How ACA Administrative Simplification Rules Can Improve

Cash and Productivity

Presented by: Ken Bradley

Vice President, Strategic Planning Navicure

Agenda

PPACA Overview

Operating Rules

Timelines

Eligibility Rules

Remittance and EFT Rules

Practice Benefits

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PPACA: More Than You Might Think

The Patient Protection and Affordable Care Act (aka ACA )

Most public discussion around expansion, individual mandate and exchanges, but there is more.

Besides its goals of improving quality and expanding access are ones of controlling costs and making healthcare affordable.

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ACA Components (well, some)

Creates the State Health Benefit Exchanges and defines benefit packages

Creates ACO demonstration projects Expands fraud and abuse/compliance efforts Potentially expands Medicaid (dramatically in

some states) Requires expansion of quality metrics and

their use Contains language attempting to further

automate the business of healthcare

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Automating Healthcare Administration We’ll focus on just 9 pages of the ACA Remember HIPAA? ACA dramatically

extends and expands it. These 9 pages contain two sections

addressing “Administrative Simplification” Section 1104

Creates “Operating Rules” framework Section 10109

Worker’s Comp Edits and payment rule transparency

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High U.S. Insurance Overhead: Insurance-Related Administrative Costs

Fragmented payers + complexity = high transaction costs and overhead costs

◦ McKinsey estimates adds $90 billion per year*

Insurance and providers

◦ Variation in benefits; lack of coherence in payment

◦ Time and people expense for doctors/hospitals $76

$86

$140$191$198

$220$247

$516

$0

$100

$200

$300

$400

$500

$600

US FR SWIZ NETH GER CAN AUS* OECDMedian* 2006

Source: 2009 OECD Health Data (June 2009).

Spending on Health Insurance Administration per Capita, 2007

* McKinsey Global Institute, Accounting for the Costs of U.S. Health Care: A New Look at Why Americans Spend More (New York: McKinsey, Nov. 2008).

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Inefficiency Costs (a lot!) National Academy of Sciences/Institute of Medicine

$2.6 Trillion spent, about $260 Billion administrative Excess is estimated to be $168-183 Billion / year

Wasted dollars by category: Unnecessary services - $210 B Inefficiently delivered services - $130B Excess administrative costs - $190B Prices too high - $105B Missed prevention opportunities - $55B Fraud and abuse - $75B

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Likely Affects You One estimate of the affect on practices

$247,500 / year on unnecessary / redundant admin tasks

$19,444 / year on phone calls with pharmacies $38,761 / year on verifying patient coverage manually $9,248 / year on resubmitted denied claims

Source: National Academy of Sciences/MGMA

Physicians today spend about 43 minutes a day (3 weeks a year) interacting with health plans Time not spent on patient care

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Consistency and Standardization

What if: You were able to receive detailed, consistent benefit

info from payers; and payers used remittance and remark codes

consistently for common denial scenarios; and EFT and ERA were available and enrollment was the

same for all payers? You could reduce costs!

The ACA provides a new framework to address many of the reasons for needing to do things manually as well as requirements for more detailed and accurate information.

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Operating Rules – Dealing with Inefficiency

New concept introduced with ACA’s Section 1104 Allows for the creation of additional business rules

and guidelines for the electronic exchange of information

Wherever there is a reason for not 100% automation (no paper or manual processing), Operating Rules may be developed to address

What prevents 100% automation? Letting various trading partners…

“interpretation” the standards where it lets them define transmission methods, acknowledgment format use defined standards in inconsistent ways from everyone else

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The Goal: Automation

CORE/CAQH

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ACA, HIPAA and Operating Rules

ACA provides for the creation of Operating Rules to enhance existing or create new standards, but not replace existing ones

All existing HIPAA standards are the foundation: 837 Claim 835 Remittance

But, there are new ones: 275 Attachments CCD+ NACHA transaction used by banks

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ACA, HIPAA and Operating Rules

Operating Rules go farther than typical standards: Data content, definitions, how to use Required information Consistent use of codes in defined business

scenarios Transmission standards Security requirements Response timing Exception reporting Eliminating interpretation … anything that prevents 100% automation

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Operating Rule Scope

May address ANYTHING that inhibits automation, where data doesn’t flow consistently among various healthcare trading partners

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We’ve Heard All This Before, Haven’t We?

The difference this time: Single word: Certification Health plans are required to attest they are following

the rules, or they will face penalties. First set of implemented rules began January 1, 2013. Health plans should have submitted attestation

document to CMS by December 31, 2013. HHS will assess possible penalties by April 1, 2014.

Penalties: $1 - $20 per day, per covered life with failure to

be in compliance Doubled if knowingly inaccurate, incomplete

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Timeline

Jan 1, 2013• Eligibility• Claim Status

Jan 1, 2014• Remittance• EFT

Oct 1, 2014• ICD-10• Health Plan ID

2015

Jan 1, 2016

• Claims• Plan Enrollment / Disenrollment• Referral Certification /

Authorizations• Attachments

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Eligibility Operating Rules January 1, 2013 brought several new eligibility

requirements: How to handle patient prefixes and suffixes like MRS,

MR, MD, II, JR Prefix/suffix should be removed before attempting lookup

Consistent and defined error reporting requirements “AAA” 5010 specifications, e.g., “71” = Patient DOB doesn’t

match Response times for both batch and real-time

inquiries 20 seconds real-time and next day for batch

System availability e.g., minimum 86% availability per week

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Eligibility Data Requirements

Payers are required to return details: Much needed critical information was defined in

5010 as “highly recommended” where the Operating Rule now requires them

Health plan name required Past (up to 12 months) and future eligibility dates In and out-of network variances Remaining patient deductible amounts Static patient responsibility amounts: co-pay, co-

insurance Generic inquiries (type 30), must have plan name

and patient financials for each required service type returned

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Remittance and EFT Operating Rules

Required implementation: January 1, 2014 Adds new transaction – the CCD+ to the HIPAA

list of transactions to allow bank deposit reassociation with 835 remittance data Bank deposit data will contain the 835 remittance

advice tracking number Requires defined claim adjustment reason and

remark code combinations for common reasons services are not paid

EFT & standardized and electronic EFT enrollment Rule # 380

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Remit Reason/Remark Use

Defined business scenarios1. Additional information required

2. Missing/invalid/incomplete data from submitted claim

3. Billed service not covered by health plan

4. Benefit for billing service not separately payable

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Additional Information Required

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Missing/Invalid/Incomplete Data

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Billing Service Not Covered

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Not Separately Payable

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Expected Benefits of the Operating Rules

Look for Operating Rules to: Eliminate inconsistent data usage Define missing or unclear usage instructions Create transmission, format and system

availability expectations

Resulting in less: Variation in business operations from payer-to-

payer Manual processing Guessing about what is needed and how processes

should work Money spent on administrative costs!

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Time to Take a Look at Your Revenue Cycle

With these new rules, it’s time: If you are not currently doing automated

eligibility, now is the time to consider.

If you are not currently using remit and EFT, now is the time to consider doing both.

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Automation (Done Correctly!) Helps

Source: Milliman, 2006

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The Benefits Keep on Coming Automated, Consistent and Accurate

Transactions Improve operational costs

Help reduce denials Eligibility changes show a 10-12% reduction in denials Faster secondary and patient billing cycle

Improve denial management Standardized understanding of payment reductions

Improve analytics Standardization allows apples-to-apples comparison

Permit accurate and point-of-service patient collections

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Conclusion: Improve Your Bottom Line

Automate: Eligibility $3.70 manual v. $0.74 electronic Remittance and EFT $2.96 manual v. $1.48 electronic

Reduce denials: Use eligibility data to file accurate claims and

begin point-of-service patient collection AMA: 21% of claims need follow-up Costing $14-$25 for each follow-up

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ResourcesCore Phase III Rules: EFT and ERAhttp://www.caqh.org/CORE_phase3.php

ACA Timelinehttp://www.healthcare.gov/law/timeline/index.html Kaiser Foundation – state level activity (e.g. State Benefit Exchange status)http://www.statehealthfacts.org/index.jsp

American Health Information Management Association (AHIMA) Operating Rule Overviewhttp://library.ahima.org/xpedio/groups/public/documents/ahima/bok1_049348.hcsp?dDocName=bok1_049348

The Daily Practice Blog – www.dailypracticeblog.com

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Ken BradleyVP of Strategic Planning

Navicurekbradley@navicure.com

770-342-0210Twitter: @Ken_Bradley

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