Claiming Victory

Sept. 1, 2006

Speed and accuracy are the two linchpins for healthcare organizations involved in any aspect of claims and coding.

No one can argue the importance of coding and claims processing in today’s bottom line-driven healthcare business. With a record number of disease, diagnosis and procedure codes, and the growing dominance of payers in the healthcare equation, healthcare organizations (HCOs) are under the gun to make sure all their i’s are dotted and their t’s crossed.

Speed and accuracy are the two linchpins for healthcare organizations involved in any aspect of claims and coding.

No one can argue the importance of coding and claims processing in today’s bottom line-driven healthcare business. With a record number of disease, diagnosis and procedure codes, and the growing dominance of payers in the healthcare equation, healthcare organizations (HCOs) are under the gun to make sure all their i’s are dotted and their t’s crossed.

The road ahead won’t get any easier. The ICD-9-CM coding system that has been used for diagnoses and procedures for more 30 years is about to be a victim of progress and evolution, assuming the United States decides to keep pace with other medically advanced communities. Its successor, ICD-10-CM, is scheduled for release in federal fiscal year 2007 and threatens to increase the number of codes by a factor of 10.

Accuracy, therefore, becomes a priority, since coding errors or the filing of an incomplete claim almost always results in a claim delay or denial. No one knows better than cash-challenged HCOs that prompt reimbursement from payers depends on the speed with which completed and cleanly scrubbed claims are processed and filed. To achieve both accuracy and speed, healthcare organizations are, of course, turning to digital solutions.

Logic-based Coding

In its quest for increased efficiency and coding accuracy, DuBois Regional Medical Center (DRMC), a 214-bed facility in DuBois, Pa., chose a coding solution from Hamden, Conn.-based HSS Inc. Known for its industry-leading coding, regulatory and reimbursement solutions such as WinStrat and Web.Strat, and also known as a company whose products are embedded in other vendor solutions, HSS was acquired in May 2005 by Ingenix, based in Eden Prairie, Minn.

DRMC evaluated products from three vendors before choosing Web.Strat, says Lois Weir, the hospital’s coding supervisor. The decision was relatively easy, since each member of the coding staff was involved in the evaluation of products and the final selection. “You have to get your coders on board from the beginning,” Weir advises. “There was a little fear at first, but being part of the decision-making process eased their minds.”

Price is usually one of the deciding factors, as it was for DRMC, but there also were others, such as ease of use and the fact that Web.Strat offers both book- and logic-based coding. “Because it’s user-friendly with the logic built in, the computer is now doing some of the work and eliminates some of the decision-making process,” she says.

Joanne Genevro, director of revenue management, adds that even though the seven full-time and two part-time coders were given the option of using either the logic or book functions of Web.Strat, they immediately began using the logic-based function and only used the book-based function to occasionally look up a reference.

Prior to going live with Web.Strat late last year, all coding at DRMC was done by book coding. Coders relied on hard-copy ICD-9 books and reference materials for the information they needed to code encounters. Since some of these books and references were kept in a central location, coders often had to leave their desks to locate the materials they needed. Because Web.Strat is a customizable Web-based solution, coders now can access a common database via a standard Web-browser interface, which allows them to work their way through various menus and questions to arrive at the correct codes. “All the reference materials are at their fingertips,” says Weir.

Gains Are the Proof

Since no software installation is required on desktop computers, each coder consistently accesses the same regulatory content which is updated automatically using Web services technology, thus eliminating the need for coding staff and IT staff to manually install regulatory updates, which are required up to 24 times per year. In addition, coders who are in the habit of making handwritten notes in their hard-copy books aren’t left out in the cold; they can continue to make similar notes through Web.Strat, which they can read from their monitors. Interestingly, coders at DRMC use dual monitors.

Supported by grant number 1 UC1 HS0156083 from the Agency for Healthcare Research and Quality, DRMC purchased an electronic medical record (EMR) from McKesson Corp. at the same time the coders went live on Web.Strat. “With the use of dual monitors, each coder is able to view the EMR on one screen and the Web.Strat coding information on the other,” she explains. This is a lot more efficient than using a single monitor with a split screen because “you’re not constantly opening and closing windows,” Genevro adds.

Gains in efficiency and speed have resulted in marked productivity increases at DRMC. Before Web.Strat, the time from patient encounter to coding was five days. Now, coding takes place two to three days after the encounter. The hospital also has reduced its coding backlog from $5 million to $1 million. “At times in the past, we would get behind in coding due to staff vacations or illness and would end up coding at 17 or more days. It would take months to catch up,” Genevro says. “Since going to Web.Strat and the new EMR, backlogs have not been a problem, and we have experienced several leaves of absence during this time. Also, with the EMR, physicians’ response times to our inquiries and their documentation have improved.”

DRMC also initiated a new management structure to bridge the gap between coding and more traditional financial functions of the hospital. “In most hospitals, coders report to the health information management (HIM) department,” Genevro says. “But HIM is largely devoted to data collection. We believe coding is a financial function and is a better fit reporting to a financial department. Three years ago, when we started the revenue management department, we moved coding into that department,” she notes.

Reporting directly to the hospital’s chief financial officer, Genevro says coders, clinical staff and DRMC’s financial staff now work together as a team. “And coding is at the center,” she says.

Speedier Claims

Paper claims take more time to process than those filed electronically. But sometimes that’s an inevitable consequence of the types of services provided by a healthcare organization.

Lois Weir (left) and Joanne Genevro of DuBois Regional Medical Center

Approximately 80 percent of claims sent to Silver Spring, Md.-based APS Healthcare Inc. are on paper, says Lynn Wentz, vice president of operations.

Small organizations know that paper claims can impede efficiency; for large organizations, the inefficiency of managing paper simply multiplies the problems. How a large organization elects to handle the necessity of managing paper can, by definition, impact its bottom line.

APS Healthcare is a $200 million, private and for-profit provider of specialty healthcare solutions that cover more than 20 million members in the United States and Puerto Rico. APS offers customized, integrated healthcare solutions across three major healthcare product lines: health management services, behavioral health services and quality improvement programs.

The company’s commercial division serves more than 900 corporate and public sector employers, health plans and unions. APS is also one of the largest healthcare service providers in the public sector arena, serving more than 25 percent of the nation’s Medicaid population through 28 programs in 18 states. However, the primary product line that pays out claims is behavioral health services, which administers benefits for the treatment of mental illness and substance abuse, says Jay Krueger, senior vice president of business strategy.

The major reason for the high number of paper claims, according to Wentz, is that the behavioral sciences tend to be more fragmented than other health specialties. “There are a lot more solo practitioners who tend to be paper-based,” she notes. Still, even under these circumstances, claims need to be processed quickly.

“Providers are a key constituent,” says Krueger. “They want to know that their claims are paid in an accurate and timely manner, and we place a high premium on making the whole process hassle-free.”

To ensure timely payments and to increase overall efficiencies of the claims process, APS Healthcare turned to Newport Beach, Calif.-based The TriZetto Group, Inc. After evaluating products from all the leading vendors, APS Healthcare made a decision in February 2002 to transition a significant portion of it business from its legacy processing system to Facets, TriZetto’s comprehensive administrative software, Krueger says. Implementations began in July 2003 and were completed in December.

Choosing the Right ModelIncluding deeply integrated HIPAA and e-business capabilities, Facets also offers business intelligence functionality and a scalable architecture. But rather than bringing all functions in-house, APS Healthcare chose to let TriZetto host and manage the software. “As we thought about our needs, the outsourcing model worked best,” says Krueger.

However, Wentz is quick to add that the organization did not give up all control when it made a decision to outsource, and, in fact, retained specific functions. “We retained in-house responsibility for claims processing, benefit configuration, provider network information, maintenance of eligibility files and the reporting that comes out of the Facets system.”

Krueger adds that the organization “wanted some control over business processes and some of the technology.”

The major challenge in switching to the Facets system was the integration of some parts of the old legacy system with the new system. But analyzing the architecture and necessary interfaces also provided an opportunity “to rethink how work flowed and how we wanted to administer the claims process,” Krueger says. Typically, moving from one claims system to another causes major headaches because vast amounts of personal data have to be transferred quickly. But, in this case, the transfer of all current and historical claims data was completed by TriZetto in a matter of days, allowing APS Healthcare to continue to function and provide seamless member service even during the transition.

Early in the implementation process, Facets also was integrated with the MACESS system, an imaging and workflow software provided by a TriZetto business partner, says Wentz. This allows highly accurate scanned images of paper claims to be available through the Facets system for claims processing and service, she adds.

Meaningful Metrics

Since so many paper claims are submitted, Wentz explains “a day in the life of a claim.” First, she says, paper claims are received at a post office box and then taken by courier to a TriZetto business processing outsourcing center in Linthicum, Md. Here they are opened, sorted, batched and scanned using customized Resource Recognition Incorporated (RRI) software, which includes advanced OCR (optical character recognition) processing. All claims are then exported to Facets in an overnight process via an 837 format.

Claims pass through the extensive Facets editing, and then auto-adjudicate or suspend for additional review. Claims are distributed for review through the MACESS workflow distribution system and queues. “If it’s determined that a claim needs further investigation, the claims examiners pull up the MACESS image and the claim in Facets,” Wentz says. Once the issue is resolved and the claim is processed, the claim is then moved into payment status. “The next day, checks are cut and mailed along with the explanation of payment to providers. Explanation of benefits are also mailed to members.”

However, due to the nature of the behavioral healthcare business, APS Healthcare’s firm commitment to accurate claims processing and the overwhelming majority of paper claims submitted, Wentz adds, “About 50 percent of claims are suspended for additional review to be sure all claims are paid accurately.”

Even so, since moving to the TriZetto solution, APS Healthcare has realized significant gains in speed and productivity. “First and foremost is speed in payment,” Krueger says, noting that 95.5 percent of claims “are paid within 14 days and 100 percent within 30 days.” That’s not bad considering that the company is currently processing about 1,300 claims per day through Facets, with a projected jump to about 1,750 in October. In addition, accuracy of claims is greater than 99 percent, Krueger says, “And our provider satisfaction rates are well above 90 percent.” The organization also has experienced a significant cost savings. “We have seen a 20 percent reduction in overall cost per claim, which translates to more attractive pricing for our customers,” he says.

What’s more, APS Healthcare saw a 25 percent reduction in the claims department staff between 2003 and 2006, according Wentz, confirming that the organization is well satisfied with its decisions. “With the implementation of Facets, our leadership staff is now able to focus on managing the business to deliver better results to our customers.” That’s an appropriate “mission accomplished” for any healthcare organization.

For more information about Facets from The TriZetto Group,

For more information about Web.Strat from HSS,

Richard R. Rogoski is a free-lance writer and contributing editor to HMT. Contact him at [email protected].