Estimates show that that unnecessary spending in the U.S. healthcare system reaches $1.2 trillion of the $2.2 trillion total spent nationally. Studies indicate that automation, simplification of processes, or a combination of both could generate savings ranging from $21 billion to up to $300 billion.
Government-mandated electronic data interchange (EDI) standards (through the Health Insurance Portability and Accountability Act, HIPAA) are in place for healthcare transactions associated with the payment process cycle, as it relates to eligibility verification and notification of processed claims. Yet, the interpretation, utilization and application of the standards vary widely among EDI entities (e.g. payers, claims clearinghouses, and practice management software vendors).
Current Environment
HIPAA addressed issues related to data content and format for health care-related EDI transactions. However, there is still a lack of uniformity in the flow and access to data that leads to variability in the execution of transactions, which results in waste in the system. A recent study indicates that administrative activities spending on claims processing ranges from 10 percent to 14 percent of gross revenue for physician practices, 8 percent for hospitals, and 7 percent to 11 percent for private insurers.
Opportunities
A study shows that labor costs associated with the verification of insurance coverage could be reduced by as much as 50 percent with the adoption of automated HIPAA eligibility transactions, as opposed to labor-intensive and time-consuming insurance verification methods (e.g., the Web, fax and phone). Labor costs estimated at $1.38 per call could be eliminated if insurance coverage verification were automated.
The CAQH Committee on Operating Rules for Information Exchange (CORE) continues to develop voluntary operating rules for electronic data interchange to improve administrative efficiencies in health care. CORE's operating rules have addressed eligibility verification and benefits information, claims status and are now addressing additional transactions. CORE's efforts model those of the banking industry, which developed operating rules for electronic transactions (e.g., electronic funds transfers). CORE's goal is to push the industry to make CORE-certification the norm.
HASC Recommendations
Adoption of voluntary certification with the Council for Affordable Quality Health Care (CAQH) Committee on Operating Rules for Information Exchange (CORE) Phase I and II rules by health plans, clearinghouses, and practice management systems and electronic data interchange, as well as active participation in CORE Phase III.
- Development and dissemination of standardized materials to educate the provider community about the CAQH CORE Phase I and II rules, and CORE certification for vendors and practice management systems.
- Streamlined implementation of new or substantially revised HIPAA standards by support of pilots that test standards prior to adoption.*
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* On January 5, 2009, CAQH announced a partnership with CMS, the Blue Cross and Blue Shield Association (BCBSA), Integrating the Healthcare Enterprise (IHE), and the Healthcare Information and Management Systems Society (HIMSS) that is focused on demonstrating how the CORE Phase I and II rules are already requiring, and thus pre-testing, for aspects of the "new HIPAA" transactions (new regulation under HIPAA will be slated for 2012). HASC wants to use real-world efforts like this to show that the industry can embrace, test, improve, and use standards before they are required for adoption.
