By: J.R. “Steve” Stevens, CEO, Jopari Solutions, Inc. and Peter Rousmaniere, Independent Consultant
In the field of workers’ compensation, more and more medical providers, payers, regulators and vendors are relying on electronic medical data transmission to save time and money, and to meet the increasing demand for more complete medical information.
Beginning in the early 2000s, the workers’ compensation community first recognized the potential of electronic data transmission for its market segment, already a proven model in other arenas such as group health, Medicaid and Medicare. At the time, select hospitals, occupational medicine clinics, and other early adopters began sending electronic bills to insurers or third party administrators. The evolution continued with medical providers attempting to electronically send treatment documentation to a few workers’ compensation claims payers.
But this was only the beginning. Today, some providers already rely on electronic transmissions for over half their workers’ compensation billing and document submission. Some payers, as well, use this method to receive up to a fifth or more of their incoming bills and attachments. These providers and payers are realizing definite benefits from more timely and accurate communication, thus reducing operating costs that are inherent from the friction of paper submission/processing. Indeed, electronic transmissions have emerged as the preferred method of sending and receiving medical information in workers’ compensation, thanks to a decade of small and large advances, refinement, and significant progress on an electronic highway that will eventually support virtually every inter-party exchange of medical information.
Conventional transmission methods, heavily dependent on mail, faxing and scanning, impose delays and error rates which leading medical bill review firms estimate as upwards of 20% or more. Also, new concerns about medical information privacy and the required security controls make these methods even more problematic. Electronic submission largely sweeps away these defects.
At first, adoption was spotty. Each payer wanted something different in the way of data or documentation. There were no real workers’ compensation guidelines, and the first versions of state rules to be put in place leaned towards the use of individual state-specific formats that were significant variants of with existing national standard formats.
It was soon realized that in order to achieve full adoption by providers, workers’ compensation payers needed to leverage the vast technology infrastructure in place to support group health and commercial claims. The workers’ compensation industry, working in conjunction with regulators and standards setting bodies, has established a consensus of how to employ these well-established formats, allowing providers to use their existing technology, while at the same time provide for the data requirements needed in workers’ compensation.
State regulators now have begun to legislate electronic transmission of bills, attachments, and remittance/payment information citing these standards. Many national workers’ compensation payers have begun to request and accept electronic bills and attachments in every jurisdiction.
The workers’ compensation professional and the medical provider executive need to be aware of, and know how they fit into this transformation. As standardization moves incrementally forward, the operational features will become more widely known, the implementation tasks less arduous, and economic benefit better documented.
Without the full adoption and standardization of electronic transmission methods, the workers’ compensation field will remain clogged with paper. And it will be handicapped in its urgent agenda to control spiraling medical costs because it will be unable to reduce delays and errors in medical information.
Jopari Solutions, Inc. (www.jopari.com) is a leader in inter-party data communications in the Property and Casualty insurance field. It has designed and operates a full array of electronic transmission services expressly for the workers’ compensation and the auto medical insurance market that can fully support the use of the national standards. It has been a leading participant in nearly every major milestone event associated with this evolution.
A Burgeoning Community of Beneficiaries
Constituents with six independent perspectives are moving forward the switch to electronic transmission.
State agencies can set standards and rules on the transmission of medical information pertaining to work related injuries, often based on HIPAA requirements. The pace of adaptation to electronic transmission of medical bills and attachments is more intense today in part due to recent mandates by states – Texas (1) and Minnesota (2) – to send and/or accept workers’ compensation medical bills/attachments electronically.
Workers’ compensation regulators are more assiduous about collecting information they view as necessary to maintain the integrity of their workers’ compensation system. These information demands include not just medical data, but also reports of injury and proof of insurance coverage. Regulators see the vast superiority of electronic submission over paper channels.
While each state operates with total independence from each other, many have looked to an association of state workers’ compensation agencies to provide guidance on establishing workers’ compensation electronic data interchange (EDI) standards. The association is the International Association of Industrial Accident Boards and Commissions (IAIABC). The IAIABC is a not-for-profit trade association representing government agencies charged with the administration of worker’s compensation systems throughout the United States, Canada, and other nations and territories. The IAIABC EDI Provider to Payer (Pro-Pay) Subcommittee and Medical EDI Committees are working collaboratively with standards setting organizations to establish a set of national workers’ compensation EDI guidelines. ( Jopari is an active participant and contributor in these efforts, providing valuable input from providers, payers, and technology suppliers.)
Claims payers receive medical information, channel it to various internal users and external partners, and make payments to medical providers. Insurers, TPAs, and self-administered employers are today burdened with huge, largely paper-driven flows of medical information in the forms of bills and accompanying documentation.
Claims payers which are experienced with e-billing like the “straight through” features of electronic submission. From the provider’s doorstep, data flows to the payer or its agents without human intervention and with powerful exception controls. With clean data, the payer can more accurately fulfill state data filing requirements, as well as process and pay bills in compliance with tighter turn-around standards states have begun to impose.
Independent vendors comprise another constituency. They act on behalf of the payer, provider or both. These vendors facilitate electronic transmission connectivity for the benefit of their customers. These vendors include clearinghouses, which shepherd data between entities, and e-billing agents (such as Jopari), which create the interfaces between clearinghouses and their provider or payer clients. They also include medical bill review systems and firms which receive medical information on behalf of their payer clients. Jopari has established formal trading partner relationships with numerous vendors, and continues to expand the inventory.
Medical providers are the originating source of medical information. They too are challenged with rising operational costs. Providers are primarily interested in being reimbursed quickly and accurately. Many have seen that electronic submission can cut payment cycle time by 75% or more. Providers range from solo practices that may be technologically challenged to multi-provider chains with immense internal IT resources.
A fifth constituency is the insurance rating agencies which actuarially analyze loss costs and submit filings to state insurance departments. The National Council of Compensation Insurers and the state bureaus that operate in states not covered by the NCCI are in the process of significantly upgrading the quality of medical information they are requiring from insurers. Their focus is on improving the quality of loss analysis in an era in which medical expenses exceed indemnity expenses and are growing at a considerably faster rate.
The NCCI is introducing a major overhaul of its medical database, effective in the third quarter of 2010. Participating insurers will be required to submit considerably more detailed information about medical payments. While not the intention, this “data call” will effectively put a much higher burden on insurers to collect correct and complete medical information from medical providers.
Voluntary standard setting bodies are committees, usually made up of representatives of the users of a given data transmission standard, and either accepted by industry or charged by a government to maintain the standards in question (3). Jopari is an active member and/or contributor to these organizations.
Visualizing the Technology
Start with the injured worker presenting her or himself at the registration counter of a medical practice. The practice needs to verify the coverage of the worker and obtain billing information. It may also want to confirm that the patient visit is approved by the payer.
It is technologically feasible for the practice to obtain these confirmations by electronic inquiry, as often happens in group health today. However, at this time, this stretch of the electronic highway for workers’ compensation has not yet been built. It will begin to be better established over the next few years.
So electronic communication begins today with the submission of a bill with accompanying documentation. In the workers’ compensation field, about 80-90% of medical bills include attachments, which document treatment and prognosticate future treatment and recovery.
Many providers are already accustomed to submitting medical bills electronically to commercial and government health insurers. (Most providers have technology in their offices to submit bills electronically using standard formats.) For workers’ compensation bill submission, it is necessary to think beyond the health insurance model to address the substantial amount of documentation, such as doctor’s notes and state forms which workers’ compensation claims payers need or are required to receive in order to establish the appropriate reimbursement.
If the practice has installed an electronic medical record or document management system, it can submit both the bill and the documents via secure transmission sessions, in standard formats (4). Many medical practices do not yet have fully electronic systems. In this more common scenario, the practice relies on paper records, and will need to submit documents by fax. The schematic shows that Jopari has established the processes to manage both electronic document and fax submission, which ensures linking attachments to the appropriate bill, before sending to the payer.
The medical practice could send its information directly to payers. This is rarely found, because the provider does not wish to dedicate resources to forge and manage direct links, and because payers may not wish to create or manage by themselves the vast number of connections required, as well as develop the complex system of edits and exception processing rules.
Jopari has deployed and manages a connectivity hub for payers with those providers which can submit directly, as well as clearinghouses and other e-bill agents. The system detects duplicate medical bills, matches to claim information supplied by the payer, as well as identifies errors and omissions in the submitted data. Jopari returns the submission to the sender for correction automatically. Without these checks, the bills may flow into the payer’s own intake or the intake of its partners (such as a bill review vendor) requiring manual intervention, incurring extra expense in processing, and delaying the reimbursement cycle. As noted above, the system also ensures that all required documentation is also submitted and linked to the bill, prior to sending the complete set to the payer.
Jopari is dedicated to streamlining the information flow by keeping the provider and payer fully informed about the status of transmissions via a series of acknowledgements. Thus, electronic transmission is essentially a two way communication involving constant editing, exception processing, and confirmations. As shown in the schematic, the payer and provider can access portals to monitor every step in the submission/reimbursement cycle, as well as have acknowledgments and remittance information imported directly into their systems by Jopari. This improved communication significantly reduces telephone calls about status and duplicate bill submission.
Eventually all the parties – internal and external to the payer– review, adjust, and pass on their results to the payer’s payment system. The payer then reimburses the provider. Information is also passed on to state databases where required.
The schematic shows that remittance information and payment to the provider can be completed electronically rather than by paper check. This extension of the highway is technologically feasible but at an early stage of implementation in the workers’ compensation field. Over the next few years, electronic remittance/payment will become more prevalent as the benefits of auto-posting of reimbursement decisions and cash are realized, thus reducing printing and mailing costs.
The Demon of Medical Inflation
You have to be part of this transformation because this trend toward e-transmissions is part of a bigger context—the heightened concern over medical inflation. Indeed, electronic transmission’s core rationale in workers’ compensation is medical cost containment.
State regulatory agencies have been upgrading their programs for overseeing the delivery of medical care. They are spurred on by the realization that medical care today accounts for more workers’ compensation losses than do indemnity benefits. In some states, over 70% of workers compensation claims costs are for medical payments, and nationally about 60% of claims costs are for medical care. These agencies want closer analysis of medical fee schedules and the performance of provider networks.
At the same time, the National Council for Compensation Insurance has, as noted above, significantly upgraded its “call” for medical data from participating workers’ compensation insurers. The NCCI expects these improvements will enable it to much better analyze loss trends and to project the impact on loss costs of proposed legislative changes at the state levels – for instance, a change in fee schedule.
Electronic transmission can sharply improve a claim payer’s influence over the course of medical treatment. Medical bills are received much faster, and this can mean discovering claims to which its employer clients have not yet alerted it. The claims payer learns quickly who is providing medical care – whether care is within or outside a provider network. When bill submission is simultaneous with document submission –as it should be – the claims payer is decidedly advantaged by getting quickly the material it needs to assess, reserve for, and strategize the claim, as well as authorize payment.
Claims payers should therefore approach e-billing not simply as a way of shaving the burdens of managing paper flow or simply achieving compliance. They should use e-billing to sweep away obstacles to improving the management of medical care.
Jopari Solutions, Inc (www.jopari.com) provides to the insurance industry gateway technology which expedites medical and financial data communications among payers, providers, suppliers, and regulators. Jopari’s technology speeds data throughput, reduces errors, and lowers overhead. Jopari is a leader in inter-party data communications in the Property and Casualty insurance field.
About the authors:
JR “Steve” Stevens is CEO of Jopari Solutions, Inc. – he can be reached at firstname.lastname@example.org.
Peter Rousmaniere is a nationally recognized expert in workers’ compensation. For over twenty years, he has served as entrepreneur, consultant, lecturer and journalist covering technology, managed care, injury prevention, and claims payer strategies. He holds a BA and MBA from Harvard University. He can be reached at email@example.com.
(1) The Texas Department of Insurance, Division of Workers Compensation, mandated e-billing as of 1/1/08 “to be able to exchange medical billing and reimbursement data electronically.”
(2) The Minnesota Department of Public Health mandated e-bill transmittal as of 7/15/09 and remittance as of 12/15/09. The regulations cover bills for almost all health transactions including workers’ compensation and auto medical.
(3) These standard setting groups include: ASC – Accreditation Standards Committee; NCPDP – National Council for Prescription Drug Programs; NUBC – National Uniform Billing Committee (mainly for hospitals); NUCC – National Uniform Claims Committee (mainly for doctors); and WEDI – Workgroup for Electronic Data Interchange.
(4) Four of the ASC X12N standard transactions that are most prevalent in workers’ compensation EDI connections are ASC X12N 837 Healthcare Claim (bill); ASC X12N 835 Healthcare Claim Payment /Remittance Advice (EOR/EOB); ASC X12N 275 Additional Information to Support a Health Care Claim or Encounter (documentation/medical attachment) ; and the ASC X12N 277 Health Care Claim Acknowledgement (status messages.)