There’s no question that the healthcare industry is on its way to completely digitizing business processes. The EHR Stimulus Alliance, a joint effort by well know IT vendors whose purpose is to educate physicians across the country on the benefits of the American Recovery and Reinvestment Act of 2009, resulted in a dramatic increase of healthcare providers that adopted EHR and began digitizing other business practices, such a e-prescribing. According to a recent study from CompTIA, half of healthcare providers are currently using EMR/EHR systems and one-third expect to increase IT spending by five percent over the next year. With more and more providers making the switch to electronic records, it enables medical billing organizations to complete their transactions with the insurance companies electronically, reducing costs and eliminating unnecessary administrative tasks.
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 partner to completely automate the claims submission process.