Introduction. By Santhosh Patil, Infogix Inc.

Transcription

1 Enterprise Health Information Management Framework: Charting the path to bring efficiency in business operations and reduce administrative costs for healthcare payer organizations. By Santhosh Patil, Infogix Inc. Healthcare Payer organizations must find ways to reduce administrative costs, increase efficiency of operations and ultimately make quality healthcare affordable to all insured, in a radically altered playing field due to Healthcare Reform and Regulations. With the accelerating use of real-time EDI exchanges and increasing complexity of health insurance and information exchanges, the need for validating and tracking key information is critical to manage information risk, ensure compliance with relevant regulations and to ensure customer satisfaction. Introduction Organizations across the healthcare value chain, including payers, providers and a myriad number of intermediaries, recognize the urgent need to manage cost and improve performance in their core business operations to cope with an expanding array of regulatory and standard requirements such as the Reconciliation Act, 5010 Compliance, ICD-10 Adoption and the National Association of Insurance Commissioner s Model Audit Rule (NAIC-MAR). More specifically, the Affordable Care Act (ACA) requires healthcare payer organizations to establish procedures to simplify administrative operations and reduce costs without compromising the service level. This involves adopting a single set of standards and operating rules between providers for claims status, eligibility verification, electronic fund transfers for payments, health claims, encounter information, enrollment and disenrollment. Health insurance firms will also need to deal with a tax on revenues and a cap on profitability in the small-group and individual markets. Health insurance companies that are not able to document compliance may be fined up to $1 per covered member per day, which can quickly turn into millions of dollars in penalties for large payers. Many organizations are leveraging standardized automated information management controls and monitoring to prevent the cost of errors and IT rework associated with errors. For example, a large health plan saves more than $5 million each year by automating their manual checks alone. Another large BCBS plan saved more than 30% of its internal audit cost related to NAIC-MAR audit by deploying standardized automated controls in 73 of its critical interfaces. Key Business Drivers and Implications As payers plan to overhaul their processes and systems in order to deliver the mandated requirements and meet the deadlines imposed, they are bound to face significant challenges with implications. Some of these challenges include: Transition to HIPAA 5010 in support of ICD-10 adoption: Operational implications may arise out of reengineering the current systems within the claims gateway, payment processing and health information analytics. Transition from batch to real-time systems: Gateways to health information are moving into distributed realtime systems resulting in a greater need for tracking information flows. Replacement of market forces with new audit and compliance requirements: In order to be compliant with NAIC-MAR, sufficient documentation will be necessary to audit operations of historical claims, encounters,

2 payments, enrollments, etc. Integration of Health Insurance Exchange (HIX): New set of enrollments in small group and individual segments will require business-to-business reconciliation and balancing of enrollments, subsidies, etc. across exchanges, trading partners, providers and payers. Impacts of Health Information Exchange (HIE): Wide spread usage of electronic health information can adversely affect the integrity of subscriber claim information. Policy level changes aimed at universal coverage and Medicaid expansion: An increase in enrollments will result in new data validation, verification and measurement requirements. Achieving Operational Excellence Using Health Information Management Controls While healthcare payer organizations are making drastic changes to their enterprise, it is critical to have effective information controls in place to achieve operational efficiency and reduce costs. Here are some critical areas within a healthcare payer organization that would benefit from an automated information control framework. EDI Gateway Operations Management The EDI Gateway is critical to the payer s process of exchanging all electronic transactions (applicable to 837, 835, 834,820, 270, 271 etc.) with trading partners. These HIPAA transactions pass through numerous transformations and edits in the gateway and then are directed to their respective processing system - claim adjudication, enrollment, eligibility, billing and payment. Some areas of control within the EDI gateway workflow are outlined below. Control Although additional validations will be necessary, end-toend reconciliation and balancing is the first critical function for ensuring the integrity of EDI transactions. This includes reconciling the number of 837 claims processed with the number of 837 transactions submitted by trading partners. Also necessary is balancing of 834 membership enrollments processed with those sent by trading partners. A final match which should be completed is balancing 834 remittances processed with appropriate 837 claim transactions. As for timeliness and accuracy of acknowledgements, it is recommended to validate 999/997 functional acknowledgements are sent on time to trading partners. Also, payer organizations should verify appropriate A0, A1 responses are sent on time for claims received and accepted. A final recommended validation for this area pertains to EDI formats sent and received. It will be critical to validate ERAs (835) sent to trading partners against ANSI file format compliance. Also, 837s received should be checked to ensure compliance with the X12 format. Monitoring The ability to monitor EDI transactions is a second critical function. Healthcare payer organizations should maintain a strategy for monitoring outgoing remittances by partner and provider. These same capabilities can be used to monitor the reasonability of received transactions. These capabilities will lead to the ability to trend on EDI data to identify operational issues and improve SLAs. Measurement The final critical function recommended for EDI transaction integrity is the ability to utilize accurate EDI data for decision making purposes. A transaction status report is beneficial in that it provides details of all errors that are defined between trading partners and payer gateway. Payer organizations should have the ability to generate performance metrics for providers and trading partners as well as provide executive summary reports for senior management.

3 Claims Pre-Processing and Adjudication Applications/Subsystems Claims pre-processing is the forefront of the claims adjudication process that receives 837 transactions submitted by the claims EDI gateway. The claims are validated, transformed and translated before being submitted for adjudication. The requirements for validating and monitoring these processes include tracking all claims by DCN, claim number, as they move from the EDI gateway through automated pre-processing into automated adjudication and payment processes. The focus here is tracking for timeliness and completeness. This same tracking validation can be used to track the lifecycle of claims (e.g. large value claims, suspicious claims etc.) suspended during the pre-adjudication and adjudication steps. Tracking and validation of this data will allow healthcare payer organizations to monitor and report on the volume of claims in suspense by provider and procedure type. Operational improvement can be reached by aging and trending of the claims processing lifecycle to identify bottlenecks and improve SLAs. Health Insurance Exchanges (HIX) Starting 2014, the Health Insurance Exchanges are expected to expand coverage and increase affordability. Many healthcare payer organizations are in the midst of building new processes and systems with the goal of integrating with exchanges to allow enrollment of a new set of members. Again, robust validation and monitoring is necessary here. Automated validation can ensure that total member records match between the exchange and payer gateway. Similar validation can also track down subsidy amounts for each member through the exchange. Trending should be performed on disenrollment data and termed members should be tracked. Additional trending on profile information changes of members, frequency of updates, etc. to detect patterns of fraud and abuse will be important in this newly competitive environment. Being such, organizations that monitor and measure sales and enrollment data will have the ability to rapidly adapt to consumer needs and competition (like address changes) of members. Audit, Compliance and Finance Process Health Care Reform has added more audit and compliance reporting requirements to an already heavily regulated industry. Internal audit is also mandating transaction level reconciliation to prevent errors and financial losses that may occur from changes in systems and processes. The ability to perform premium reconciliation with financial and membership systems aligns with this mandate. Payer organizations should develop formal structure to document financial risks and controls for monitoring and reporting purposes. In parallel, automation of currently manual processes and the reduction of dependencies on IT will help generate consistent and accurate audit information for regulators. To comply with NAIC MAR, sufficient documentation to audit historical claim information indicating final disposition of all claims is critical. Health Information Exchange (HIE) The goal of HIEs is to allow authorized users to quickly and accurately exchange health information to enhance patient safety and improve efficiency. As health information widens into health information exchanges, maintaining integrity of data is paramount. Controls requirements for HIE include the ability to ensure the completeness of health information based on HIPAA guidelines. Summary balancing to ensure that the total number of messages received matches the total number of messages stored into multiple databases and processed by subsequent applications will keep data consistent in a disparate technical environment. Similarly, organizations should ensure that the total number of images (content keys) received matches the number of entries in their imaging system.

4 Enterprise Operational Information Management Framework With changes in healthcare organizations happening at a massive scale, there is a strong need to effectively manage information exchanges across their operations. The Enterprise Operational Information Management Framework is a standardized approach to deploy information management controls, monitoring and measurement capabilities across business operations of a payer organization. An Enterprise Operational Information Management Framework needs to have the following characteristics: The ability to process both real-time and batch transactions. The ability for controls to be applied across files, messages and transactions. Robust notification and exception handling mechanisms to enable swift issue resolution so as to prevent downstream processing of inaccurate, incomplete information. Built-in compliance reporting and audit trail to facilitate internal and external audit. Provide visibility to the underlying business processes by providing information about the process state (volume, etc.) and control state (number of errors, etc.). Integrate with industry standard tools and interfaces. Key Recommendations for Payers The next few years will be a crucial period for payers, as they prepare for the transition to a new competitive landscape. It is critical for payers to be proactive and plan for establishing information management controls that are accurate, consistent and can be applied to the entire enterprise. In particular, the following actions are recommended for payers: 1Maintain Executive-Level Management Sponsorship: There is strong support and awareness of the value of information management controls on the part of senior management. It is critical that this level of engagement be maintained to foster this level of advocacy and ultimately evangelize. 2Review Current Operations and Controls Planning: Perform an independent assessment of current operations to identify areas of risk and develop a roadmap for execution of controls. The consideration of information controls should begin during the design phase of any application development process. 3Develop Formal Documented Standards and Policies for Enterprise Information Management Controls: Although there are informal standards and policies currently in place regarding the use and deployment of information management controls, payers could benefit greatly from the development of formal, documented enterprise-wide standards and policies. 4Capture, Track, and Analyze Operational Performance Metrics: Currently, there are little or no metrics in place to measure the effectiveness and performance of controls or to quantify the value and financial impact of information errors detected. The Claims Operations team has a prime opportunity to substantiate their success as an organization and validate the value-added contribution the team makes to the enterprise by capturing, tracking, and analyzing metrics and to demonstrate the value, cost benefit, and ROI of having information controls in place.

5 5Develop Formal Processes for the Use, Deployment, and Expansion of Enterprise Information Management Controls: Currently, there are no formal processes in place for reviewing the effectiveness of existing controls or for the overall lifecycle of controls including planning, design, deployment, assessment, and optimization. Consistently reviewing controls within a standardized timeframe ensures controls are mitigating risk as initially intended thereby realizing the full value of the controls. This includes expanding the use of existing control solutions to additional key functional areas where the product is not currently being used. This need becomes more critical with the addition, merge, and/or conversion of applications. 6Develop a Formal Process for Documenting Exception Resolution: Exceptions flagged by controls need to be further analyzed, root causes identified, and remedial process changes need to be implemented in order to continuously improve the quality of core processes. Not aggressively pursuing such improvements might lead to significant leakage in value added by controls solutions. Conclusion With healthcare reform imposing new regulations and standards on the healthcare industry, organizations must look to increase operational efficiency and cut costs wherever possible, while still maintaining a consistent level of service. Such items as the Reconciliation Act, 5010 Compliance, ICD-10 Adoption, and NAIC MAR have led healthcare payer organizations to look at utilizing a standardized operational information management framework. 7Instantiate a Formal Monthly Review Process: All stakeholders affected by controls need to come together in a formal setting to review the effectiveness of the controls and suggest ways of enhancing them as needed. 8Market the Use of Information Controls: There is a need to create awareness of information controls internally among all key stakeholders, and promote the value and benefits gained from having information controls in place on all critical applications throughout the enterprise. 9Identify Additional Areas of Opportunity: Automate and replace manual controls based on the cost benefit analysis. Cost benefit analysis must include savings resulting from control development and control maintenance activities. Cost Savings Cost Avoidance FTE savings :$3- $4 million per year Early Detection of Errors: $2-$3 million per year Audit cost: $.5-1 million per year Duplicate Payment Avoidance Potential: $1-$2 million per year 36 million transaction per year verified Over 1000 errors detected each year SOX, NAIC-MAR compliance Internal Audit Standards These operational controls and monitoring solutions can automate validations, proactively detect errors, and provide realtime monitoring into processes such as the EDI Gateway, Claims Pre-processing, HIE, HIX, and Audit, Compliance and Finance processes. It is recommended that organizations gain executive sponsorship and continually review operational controls and analytics to ensure continual improvement and maximal ROI from their solution. Risk Reduction Compliance About the Author Santhosh Patil Customer Development Group, Infogix Santhosh Patil is a Principal at Infogix, and leads the Solution Architecture and Strategic Services practice. Santhosh assists industry leading enterprises in assessing information risks, aligning business problems with strategic planning, advisory and technology solutions. Previously, Santhosh has worked in various consulting positions across several industries including Health Care, P&C Insurance, Trading and Risk Management, Investment Banks and Hedge Funds. Santhosh has a Bachelor s Degree in Computer Science and Engineering and is currently pursuing an MBA at Kellogg School of Management. For more information, please contact: Santhosh Patil spatil@infogix.com Learn how Infogix Controls can save you time and money. Visit or call (US & Canada) +44 (0) (UK and Europe). Copyright 2012 Infogix, Inc. All rights reserved. Company, product, brand, and mark names and logos herein are the property of their respective owners For a list of Infogix trademarks, visit: