Why Revenue Cycle Management Needs Electronic Data Exchange

February 15, 2016 - More focus on electronic data exchange can potentially save healthcare organizations, hospitals, and health systems $8 billion annually, according to a report from the American Hospital Association (AHA).

Rising healthcare costs may be directly attributable to healthcare providers’ overabundance of paperwork.

But administrative simplification will reduce this burden for both providers and patients and advance value-based care, the AHA said.

And administrative streamlining may advance patient transparency and standardize claims data.

More neatly aligned financial and clinical data will ensure the healthcare industry is better prepared for reimbursement reform changes, the AHA claimed.

Additionally, patients will become more knowledgeable about their financial obligations.

Electronic communication may also help evolving value-based care models – including bundled payments and accountable care organizations (ACOs) – improve their information sharing capabilities with healthcare providers, the report said.

“Hospitals and health systems can realize improvements and significant savings by increasing the volume of electronic data exchange called for under the Health Insurance Portability and Accountability Act’s (HIPAA) administrative simplification provisions,” the AHA stated.

The healthcare delivery system spends up to 32 percent of each healthcare dollar on administrative costs that could potentially be streamlined through the adoption of the HIPAA transactions standards and operating rules processes, said the report.

“Administrative simplification enabled us to shift 15 percent of the revenue cycle workforce to key eligibility verification and collections functions,” asserted Joel Perlman, Montefiore Health System’s Executive Vice President and Chief Financial Officer, within the report.

“Administrative simplification is a key ingredient in sustainability under health reform, especially for our small hospitals where managing revenue cycle processes,” added Scott Hawig, Froedtert Health’s Senior Vice President of Finance and Chief Financial Officer.

Better data puts the value back in value-based care

More accurate and complete data will help promote value-based care, the AHA said.

Claims data is becoming more standardized because of an increased focus on clinical components, the organization stated.

It is also being used more commonly to make risk-based decisions in value-care purchasing and as a means of measuring care quality.

“Business routines that improve on the policies and procedures for transactions around coverage, billing and payment also ensure greater accuracy in the transactions to achieve cleaner claims, resulting in less rework,” explained the AHA.

“It is important to understand the cost component and work with patients to help make value-based decisions,” the report asserted.

“[However,] such information will only be available if providers and health plans agree on the data that are needed and how the data will be collected, shared and used.”

Greater transparency demands engagement

Transparency demands trust. Trust demands engagement.

“Engage actively in the finance system of the hospital to ensure processes support efficiency gains and greater transparency for patients,” the AHA advised.

Healthcare providers are not able to efficiently help patients learn about their coverage and care options, said the AHA.

Providers are simply spending too much time on eligibility verification, such as having to check a health plan’s website to get information about deductibles and copays, on behalf of an inquiring patient.

This alone creates massive revenue cycle complications.

“What impacts a health plan member most is whether or not a physician is participating with that individual’s health insurance product,” Brian Hoyt, Managing Director at Berkeley Research Group, explained to RevCycleIntelligence.com. 

“If a member needs to see a doctor and they go to their health plan’s provider directory and see a provider listed in the provider directory, there's a presumption that that particular provider is actually participating with that health insurance product,” he said.

“If that turns out not to be the case, then that member could be hit with a bill for out of network charges.”

“Eliminate redundancy in financial process to eliminate redundant manual paper and phone-based legacy processes with health plans and replace these with automated routines,” the AHA suggested.

“More than ever before, providers need to engage and work with health plans and others to ensure the standards are feasible for everyone.”