Claims Management and EDI Spending Projected to Increase by $150 Million

If the results of a new revenue cycle study released by Williston, Vt-based CapSite Consulting are to be believed, the U.S. hospital market for claims management and electronic data interchange (EDI), which currently represents $950 million in new and replacement spending, will increase by another $150 million over the next 12 to 18 months. In particular, the study focuses on the industry outlook for direct submissions to payors, claims management vendor market share, and industry readiness for the new HIPAA 5010 format.

The survey, the first of its kind conducted by CapSite, is based on responses by 400 hospitals. While most of the respondents were executives at hospitals fewer than 200 beds in size, the study is in line with the broader segmentation of hospitals across the U.S., say the report’s authors. According to Gino G. Johnson, vice president and general manager of CapSite, the study was undertaken to gauge the industry’s progress in the revenue cycle management arena, which competes with clinical solution priorities brought on by health reform legislation.

The survey’s results revealed some surprising conclusions. One is that nearly one-in-four (23 percent) of hospitals respondents said they intended to eliminate their reliance on a clearinghouse, and go direct to payors within the next three years. Johnson acknowledges the trend, with the caveat that some of the hospitals may be underestimating the complexities of going direct. He adds that both parties need to be prepared to conduct the transaction before direct payments become a reality. “It is not going to happen overnight,” he says.

Of the majority of hospitals that currently use a revenue claims management provider, most ranked Medicare edits, health information systems (HIS), and payor edit accuracy high on their lists of most valuable attributes of their current solution. Yet CapSite’s research director Brendan FitzGerald notes that the survey also revealed a fairly high degree of dissatisfaction by hospitals over the reporting capabilities of their solutions. Workflow, remittance management, and HIS integration also ranked high as areas in need of improvement.

In another area, the respondents expressed a lukewarm level of confidence in their readiness for Health Insurance Portability and Accountability Act (HIPAA) 5010 format, requiring providers to submit their claims electronically. Most hospitals rated their vendors at roughly a 7 on a scale of 1 to 10 when asked to express their confidence in their vendors with regard to the HIPAA 5010. “It represents an industry that is making progress towards it, but is not 100 percent confident at this time,” Johnson says.

Additional information about the 2010 U.S. Revenue Cycle Study will appear in the August issue of Healthcare Informatics.