This is the second of a three-part series on the current and future market for computerized healthcare financial systems. Access part one here.
In hospitals alone, patient billing systems this year represent a $230 million market, one that's expected to reach $253 million next year, according to Michael Davis, executive vice president of products and services at HIMSS Analytics. Davis said upcoming financial requirements will swing the budgetary pendulum toward financial systems, sucking dollars out of clinical systems projects. But those spending figures fall far short of what's being spent on some clinical systems.
"There are two regulations that are going to be driving financial systems purchases," Davis said. "One is HIPAA claims attachment, where you need to more tightly couple claims and financial systems."
On Sept. 23, 2005, HHS published its proposed rule for HIPAA electronic healthcare-claims attachments. A final rule is expected no later than fall 2008, according to a CMS spokesman. Under the rule, clinical information can be attached to electronic claims transmissions so insurance companies wanting more information about a claim can obtain it without delay by waiting for paper records to be delivered and processed.
"The second one is called severity-adjusted DRGs," Davis said. That proposed rule was issued April 13 and calls for creating Medicare Severity DRGs and phasing them in through fiscal 2009. "What they're doing there is they're inputting entirely new coding systems that are kind of tuned for severity of illness, which the current DRGs aren't," he said. "They were due this year, but they pushed it back. A lot of these patient accounting systems have these old legacy architectures, and it's not easy to reconfigure them." So replacement is a likely option.
"What it will do in our opinion is it will slow down (electronic medical-record) implementations. It will have to," he said. "These are government regulations that have to be done." Plus, just as clinical system rollouts fixate clinical leaders, a financial systems upgrade will rivet the attention of financial leaders who cannot afford to make a mistake.
"As they replace their financial management systems, a lot of chief financial officers see that as a career-limiting decision," Davis said.
Greg Snow is vice president of revenue cycle at Geisinger Health System, an integrated delivery network including three acute-care hospitals and more than 40 physician offices and clinics based in Danville, Pa. Geisinger has been an early participant in a Healthcare Financial Management Association task force on patient-friendly billing that is requiring a complete overhaul of financial systems and processes at Geisinger.
"We actually got started in September or October of 2005," Snow said. "What we said was, 'What do patients really want to see?' I'm a firm believer that patients don't necessarily care what the charge of something is, whether an MRI is $1,000 or $10,000. Many people view healthcare as an entitlement, and I don't have a problem with that. What they're concerned about is what's coming out of their pocket."
The Geisinger goals, Snow said, are to be able to show what a patient would pay out of pocket before they check in and "to do everything in advance from an administrative point of view, so everything you do when you come in is clinical."
Snow said no single software vendor offered a system that could do all of the tasks Geisinger needed. He described a system using multiple software applications pieced together in places with computer interfaces and in others with "sneaker ware" (i.e., human labor) to create an integrated whole.
"Right now, a lot of it is done manually," Snow said. "We don't have the complete system in place. What we're ultimately looking to doit should happen within the next six months to a yearis to be able to guarantee to a patient what (their) out-of-pocket expense is going to be."
At Geisinger, the first step is to verify coverage and benefits, Snow said. Geisinger developed its system in conjunction with a third-party vendor to take patient information from the hospitals' scheduling and orders software, check eligibility and determine patient benefit levels, run that information through the hospital's contract management system and then price the services and calculate who pays what.
"Anywhere from two days to 30 days in advance, we will take all these appointments and verify all of the benefits in a batch mode," Snow said. "The real issue with this, and where there is a major paradigm shift, most revenue departments in the past have been good if they could verify coverage. We're taking it to the next level.
"We're not only verifying coverage, but we're verifying benefit levels. That's a big deal. Do you have secondary insurance and what are the terms of secondary coverage? One of the drawbacks is that most plans will provide you with a confirmation of benefits, but they won't tell you the status of their (member's) deductible and how much of that is left today, $500 or $1,000. That is problematic."
Emergency department patients account for 40% of hospital admissions at Geisinger, Snow said, so for them, "We have a same-day process set up. We use pieces and parts of the system to do the administrative work from the ED."
Overall, he said, "We're doing well with the inpatient parts of things. The outpatient component and the physician piece create issues. We have 700 physicians. That's a pretty substantial workload. There is no issue on the physician contracts, it's more of a volume play, and it's harder to predict what the services will be. If someone comes in and said, 'I'm having a right knee replacement or a hernia operation, for the last two years I can tell you exactly what my average costs have been. With the contracts, we can get very accurate."
The advance pricing system is not nearly as effective with more-complex cases, Snow said. "When you come in with an undiagnosed illness and we start running tests, that's when we get into problems."
"Are we there 100%? No," said Snow, who estimates that 65% to 70% of Geisinger hospital patients receive estimated bills in advance of treatment. "Are there pitfalls and drawbacks? More than I can talk about. But it does provide you with a competitive advantage in the marketplace, because there are so few people out there in the market doing it."
By front-loading a patient's complete financial picture into the system as early as possible, it gives the hospital time to respond to the patient's financial needs, Snow said.
"We don't deny care to anybody," Snow said, though the growing number of uninsured among the employed patient population has increased the need for flexibility and responses tailored to their situations. "Over the last few years, the number of (uninsured) people with incomes of $50,000 a year has increased by 155%. If a person is making $50,000 a year and we know that in advance, we can make other arrangements. We can say, 'Let's talk about discount plans, charity-care or payment plans. We can be more efficient. We're trying to make it a competitive advantage by offering services that are more patientcentric."
Developing the system was not cheap, so Snow knew that measuring return on investment was critical and not just by the squishy, anecdotal ROI estimates that are typical of clinical IT projects.
"If you add, like in our case, 125 people (employees), obviously there are costs associated with that investment," Snow said. "I was looking for something that was ironclad to measure." That turned out to be claim-rejection rates. Before the program, the Geisinger rejection rate was around 5%; today, it is less than two-tenths of one percent, Snow said.
"When you take that on net revenue of $1.8 billion a year, that's a substantial amount of money," he said. "We estimate that our improvement to net revenue from this program is a little over $20 million a year, and the cost of the program is $5 million a year. That's 4-to-1 on just rejections. It doesn't take into account reduced expenses from not having to redo claims. It doesn't take into account (improved) patient satisfaction."
Snow said he hopes to reach "ideal state" with the program within six to nine months. "I think there are a couple of pieces Im still concerned about. I'm concerned about integration of the self-pay segment, and I'm concerned about capture of all the services provided, and the last piece will be guaranteeing the cost. I think it will work. I know it will work. Are there issues to overcome? Absolutely, but I think that's where healthcare is headed."
Look for a description of the Intermountain-GE project's "next generation EMR" in the final section of the three-part series.
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