NEHEN :: NEHEN in the News

Modern Healthcare

Bifocals needed for focus on HIPAA
Eye on Info: Internet Technology and HIPAA

By John Morrissey
February 7, 2000
URL: http://www.modernhealthcare.com

What do you see in the initials HIPAA?

Information management provisions in the federal Health Insurance Portability and Accountability Act of 1996 will test the vision of healthcare organizations, say consultants anticipating final rules early this year.

Senior executives will need plenty of vision to direct the biggest forced revamping of healthcare operations since Medicare. But to see clearly, use bifocals.

That's to help see near and far at the same time. Even though the HIPAA challenge is imminent and pressing, it presents a defining moment for improving business processes well beyond the scope of the regulations themselves, says Tim Segall, a partner with Computer Sciences Corp.'s healthcare consulting group.

A voluminous checklist of regulatory do's and don'ts will require a sharply focused near-term plan to meet mandates on electronic transaction standards, information security and patient confidentiality within a tight two-year timeline.

But experts say healthcare organizations also need a long-term view of where this flurry of activity fits into larger goals that stretch to the horizon: fostering efficiency and knifing unnecessary costs. Early efforts demonstrate the potential to save or recoup millions of dollars annually.

"It can create major efficiency -- if you look at it as the driver of what should have been done in any organization," says Shannah Koss, HIPAA services executive for IBM Global Solutions. "This is finally going to get us where we need to be."

The bad news is that the process of cutting costs from business operations will itself be costly. The good news is that Internet technology, a new recruit in the data management campaign, has reported for duty.

"The presence of Internet technology will make these things easier to do in 24 months," says John Glaser, vice president and chief information officer at Partners HealthCare System, a Boston-based organization of six hospitals and nearly 1,000 physicians.

In the Boston area, major provider and payer organizations already are well on their way toward a uniform method of handling healthcare transactions, including a common technological basis for sending them electronically.

A consortium called New England Healthcare EDI Network incorporated last November, two years after regional providers and payers began discussing a cooperative plan for designing and implementing administrative cost-reducing measures.

NEHEN's objectives are to:

Improve care quality by facilitating timely exchange of electronic data.
Reduce labor costs associated with current administrative processes.
Reduce financial exposure related to inefficient and incomplete business procedures, such as confirming eligibility for insurance reimbursement.
Help organizations meet HIPAA regulatory requirements.

Getting the major provider and payer organizations to agree to such a joint undertaking was the first of two critical elements in the overall plan, Glaser says.

Partners is one of NEHEN's three founding provider organizations, along with CareGroup Healthcare System, with five Boston-area hospitals, and Lifespan, with five hospitals in Rhode Island and Boston.

Founding payer organizations are Harvard Pilgrim Health Care, the second- largest payer and largest managed-care organization in eastern Massachusetts, and Tufts Health Plan, the region's second-largest managed- care organization. Harvard Pilgrim and Tufts have recently gushed red ink, in part because they could not control expenses. That gives them all the more reason to back NEHEN.

Three other provider organizations recently joined the network: Boston Medical Center, Children's Hospital of Boston and UMass Memorial Health Care, a system of four hospitals in the Worcester area.

The other critical element involved agreement on a common set of transactions, and the federal government's adoption of a particular set of industry standards did the trick, Glaser says.

Work groups under the banner of the Accredited Standards Committee X12 had met six times per year since 1993 to hammer out a comprehensive set of national standards. But it took the push from HIPAA to lend authority to the effort to streamline administrative processes, says Segall, who's also the NEHEN project manager.

"Two years ago, nobody knew how to start fixing this problem," he says. "Now it's supremely clear."

To establish a common technological base for the transaction network, NEHEN members agreed to adopt the protocols that are central to information exchange on the Internet. But rather than use the public Internet, they decided to stay within a private areawide telecommunications network, Segall says.

"It doesn't have to be the Internet per se; it has to be the Internet technology," Glaser says. All participants had to speak the same electronic language, and all had World Wide Web browsers either in place or as part of their computer plans, which made Internet protocols "well-suited to the task," he says.

The extra cost of a private network was worth avoiding the potential for public wrath over conducting healthcare transactions via the Internet, Segall says. "We pay a small amount of money, we stay out of the press, and we get a good-quality level of service."

Each NEHEN member pays $120 per month for the network connection. The consortium operation, run by Computer Sciences, is supported by subscription fees of $6,000 per member per month.

For now, the priorities center on reducing the mistakes and omissions early on that lead to denial of payment and inability to collect.

After an 18-month pilot project, a procedure for verifying eligibility under terms of a patient's insurance plan is in operation networkwide, Segall says. A program for confirming referrals and gaining authorization for treatments is scheduled for launch later this month or in March.

Once those principal obstacles to claims payment are addressed, an electronic claims-processing initiative is scheduled to begin in August, using standardized transactions between providers and payers.

The savings potential of the automated process is "a tens of millions of dollars proposition" for Partners, which has 300 people devoted to deducing the reasons for claims denials and trying to fix them, Glaser says. The usual denial rate: 10% to 12%.

In one outpatient department at an unnamed Partners hospital, the push for eligibility verification reduced claim rejections by 50% in the first four months, Segall says. It also reduced the time spent reworking denied claims, improved data quality within hospital information systems and cut down on the number of administrative queries from patients.

Less than 5% of outpatient cases underwent an eligibility check under the manual process of verification, and inpatient verification was done after registration, according to results of the case study. That led to misdirected claims, wrong insurance identification numbers and services provided but not covered. What's more, the revenue to be gained by bird-dogging outpatient billing problems after the fact usually isn't worth the cost, Segall says.

The new electronic approach provides access to eligibility verification in scheduling, registration and billing departments, covering 80% of the patients with insurance.

For Partners, a provider organization with more than $2.5 billion in annual revenue, the annual impact could amount to "$25 million to $30 million we'll get that we were losing before," Glaser estimates.

Technology alone did not suffice, however, for business operations employees who were not focused on checking for eligibility, especially in the outpatient departments. Once the computer system is built, "you can turn it on, but that doesn't mean they're quite ready to use it," Glaser says. Part of the initiative involved redesigning work flow to capture correct data at the beginning of the patient encounter.

To capture a critical mass of that data from payers, Boston-area providers had an easier time than most. "We didn't have to have 20 people in the room," he says about getting the cooperation of payers. "We just had to have five."

A key conclusion of the NEHEN pilot project was that providers require "all- payer access," defined as support for a minimum of 70% of their payer transactions. More than a dozen payers serve eastern Massachusetts, but NEHEN corralled "the only five payers who count," Segall says.

Besides Harvard Pilgrim and Tufts, Partners forged data connections with Blue Cross and Blue Shield of Massachusetts, the state Medicaid program and the Medicare fiscal intermediary.

By contrast, the Stamford, Conn., market just 200 miles away has a large number of payers with small percentages of market share. Hospitals in that market would do well to wait for payers to conform to HIPAA standards, easing the initial burden of gaining cooperation and building interfaces with that many insurance data sources, Segall says.

The more destinations for data a network must serve, the more critical an Internet-style approach becomes, Glaser says. Markets with many scattered players need such an option, but NEHEN could have done just fine using non- Internet technology, he says. The compact core of essential players in the consortium made the availability of Internet technology less critical to success.

But the use of Internet protocols in its network sets up the consortium to take advantage of innovations in security that could someday pave a path to the public highway, Segall says. "With a trivial amount of work, we can drop it onto the Internet."