liabilities.
"Usually, the goal is they're doing that before the patient presents, or at least before the patient receives services," Lestina says. "It's supposed to provide hospital employees the information they need to provide financial counseling."
In reality, "real time" only moves as fast as the providers can pull data from the payers. For payers and providers thus far, technological progress has been slow, Lestina says.
The Council for Affordable Quality Healthcare, or the CAQHa coalition of providers, IT vendors, payers and payer trade associationsand its Committee on Operating Rules for Information Exchange, also known as CORE, is working to standardize rules for communication between plans and providers, initially, to check member insurance eligibility and benefit levels.
Lestina said the CORE program is still being adopted by plans, and so, "Its not available to everybody. It is voluntary. It's not subjected to any rules or regulations, and it isn't being adopted as quickly as I think they thought it would be. There are payers who have adopted it, but because there are not enough of them, I don't know yet if it has actually provided value to the providers. It will be interesting to get feedback on that."
Chris McNamara, CAQH spokesman, says the first batch of rules was released in September 2006 for checking and communicating patient eligibility between plans and providers. This past April, the first plans and providers were certified by the CAQH as users of the new rules. Providers listed as CORE-certified as of June include the Mayo Clinic, Rochester, Minn.; 1,002-bed Montefiore Medical Center, New York; and the Veterans Health Administration. Four payers were listed as certified, but one of them is Indianapolis-based WellPoint, which includes 14 Blue Cross and Blue Shield plans.
Certification means if a payer or provider makes an eligibility inquiry, the organization's system will comply with the rules, McNamara says. Certified providers will be able to get a response from a certified plan within 20 seconds. "It allows for batch processing, but we strongly discourage that, because the world is moving toward real time anyway, so that's the goalnot to facilitate an old process," McNamara says.
No metrics are available yet on claims volume or average transaction speed since certified plans have been complying with the CORE rules only since April. "We're thinking that it will be toward the end of the year before we have any real data," he says.
However, according to a 2006 survey by the CAQH of eight provider organizations involved in the CORE programusing CORE rules and automating the eligibility and benefits verification processes using HIPAA 270 (the Health Insurance Portability and Accountability Act-approved data standard for inquiries into eligibility, coverage or benefit information) and 271 (the standard used to provide eligibility and benefits information, typically in response to an inquiry)the average labor cost dropped about 50%, from $2.7 million a year (or 51 cents per transaction) to $1.3 million a year (or 25 cents per transaction).
Health plans, not surprisingly, did even better with automation, according to the survey. Their average labor cost per phone call to check eligibility was $1.38, compared with essentially no cost for an all-electronic transaction. "For the 16 health plan respondents that provided eligibility data, the annual labor savings could be as much as $78 million," according to the CAQH survey report.
Look for industry experts' comments on regulations that will drive financial systems purchases in part two of the three-part series.
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