One area experiencing substantial growth, and where technology can have a significant impact on the billing process, is electronic claims submission. A 2006 Milliman study revealed that it costs $6.63 to process a claim manually, compared to $2.90 electronically. Because of this significant cost savings, a number of health insurers are beginning to require claims be submitted electronically. Therefore, it’s not surprising that America’s Health Insurance Plans (AHIP) found that 75 percent of all health insurance claims are now submitted electronically, up from 24 percent in 1995. There are obvious additional benefits to electronic claims submission, such as:
- Reduced administrative tasks
- Increased accuracy
- Faster payments from payors
The Cost of Attachments
Even with electronic claim submissions becoming standard practice, claims that require additional documentation are still primarily being submitted manually. Although only four-10 percent of claims require attachments, they tend be high dollar claims that significantly impact provider cash flow. A 2002 Health Insurance Association of America survey found that lack of required documentation was the primary reason for pending claims.
Attachments average four pages in length and are traditionally submitted manually via mail or fax. If a medical billing manager does not utilize electronic attachments, they typically submit the entire claim and attachment manually, thus taking time away from value-added business processes. Paper claims and attachment submissions take anywhere from 28-120 days to be processed by the insurer, however electronic submissions are often processed in seven-14 days, greatly reducing reimbursement cycle time.
A typical medical billing organization submits an average of over 750,000 claims annually. If just four percent of those claims require attachments, that’s 30,000 claims, and at an average of $6.63 per claim, the cost equals almost $200,000. In comparison, it only costs $87,000 to process those claims electronically at $2.90 per claim, resulting in a savings of over 50 percent.
Furthermore, with The Center for Medicare and Medicaid’s(CMS) nationwide Recovery Audit Contractor (RAC) program the requests for claim attachments and additional documentation will increase. CMS and their contractors have discovered billions of dollars in overpayments to providers due to miscoding on claims or outright fraud. As a result of their findings, CMS has placed stiffer regulations on the medical necessity behind patient procedures, which will require providers and medical billing organizations to submit a greater number of attachments in support of their claims[HU1] . CMS issued a policy that allows them to request additional documentation on one percent of all claims submitted for every 45 days of the previous calendar year. So for example, if a provider submitted 426,000 claims the previous year, CMS could send up to 532 additional documentation requests every 45 days.
If the responsibility of the medical billing department is to maximize the revenue per claim and minimize the cost per claim, it only makes sense to employ an electronic attachments clearinghouse to completely automate the claims submission process. Most electronic attachment service providers, like MEA|NEA, or Jopari, are secure, HIPAA compliant and do not require expensive software purchases or upgrades.
Eliminate Paperwork and Phone Tracking
With lack of documentation often causing claims to be pended or denied, more time must be dedicated to follow-up, rework, and the resubmission of claims. When filing a claim that requires an attachment, the biller must fill out the claim form on the computer, but then also print out that form along with the required documents and images for the attachment. The attachments must then be either faxed or mailed, and receipt and approval of the claim and attachments is often verified with the insurance company via phone. The average paper claim takes 20 to 30 minutes to track via phone with average labor costs of $3.70 per inquiry, whereas an electronic claim and attachment can be verified and tracked on a web portal without the billing manager ever having to pick up the phone.
Imagine the time and cost savings if paper and phone tracking were completely eliminated from the billing manager’s to do list. By employing electronic attachments, all attachments can be submitted, tracked, and stored through the electronic attachment clearinghouse’s secure web portal.
Providing accurate information to the insurance companies can be the difference between a paid claim and a pending claim. Adding electronic attachments to the claims process not only further reduces the likelihood of human error, but also allows medical billing organizations to submit the supporting attachments with the initial electronic claim, thus greatly increasing the first-pass rate on many claims.
When submitting attachments electronically, the biller scans or uploads the required documentation, eliminating the possibility of lost attachments. Some electronic attachment clearinghouses offer features that enable medical biller’s to determine additional documentation requirements by payors for adjudication purposes per the clinical codes listed on the claim. This functionality eliminates the need to wait for a request for additional documentation from the payor.
Overall Improved Payment Performance
Attachments are a small piece of the claims process, but can have a dramatic impact on the speed of the payment process. The average billing cycle for a clean electronic claim is seven to 14 days compared to the average 28-day cycle for a clean manual claim.
With electronic attachment submissions reducing administration tasks and time, as well as, improving claim first-pass rates, overall payment performance will improve. For example, EmblemHealth’s dental division processed almost 20,000 electronic attachments last year, and when calculating the average cost per claim, they have saved close to $74,000. Due to the dramatic costs benefits seen in dental, EmblemHealth will begin incorporating electronic attachments to compliment their electronic medical claims services in early 2011.
Overall, electronic attachments can offer the most significant impact by improving the efficiency and accuracy of the claims submission process. By partnering with an electronic attachments clearinghouse, providers and medical billing organizations can submit 100 percent of their claims electronically, thus capitalizing on the benefits that technology brings to streamlining business processes and improving overall payment performance.