Business of Healthcare

A New Look at EDI

Single source solution leads to 60 percent decrease in cost per claim.

By Gigi Wallin

At the centralized billing office for St. John's Regional Medical Center and St. John's Pleasant Valley, both part of Catholic Healthcare West (CHW), staff have taken a new look at the use of electronic data interchange (EDI) to support business office processes. Approximately 18 months ago, we replaced several existing EDI systems with a new, single source, all payer solution, and today, we are seeing the results of this re-engineering effort.

The benefits have been found in the consolidation of multiple disparate systems into a single solution that is easy to use and support. We now have a consolidated data repository of claim data available on-line to all authorized staff. As an added bonus, we have reduced our transaction cost by approximately 60 per cent.

Our centralized billing office, located in Camarillo, CA, processes about 10,000 claims each month for inpatient and outpatient services provided at CHW's 261-bed St. John's Regional Medical Center in Oxnard, CA, the 180-bed St. John's Pleasant Valley Hospital in Camarillo, and a network of outpatient facilities. We also operate a long-term care and a skilled nursing facility under contract with Medi-Cal (the Medicaid program in California), and three off-site therapy centers, each with different billing requirements.

Our 53-member office processes two broad types of claims: commercial and government. The commercial side accounts for 40 percent of our electronic billings with Blue Cross being our largest payer. Government payers, including Medicare, Medi-Cal, and CHAMPUS, account for the other 60 percent.

Getting Started

The previous patchwork of EDI systems had numerous shortcomings. Software residing on several separate computers formed our "system" for claims processing. For example, we had terminals dedicated to processing only CHAMPUS claims, and separate terminals for processing Medicare claims and transmitting them to the direct dial entry (DDE) port at our fiscal intermediary, Mutual of Omaha.

This configuration created a cumbersome, slow process in the office. If several people wanted to process Medicare or CHAMPUS claims, each had to physically move to the "electronic billing room" and wait for an opening at a Medicare or CHAMPUS terminal, each carrying a stack of 50 or 60 claim records to work on. Furthermore, only one employee on the commercial side handled electronic billing. If commercial claims volume were particularly heavy, that biller would fall behind, and no one else knew how to do the job.

Even though our claims were being billed electronically, an excessive number of claims didn’t make it through the system. Every month, a significant amount of time was lost waiting for claims to be paid, only to discover they were rejected or, according to one payer, never received. Not only were staff consumed with trying to resolve problems, we felt the impact on our account receivable days outstanding. Complicating matters, none of our several systems could give us current claims status reports, and none of our vendors could solve the problem of disappearing claims.

LAN System Selected

Realizing that value-added EDI options were available, we began looking for an all-payer solution that would simplify all of these processes and decrease costs. We decided on a LAN-based solution from EDIComm, Inc., an EDI enabler and claims clearinghouse based in Woodland Hills, CA. The efficiencies created simply by eliminating multiple vendors quickly led to a 60 percent decrease in our cost per claim.

But we realized improved productivity and other efficiencies as well. Since going on-line with the integrated one-vendor solution in October 1997, we have streamlined operations and obtained greater control over claims.

The turnkey solution includes the EDIMaster suite of software, EDIComm’s claims clearinghouse, and its outsourcing services. The software resides on our network and interfaces with our patient accounting system from SMS. It is an all-payer solution for submission of traditional claims and encounter data, initiation of claims status inquiries, receipt and processing of the electronic remittance advice, automated secondary billing and patient eligibility verification.

Integration = Efficiency

The integrated EDI system captures more information electronically than our previous patchwork of software programs. The change in software has allowed us to re-engineer our workflow pattern. In the past, some billers processed only paper claims, and others worked with the electronic systems. Now, everyone with proper authorization can access the electronic system from their own desk, so we have cross-trained all our billers on the use of the electronic claims processing. As a result, the workload is now more evenly divided among staff, and we can more easily substitute staff in various roles as workload demands. With simultaneous, integrated electronic access, employees no longer need to carry piles of records between workstations.

Before claims are transmitted to the clearinghouse, they're checked for accuracy and completeness at our network server. If errors are found, the system displays them, together with a table that helps billers decide how to correct them.

CHW Realizes Faster Payments

The capabilities of the EDIComm system have led to faster collections. In our review on the status of commercial claims, we found that claims were getting paid within 15 days of electronic billing, as opposed to 24 days with the previous EDI method.

In our Skilled Nursing Facility, we've reduced processing time by two-thirds. Medi-Cal has separate billing requirements for these services. Before, the billing codes had to be manually converted for the UB92, written on a piece of paper, and then keyed into the system. Now, we just pull up the claim as we do for any other bill, verify the information, and insert an accommodation code. The patient's name, Medi-Cal ID number, total charges, and total reimbursement are included automatically.

Timely Reporting

We find the daily report of our actual billings of great value. If we’re billing Medicare or Medi-Cal and claims are rejected, we get an electronic notification the following day that shows rejected claims and suggested corrections. This has greatly reduced processing time, as we no longer have to wait for a paper notice from the payers, and we are able to make corrections on-line and resubmit the claim during the same day.

The ability to track reports has dramatically decreased the number of electronic claims that "disappear" after transmission. With the use of a tracking number supplied by the system, we can positively verify transmission and receipt and determine whether claims were rejected or queued for adjudication.

Because a repository of claim data is available over the network, we can retrieve archived UBs from any PC, view them on-screen or print them. Complete claims histories can be accessed through the repository by billing, collections, and customer service employees, eliminating the need to dig out paper copies of claims.

EDIComm programmers are also helping us deal with our managed care business. Through a customized program, we create a risk pool report of capitated claims sorted by insurance plan code. The program pulls selected data associated with those claims from the billing database, giving us access to information that we were unable to get previously.

The new system gives us comprehensive views of billing activity that wasn’t available before, such as production reports that list the number of claims each staff member processes on a daily, weekly, or monthly basis.

Looking Forward

While we have attained many efficiencies in converting to a new system, we are looking forward to implementing other key components to make the software even more functional.

One such component now being implemented is software for the receipt and processing of the electronic remittance advice (ERA) from all payers providing an electronic remittance, regardless of file format. One of the biggest benefits will be with the Medicare claims. Currently, the RA is transmitted directly to our patient accounting system, since we have a direct connection with the DDE at the fiscal intermediary. Unfortunately, the accounting system does not have the capability to interpret and post the information to patient files.

Another component of the new system to be implemented in the future is the ability to automate eligibility verification and more easily process an electronic remittance advice. With the Eligibility Master software, we will be able to verify eligibility for our Blue Cross patients. This process helps us to identify incomplete or inaccurate patient information, which might result in a denied claim later.

A New Claims Processing Model

EDIComm’s EDI software and services have combined to give us a new model for claims processing. With all of the added benefits our new integrated EDI solution provides, we are prepared to meet future growth or healthcare system integration challenges. By converting to a new system, we have not only seen a reduction in our total cost per claim, but we have also measured remarkable improvement in internal office processes.

Gigi Wallin is the director of business services at the centralized billing office for two Catholic Healthcare West facilities in the State of California.