August 1, 2006
In the past decade, electronic claims transactions have become the standard in the group-health arena, streamlining the claims management process. New regulations being drafted in California and Texas could lead to similar success in the workers' compensation industry.
Jump-start Comp Claims
by MINDY W. TORAN
riskletters@lrp.com
The passage of the Health Insurance Portability & Accountability Act of 1996 has led to improved efficiency inthe group-health claims-handling process as a result of a standardized electronic data interchange format. It has enabled health-care payers and providers to directly share claims-related information. Unfortunately, the same cannot be said for the workers' compensation community. But that's beginning to change.
New laws introduced in the states of California and Texas will soon require electronic submission of medical bills by health-care providers for processing by insurance carriers. Within two years, regulations may be passed requiring the electronic payment of medical bills by workers' comp carriers to health-care providers.
“A high percentage of billing transactions on the group benefits side now occur electronically,” says Mark Heinemeyer, president and CEO of P2P Link, a Dallas-based provider of Web-based solutions for workers' compensation billing and reimbursements. “Thus far, less than 20 percent of workers' comp-related medical bills are submitted and processed electronically, largely due to the various reporting guidelines, regulations and fee schedules at the state level. The ability to submit billing information and have claims processed electronically would greatly simplify workflow and speed up the payment process for both workers' comp payers and providers,” he stresses.
“The cost of processing paper claims is significant,” says Sherry Wilson, chief operating officer of Jopari Solutions Inc., a Concord, Calif.-based firm that provides automated payment processing and remittance services for claims payers. “Within the workers' comp, group-health and auto industries, an estimated $250 billion is spent annually on the paperwork to process some 7 billion health insurance claims that result in close to 1 billion payments. Only 44 percent of these claims are submitted electronically, many of which are in the group-health arena.
“While the different nuances within state jurisdictions have been challenging when it comes to electronic data interchange in workers' comp, the main problem has been the lack of standard transaction sets for claims submission and payment processing,” Wilson notes.
Wilson is currently serving on the California Division of Workers' Compensation's E-bill Task Force, which is looking at setting standards that can be applied nationally for e-business strategies in workers' comp. “We're closely following the standards set forth by HIPAA, Medicare and the American National Standards Institute in the group-health arena,” she says. In addition, the International Association of Industrial Accident Boards and Commissions has created an Electronic Data Interchange Project to focus on EDI standards implementation for workers' comp.
The goal of EDI for workers' comp is seamless processing of information from the initial reporting source — the employer, insurance company, claimant or medical provider — to other trading partners, according to the IAIABC. EDI is proposed as a solution to the problems associated with data collection in workers' comp, including:
- The lack of credible information to identify and measure factors driving costs higher
- A lack of uniformity among forms and terms that prevents comparisons between states
- An excess of administrative paperwork
- Costly delays in adjudicating and paying benefits
Reliable data is used to identify the causes and extent of workplace injuries and can be used by employers to reduce the incidence and severity of industrial injury or illness, notes the IAIABC. Such data can help determine and measure cost drivers in workers' comp. In addition, lawmakers can use data to draw comparisons across jurisdictional lines and to measure the impact of legislative and regulatory reform. EDI will help reduce errors, delays in payment, and provide a consistent and standard format for transmitting claims data.
“We live in an electronic age, and the need for data is particularly strong in relation to workers' comp costs,” says Suzanne Honor, a workers' comp manager in the California Division of Workers' Compensation Medical Unit in Oakland, Calif., who has played a large role on the E-bill Task Force. “Having the ability to gather information electronically from employers and carriers will help us identify cost drivers in workers' comp, determine where reforms are needed and identify trends that need to be addressed.”
The California legislation, SB 228, enacted January 1, 2004, though not yet implemented, will require employers to accept claims electronically from providers of medical services. Bills submitted electronically at or below the fee schedule must be paid within 15 working days. Penalties for nonpayment have yet to be determined. The regulations, still in draft form, will likely go into effect in early 2007.
“Our hope is that the process will eventually be automated from end to end,” says Wilson. “The electronic payment side of claims processing is only now starting to be addressed. While California does not yet mandate the electronic payment of medical bills by insurance carriers to health-care providers, we're looking at the ability to finish the claims submission transaction with an electronic funds transfer and electronic remittance delivery to the provider. This would greatly improve the efficiency and effectiveness of workflow automation for both providers and payers, and result in significant cost savings.”
In Texas, HB 7, effective September 1, 2005, required providers to submit workers' comp medical bills to insurance carriers electronically as of January 1, 2006. The commissioner of workers' compensation for the state may also adopt rules regarding the electronic payment of medical bills by insurance carriers to health-care providers on or after January 1, 2008. Insurance carriers must pay, reduce, deny or determine to audit the bill no later than 45 days after the receipt of the bill. The health-care provider must provide any additional requested documentation within 15 days after the receipt of the insurance carrier's request. Failure to submit the medical bill in a timely manner may result in forfeiture of the health-care provider's right to reimbursement.
“While providers have been using EDI for some time in the group-health arena, the ability to send medical bills and other state-required documents electronically has been a real challenge in workers' comp,” says Greg Gilbert, senior vice president of reimbursement and governmental relations at Concentra Inc., a Dallas-based occupational health provider. “States like Texas and California are now trying to make it easier for providers to navigate through the workers' comp system electronically. We also need buy-in from insurance carriers to change their workflow processes to give priority processing to electronic workers' comp claims.”
Clearinghouses like P2P Link are helping to facilitate the electronic transaction process between health-care payers and providers. P2P Link provides an electronic “transaction hub” that enables the sharing of information between claims payers and medical care providers. The system allows providers to submit bills, medical reports and other communications through a Web interface. The bill then goes through an automated review for accuracy and completeness before it is forwarded on to the insurance carrier for payment.
“We're streamlining the process to help providers get paid in a timely manner, while simplifying payers' workflow and reducing their overhead and administrative costs,” says P2P Link's Heinemeyer. “In addition, we're helping to ensure compliance with state regulations for timely reporting and payment of claims.”
Bob O'Halloran, vice president of claims at Summit Holdings, a regional workers' comp carrier based in Lakeland, Fla., says, “Use of a clearinghouse like P2P brings greater efficiencies into the payment process by improving the flow of information and streamlining the adjudication of claims. The system allows us to create an electronic interface with providers and improves our ability to execute the payment of workers' comp claims in a timely manner. In addition, the process is seamless for providers,” he notes.
Marriott International Inc., which self-insures and self-administers its workers' comp claims, recently upgraded its claims administration system in order to process claims electronically. “We're looking to move to a paperless environment, speed up the claims process and create administrative efficiencies through the use of technology,” says Bob Steggert, vice president of casualty claims at Marriott. “P2P Link provides accuracy, speed of processing, reduces the chance for errors from handling by claims administrators and management staff, and provides a higher level of decision-making. Our goal is to maximize the electronic flow of information so we can make timely, informed decisions, provide injured individuals with the most appropriate, timely medical care and make sure workers are paid promptly.”
Maureen Marston, RBO director, western region, at US Healthworks, an Alpharetta, Ga.-based occupational and urgent-care provider, notes, “As more workers' comp carriers begin accepting electronic bills, clearinghouses like P2P Link will help facilitate the process. It's a more efficient, effective way to do billing for both the payer and provider. We can get our information to the carriers sooner, track claims and make sure their attachments are received, and hopefully speed up the payment process through this system,” she says.
Jim Dillon, vice president, claims regional operations, at Accident Fund Insurance Co. of America in Lansing, Mich., believes EDI is the “gold standard” for paying claims in a timely, accurate manner. The problem, he says, is workers' comp is such a small part of claims that many providers have yet to get on board with processing claims electronically.
“While larger providers are more cognizant of the benefits provided by electronic reporting, many smaller providers are not yet aware of its possibilities. We need to get a good mix of both payers and providers on board in order to move forward,” Dillon says. “Legislation like that being passed in California and Texas is one way to jump-start a process that makes sense for all of the players involved in the workers' comp industry.”
