HIPAAnotes Volume Three, July 2003

No. 27 – Planning Is Needed to Reap HIPAA Transaction Benefits

Remember Administrative Simplification? Remember those HIPAA provisions that if implemented, would lead to significant savings? If not, now is the perfect time to refocus on one of the major benefits to your organization that will make this painful journey to HIPAA compliance worthwhile in the end.

To comply with HIPAA, all healthcare providers that conduct electronic transactions and requested an extension to the original deadline for compliance with the transaction and code sets (TCS) provisions should have begun testing with payers and clearinghouses on April 16, 2003. Those of you who are testing now are probably doing so with two primary objectives:

The prevention or avoidance of a disruption to your revenue stream and
The minimization of any risks that would accrue from non-compliance with federal law.

You are right to be focused on those objectives. However, it is important not to lose sight of an additional important objective, namely:

HOW TO REAP A RETURN ON YOUR INVESTMENT (ROI) FOR TCS COMPLIANCE.

To fully maximize your ROI, you will need to know where you're going. To know where you're going, you'll need a map of the new terrain or quite simply, a plan for changing your processes to address automation under TCS requirements.

When constructing your plan, it is important to consider your organization's strategy for taking advantage of the automation opportunities provided by TCS standardization. Many activities that you currently perform manually will not have to be touched by an employee. There are actually many benefits that can be recognized from automating your processes through use of the standard transactions but the two primary benefits are:

You can eliminate the full-time employees (FTEs) associated
with the previously manual task or
Redeploy the FTEs to other important but understaffed areas
in your revenue cycle.

For your planning activities, it is wisest to take a systems approach. In doing so, you will be better able to decide which process alterations make the most sense for your particular organization. In the next four articles, we will explore more specific planning considerations for the various components of the revenue cycle.

John Thompson, Director
Phoenix Health Systems

No. 28 – How to Benefit from Automating Front-End Processes in Provider Settings

A critical component of the revenue cycle of any organization is the Patient Access or Patient Registration department. We all know that most of the information that will be required in any compliant transaction will have been collected and entered by this department. You can meet the requirements of HIPAA by simply collecting the right information in order to produce a clean or compliant transaction. However, if you're like most organizations, you have incurred significant costs in time and money in your efforts toward compliance. To maximize your return on investment (ROI), planning is the key! Your planning efforts must consider not only collecting the right information, but also collecting the right information in ways that benefit both the revenue cycle and customer relations.

A high leverage front-end activity is the pre-registration of patient encounters prior to service delivery. Pre-registration offers the following benefits:

More timely notification to patients of their financial responsibility
Increased up-front collections
Improved customer relations opportunities such as:
1. Pre-encounter instructions
2. Directions to healthcare facilities
3. Reminders of the date and time of appointments

Use of the 270 and 271 transactions (Health Care Eligibility Benefit Inquiry and Response) will allow you to request and receive authorization and benefit information from your payers. The transactions may be conducted in advance of or at the time of service. In your planning to maximize ROI from transactions and code sets (TCS) compliance, the timing of these transactions is critical to the eventual benefit that you can expect to achieve. If you pre-register patients in advance of encounters, you can achieve the following benefits:

Improved lead time to obtain insurance benefits prior to the encounter
Better communication and management of patient expectations for the encounter
No patient waiting time for registration/pre-certification at the encounter

If you're wondering where to get the staffing to pre-register your patients and to fully benefit from the 270 and 271 transactions, planning is the answer. Our next three HIPAAnotes will discuss the importance of careful planning to determine how to prioritize the expected automation of the other components of your revenue cycle and coordinating automation of your activities with payers and clearinghouses. Your schedule of automation will define how and when you can re-allocate resources to focus on improving the efficiency of your front-end processes.

John Thompson, Director
Phoenix Health Systems

No. 29 – Benefit from Automated Front-End Processes with Creative Planning

An organization that may be only somewhat excited about HIPAA transaction and code sets (TCS) opportunities may find that it could be quite excited about the 278 transaction. If your organization engages in revenue cycle "best practices," it pre-registers about 90% of its elective encounters. This is a good thing because your organization will use every second of lead time gained through effective pre-registration not only to request eligibility and benefit information, but also to make seemingly endless calls to payers and providers to request referrals and authorizations. In fact, almost half of the time spent used in the authorization process is devoted to making these calls.

The 278 transaction holds the promise of reducing the time spent verifying referrals and requesting authorization by enabling the request and response process to be conducted electronically. However, you must PLAN for the fact that the 278 transaction will only eliminate referral and authorization calls when the referring provider has done her part by first communicating the referral to the payer organization. When this step is NOT done, you will still need to have staff available to phone in reminders to your referring providers.

Yet, through creative planning, this process may also be automated in the following ways:

Real-time unfavorable 278 responses received during the pre-registration process could be formatted and immediately forwarded (electronically) to referring providers as reminders that they need to send authorizations to the payer;
Pre-scheduled 278 requests could be resubmitted to payers to recheck authorization status; and
Unfavorable 278 responses could be pre-sorted by patient type into reports that could be automatically routed to Case Management, Patient Access, or Patient Accounting for follow-up.

The 278 referral and eligibility transaction does offer the promise of more efficient and cost-effective operations. However, creative planning will still be needed to fully prepare for both the challenges and opportunities offered through the use of this transaction.

John Thompson, Director
Phoenix Health Systems

No. 30 – From Surviving to Thriving with Back-End Automation

If your organization is like most covered entities, all of your current HIPAA transactions and code sets (TCS) activities are likely focused on creating and testing what you hope will be compliant transactions. Your primary objectives probably are:

The prevention or avoidance of a disruption to your revenue stream; and
The minimization of any risks that would accrue from non-compliance with federal law.

As we indicated in the first article in this series, the time is NOW to be focused on those objectives. We know that you've made a significant investment in your effort to survive the next big HIPAA challenge to comply with the TCS regulations by the October 16th deadline. Yet the earliest benefits of administrative simplification will be won by organizations that are planning to thrive in the post October 16th environment.

To do so will require a new "concept of operations" for most organizations. You can start by planning to use your existing information technology (IT) resources to minimize time-wasting "hand-offs" between the departments in your revenue cycle. Work with your IT team now so that claims missing the required 837 elements are automatically routed back to the front-end departments responsible for populating them. Once repaired, further automation would allow the compliant claims to be immediately submitted, without manual intervention by the billing staff.

Additionally, your new concept of operations should leverage all the potential benefits of the 276 and 277 transactions. Many organizations have "hidden armies" in Patient Accounting that spend significant time on the telephone checking claim status. With a little imagination and a lot of IT assistance, 276 claim status requests can be pre-scheduled. Moreover, using "if – then" logic, payer 277 responses can be programmed to automatically to "reroute," "repair" or "re-bill" based on the content of the response. The possibilities for automation are only limited by your imagination, the talent of your IT department, and your failure to start your planning now.

John Thompson, Director
Phoenix Health Systems

No. 31– Two Laws Are Better Than One

In our last four articles, we focused on a number of the ways that effective planning can help move your organization beyond HIPAA transaction and code sets (TCS) compliance and into improved revenue cycle effectiveness.

Because of effective planning, we can now visualize a post October 16th world that we can look to with anticipation. In this new world, we look for a new healthcare environment. This is the vision:

We've partnered with our information technology partners to automate authorization processes with the result of reduced denials.
Our patients understand their insurance benefits prior to their encounters with the result of improved collections.
Our insurance verification and billing staff spends less time on the telephone and more time providing true financial counseling.
Even our patient flow and customer service has improved due to the good pre-registration practices that made all off the above possible.

We were able to do all this because we considered the benefits offered by the administrative simplification provisions of HIPAA and developed the plans needed to reap them.

Emboldened by our success, we begin planning to benefit even further. Thirty nine states have "clean claim" laws that impose financial penalties on payers that fail to pay compliant or "clean" claims within a predetermined time period, usually about 45 days. Because of TCS standards, we know what a clean claim should look like and move confidently to press the issue with payers. We have also received a recent guidance from DHHS which gives the clear message that there are no further delays to hope for and directs us to forge ahead with the understanding that we will not be held up for public ridicule if we submit an imperfect claim. We now have HIPAA on steroids. Because we planned effectively, October 16, 2003 is not a date that will live in infamy but rather the beginning of a new era for healthcare.