Healthcare Payments. NACHA ECC Meeting January 27, 2010

Transcription

1 Healthcare Payments NACHA ECC Meeting January 27, 2010

2 Presenters June St. John, SVP Wells Fargo Treasury Management Healthcare Product Manager Maureen Turo, VP BNY Mellon Healthcare Market Manager

3 Agenda Healthcare Overview Challenges Opportunities The Future 3

4 Healthcare vs. Retail Sector US Healthcare US Retail Total Underlying GDP > $2.2 trillion 1 (~16%) ~ $9.0 trillion 2 (~7.5%) # Participants 3 >750,000 physicians >5500 hospitals (plus multiple payer, patients) 1.1+ million establishments (plus multiple consumers) Transaction Characteristics 4 Exceptions Manual interaction Paper processing 20-40% 30-40% 80-90% 1% Low degree Low degree AR as % of Revenue % 5% Processing costs per transaction % 2% Sources: 1 CMS national health expenditure projections ; 2 US Bureau of Economic Analysis ; Economic Census; 4 McKinsey Quarterly, June 2007, Overhauling the US health care payment system 4

5 Value Chain Functional View C l i n i c a l V a l u e C h a i n Pre Visit Activities Office and Other Visits Inpatient Activities Surgical Cases Post Visit follow up Admin follow up Admin Responsibilities Clinical Technology Systems financial transaction moving earlier in clinical value chain Patient Eligibility; Fin l Evaluation POS Payments Comm l Insurance Billing Comm l Payment Processing Patient Billing Patient Payment Processing Bad debt, Collections, Refunds F i n a n c i a l V a l u e C h a i n 5

6 Healthcare Terminology Payment: Insurer to hospital/doctor Patient to hospital/doctor Patient/employer to insurer (premiums) Provider = hospital, doctor, outpatient clinic, durable medical equipment, etc Payer = commercial or government insurer PMS/HIS = Practice Management System / Health Information System Copays, Deductible, Charge Capture 6

7 More Terminology Provider Transactions EDI 270 = Insurance Eligibility/Benefit Inquiry EDI 276 = Claims Status Request EDI 837= Claim (Bill, Invoice) Payer Responses EDI 271 = Eligibility of Benefit Information Response EDI 278 = Authorization, Referral EDI 277 = Claims Status Notification EDI 835 / ERA = Claim Payment (Remittance) Electronic EOB/EOP = Claim Payment (Remittance) Paper (Lockbox) 7

8 Basic Process Flow Visits doctor Secondary claim Sends EOB/ERA Patient Pays copay Provider Pays for service Other insurers Sends EOB Pays premium Submits Claim Sends EOB/ERA Pays for service Contracts for coverage Sends EOB Employer Pays premiums Insurer Pays premium 8

9 Remittance Transaction Cost Manual Cost per Remit $8 $5 $1 Paper Remits Day Paper Remits Areas of practice that increase costs after cash posting include: 1. Contractual Allowance Processing 2. Reject Note Posting 3. Financial Class Updates 4. Secondary Billing 5. Patient Statement Billing Source: Medical Banking Project 9

10 Remittance Transaction Cost Electronic Cost per Remit $8 $5 $1 E-remits 1-5 Within Hours Paper Remits Note the difference in time and corresponding costs when the information is automatically posted! Source: Medical Banking Project 10

11 Industry Pressures Revenues Medicare/Medicaid reimbursement pressure Private insurance, high deductible pressure Growing number of uninsured Private insurance reimbursement denials/delays Lower returns on investments Increasing competition Healthcare Providers Expenses Increased labor costs, labor shortages Manual processing Investments in new treatments/medical technology Malpractice and other insurance costs Aging population increase demand Government regulation and oversight 11

12 Industry Challenges Healthcare is fragmented the worlds largest cottage industry Payers frequently change the rules Managing multiple service providers, systems, and contracts Changing priorities, slow decision making Complexity of payment structure 12

13 ACH Healthcare Challenges Current ACH Transaction Set Addenda CCD+ Characteristics/Limitations Limited to 80 characters; Free form 1 addenda or 80 characters CTX 9,999 addenda or 799,920 characters Other considerations include: Lack of standards of Addenda Data format Costs of processing may prohibit payers from adopting without government regulation requiring 13

14 Automation Challenges Complexity of remittance detail Lack of standardization across payers Multiple payments for same claim Multiple adjustments and submissions Payment and remittance detail received at different times Large size of remittance files

15 Industry Needs Automation Standardization Security Process simplification 15

16 What are Banks doing Enhanced Lockbox Using iocr to convert EOBs to 835s Intercepting 835s from Payers Reassociation and Reconciliation of Paper and Electronic Claims Payments and Remittances (835/ERAs/EOBs) Denial Reporting and Analysis Support Patient Point of Service Payment Solutions Patient Payment Financing 16

17 Questions 17

18 ECC Next Steps How can the ECC develop rules to augment/facilitate healthcare payment processing? 18