Question

Southern Pediatrics Medical Center is about to convert to an electronic claims processing system after years of using paper forms. What do you think are some of the main issues that medical billers are having while filing paper claims? In what way can electronic claims reduce some of those issues?

Answer 1

An “electronic claim” is a paperless patient claim form generated by computer software that is transmitted electronically over telephone or computer connection to a health insurer or other third-party payer (payer) for processing and payment. A “manual claim” is a paper claim form that refers to either the Centers for Medicare & Medicaid Services CMS-1500 form (formerly HCFA-1500) or a Uniform Billing UB-04 form, both of which are typically sent to the payer through the mail and require postage. Electronic claims submission helps physician practices reduce the administrative burden and expense generally associated with manual claims processing and submission. The use of electronic claims can result in significant financial savings for both physician practices and payers. Health information technology (HIT) solutions are on the rise as more physician practices are submitting electronic claims to payers. By doing so, physician practices may potentially realize increased practice efficiencies and savings in their practice’s claims revenue cycle.

The advent of technology has brought along innovative ways and method to streamline workflows and make lives easier. Using paper claims is a time-taking process and providers can face a tough time trying to process large numbers of patient’s claims. Furthermore, providers and their staff face many obstacles especially in terms of trying to convince potential clients to hire them for specific billing needs on a daily basis. Through Electronic Billing Services, providers can avail benefits such as faster reimbursements for their claims by reducing the time taken for processes to be completed. In a typical paper based setup, the average turnaround time for receiving payments is between 5-7 weeks where as in Electronic Medical Billing systems this time can be reduced to 2 weeks. For practices which take on huge amounts of patients, it is imperative to get paid on a timely basis to manage the cash flows of the practice effectively ensuring that all expenses are timely paid off.

Paper based records and billing services add costs such as printing, postage and delivery, staff and envelopes. Electronic Billing Services utilize an electronic service which means that there is no need to print out every document, and there is no need to pay for the delivery of claims through couriers or company transportation which further increases costs of fuel and labor.

Essentially, the increase in overall productivity of the practice’s workflows is a benefit that far outweighs the costs of any system. When claims can be efficiently transmitted to the clearinghouse by the touch of a button, it will not only ensure that the claims are delivered accurately and on a timely basis, it will also ensure an immediate confirmation of the claims received and a real time status check of where the process currently is in. Electronic Billing Services serve as a miraculous achievement of modern technology and should be utilized to full potential.

The American Medical Association (AMA) and the Connecticut State Medical Society encourage the use of electronic claims by physician practices. Physician practices are also encouraged to enhance their electronic data interchange (EDI) capabilities and to contract with vendors and payers that accept Accredited Standards Committee X12 (ASC X12) standards, especially those mandated under Health Insurance Portability and Accountability Act (HIPAA) administrative simplification. These vendors should also provide electronic remittance advice (ERA), eligibility and benefit information, claim status and prior authorization, as well as electronic claims processing. Physician practices can realize several benefits from introducing electronic claims submission into the practice’s claims revenue cycle. Electronic claims submission can:

• Reduce the amount of time and resources physician practices devote to manual administrative functions—time that can be better spent with patients or focused on other practice efficiencies
• Pre-audit claim fields automatically for potential errors before submission to a payer
• Identify claim issues and provide online claim resolution before processing by a payer
• Submit claims almost instantaneously to a payer
• Reduce postage, supplies and mailing expenditures
• Track a claim’s progress between intermediaries (e.g., a billing service or clearinghouse) and a payer through an electronic audit trail
• Confirm a payer’s receipt of a claim through electronic reports
• Expedite a payer’s claims processing turnaround and potential payment time frame
• Improve the practice’s accounts receivable

Electronic claims are inexpensive for physician practices to produce, submit, process and track when compared with manual claims. Additionally, manual claims submission can be a time-consuming process for a payer, as claims submitted this way typically are manually scanned into the payer’s administrative system and/or manually processed by payer personnel—extra steps that may result in delays in payment.

Physician practices should first consider what method of electronic claims submission is appropriate for the practice setting. Electronic claims may be transmitted by:

• Dial-up method, which uses a telephone line or digital subscriber line for claims submission. (Clearinghouses typically supply the physician practice with the software required for communication between the physician practice’s computer and the clearinghouse’s system.)
• The Internet, which allows for secure, direct transmittal of claims submission to health plans over the Internet and eliminates the need for transmittal software.

Electronic claims can be generated in a practice management system and then transmitted either directly to the payer electronically in accordance with the health plan’s submission requirements or indirectly through an application service provider (ASP) or cloud computing service, a clearinghouse, a billing service or another third-party vendor.