Claim Headlines (updated 12-1-07)

Links and notes to recent claims process related headlines and articles.

Inpatient Prospective Payment System Changes and the Claims Process. (December 1, 2007) In August CMS announced to the DRG groupers used to set rates for inpatient claim payment. According the CMS report, on the payment side the changes are net zero with some DRGs seeing an increase and some seeing a decrease. It remains to be seen whether the switch from charge-based to cost-based weights will be disruptive in terms of payment variations. In terms of claims process impacts, the following are worth noting:

1. New DRGs: An output of the review 20 new DRGs, CMS is deleting 8 and modifying 32 existing DRGs. CMS is taking these interim steps in FY 2007 as a prelude to making more comprehensive changes to better account for severity in the DRG system by FY 2008.
2. Three year phase in In FY 2007, one-third of each relative weight is cost-based; the remaining two-thirds were set using the previous charge-based methodology. In FY 2008, the cost-based portion will increase to two-thirds, and the charge-based portion will decrease to one-third. In FY 2009 100 percent of the relative weights will be set using the new cost-based approach.

NPI Implementation Update (revised). (December 1, 2007) A quick update for dates and NPI adoption related issues. Key note:

1. October 29, 2007: By this date, all carriers will reject claims where the NPI/legacy identifier combination used on a submitted claim cannot be validated against the carrier's the NPI crosswalk. Informational edits will no longer be issued once this happens, but will be replaced by a claim denial that will enable providers in to specifically determine why the claim is being rejected.
2. January 1, 2008: All 837i electronic claims and UB04 paper claims without an NPI in fields identifying the primary provider (billing and pay-to) will be denied/rejected. Legacy identifiers paired with NPIs in the primary provider fields on the claim will still be acceptable as will legacy-only numbers in secondary provider fields. This means that 837i and UB-04 claims with ONLY legacy identifiers in the Billing and Pay-to Provider fields will be rejected starting on 1/1/08.
3. May 23, 2008: According to the Contingency Guidance issued on April 3, 2007, CMS will lift its NPI contingency plan, meaning that only the NPI will be accepted on all HIPAA electronic transactions (837I, 837P, NCPDP, 276/277, 270/271 and 835), paper claims and SPR remittance advice. This also includes all secondary provider fields on the 837p and 837i. The reporting of legacy identifiers will result in the rejection of the transaction. CMS will also stop sending legacy identifiers on COB crossover claims at this time (with implications for primary/secondary payer coordination).

NPI Notes

• Provider Sign-Up: Require providers to sign up for their NPI number and then notify the payer of their NPI number by the end of Q3 2007. (Providers go here to sign up online: NPI Online Sign-Up -- it takes about 15 minutes to complete)
• Providers Test Your Claims: The best way for a provider to determine whether an NPI has been properly setup on is to submit a small batch of claims with NPI only as a test.
• Final Date: CMS has not yet determined/announced a date by which an NPI will be required for primary provider fields on 837 professional electronic claims and 1500 paper claims processed by carriers. According to CMS this will occur prior to May 23, 2008; a specific date will be announced once available.

HIPAA Enforcement? (June 18, 2007) HIPAA went into effect in April 2005. Two years later the HHS has initiated it's first HIPAA enforcement audit on a hospital in Atlanta. According to ComputerWorld the Piedmont Hospital has been presented with a document requiring information about 42 items. Neither the the U.S. Department of Health and Human Services nor Piedmont Hospital have commented about the audit. Indeed, one industry concern is that by not sharing information specific to the nature of the audit findings and recommendions, the HHS makes it more challenging to focus ongoing HIPAA compliance related technology investments and process change efforts. One thing is certain: The first known audit of HIPAA security by the HHS puts the healthcare industry on notice that future enforcement actions are possible and indeed likely.

Payers Get Bigger. (May 1, 2007) A recent article in Managed Care Magazine highlights conclusions from an American Medical Association report from 2005 regarding the increasing market concentration/power of large insurers. There are 166 Metropolitan Standard Areas (MSAs) in the United States.

1. 93 MSAs have one insurer with at least 50% market share of the HMO/PPO market.
2. 32 MSAs ahve one insurer with at least 70% market share.
3. 7 MSAs have one insurer with at least 90% market share.

Managed Care Magazine

NPI Deadline Changes. (April 3, 2007) The CMS has relaxed its deadline for health care providers and health plans to begin using the National Provider Identifier as their sole identification number. The May 23 deadline for all but small health plans still stands, but the agency will focus on voluntary compliance and will only investigate cases when a complaint has been filed. CMS PDF link

Providers "lag" in use of e-mail and e-medicine. (February 4, 2007) According to USA Today, despite predictions that e-communication between patients and medical providers would see wider use, studies show adoption rates that are surprisingly slow. In one survey only 8% of adults report they received e-mail from their doctors. Another survey showed approximately 25% of doctors communicated online with patients. The general conclusion, according to one researcher, is that U.S. medicine has been "astonishingly behind the rest of the world" in its use of e-mail. Some experts believe providers have reached a "tipping point" on the issue and expect to see faster adoption in the near future. USAToday link

ClaimHeader Issue (Q2 2007): Authorizations

The agony of authorizations...

This issue of the ClaimHeader is focused on authorizations and the impact they have on the claims process. Claims and authorizations are like cats and dogs, they don’t mix. The fallout from the process to match an authorization to a claim drives administrative cost, payment accuracy and service issues. In this issue we will start with an overview of the fallout and then discuss ways you can tackle authorization issues in your shop.

Highlights include:

1. Only 25 to 50% of claims that require an authorization exactly match one.
2. Manually reviewing claims to match an authorization is expensive, (as much as $3.00 per claim).
3. Generally less than 5% of the authorization holds/pends that are manually reviewed are denied.
4. Consider removing the authorization requirement for any procedure with an average paid amount under $1,000.

ClaimHeader Q2 2007 Claims Process Surveys

We've got two interesting surveys set up for Q1 2007: COB and EDI.

The EDI Survey is a bit more routine -- as we've surveyed EDI previously and many payers have undertaken significant efforts post-HIPAA to move from paper to EDI.

The COB Survey is a perhaps slightly rougher. As a generalization, the world of payer coordination has not seen the same levels of standardization that many EDI processes have undergone post-HIPAA. One the other hand, oftentimes you learn the most interesting things by going to a new place.