What is EDI? The change of routine business transactions via computer. Why do you need it? To reduce the cost of paperwork, save time, and increase efficiency of claims sent to insurance carriers.
When it comes to Electronic Data Interchange (EDI), I have noticed that many chiropractors perceive themselves acting like special agent Ethan Hunt of Mission Impossible. Hunt might find himself hanging from the ceiling of a CIA top security computer vault attempting to retrieve vital security information that was stolen. Everything has to be just right. Each and every human variable is monitored to ensure that no breach of security occurs. There is a retina scan, voice check, even the body temperature and weight are monitored, which is why he is hanging from the ceiling. Reminds you of trying to deal with Medicare doesn’t it? Is EDI really all this? No. Once you are informed of the EDI process, and who the players are, you will realize that the mission is possible, and easy.
What is EDI?
EDI is the exchange of routine business transactions via computer. EDI uses a computer-processible format to transmit and receive anything from purchasing orders to inquiries. It is sweeping across virtually every industry. According to the EDI Coalition of Associations, an affiliation of trading partners, the growth in the number of businesses using EDI is increasing at an annual rate of 45%. It is estimated that by the end of 1996, up to $550 million will be spent by companies on EDI implementation and processing.
It is important to understand that EDI is different than electronic claims submission (ECS). ECS allows only a one-way flow of data instead of a two-way exchange of information. ECS companies are changing to EDI after realizing that eligibility, claims status, and other information can be sent back to the chiropractor. And as we will see, even correction (or edit) information from the HCFA 1500 form can be sent back to the chiropractor.
The Paradigm Shift
The new managed care paradigm requires that chiropractors ascend to a new level of efficiency. The shifting sands of managed care, coupled with increased regulation and insurance tightening, leave no other option for the chiropractor than to embrace EDI cost benefits. EDI reduces paperwork expense, saves time, and reduces the percentage of misplaced or “”never-received”” claims sent to insurance carriers. Most importantly, the right EDI system will eliminate omissions and errors on submitted claims.
In addition to saving administrative costs, EDI will also enable the chiropractor to organize the labyrinth of managed care reporting information soon to be traveling through cyberspace. Insurance carriers are also realizing they must be more efficient. As stated by Steve Arter, president of Health Care Cash Management Seminars, “”One thing that is becoming more and more obvious in this age of managed care is that carriers must receive their claims electronically.”” The cost of manually receiving claims is so high that those carriers who do not convert to electronic processing will be unable to remain competitive in the market place and will ultimately fail. The same is true for IPA’s and other types of alliances. These all have a viable utilization management, outcome measurement, and protocol criteria to maintain market share and demonstrate quality to prospective payors. This can be accomplished by access to clean data in volumes that can only be achieved electronically.
The impact of this on the chiropractor is that those that do not provide data electronically to payors will be looked upon unfavorably and are subject to being dropped by the plans. This is particularly true in areas where there are too many providers. My company has worked with chiropractic plans and alliances that have told us that they must trim their provider panels, and their EDI status will be one of the key factors in determining who will be dropped.
When a claim is submitted electronically, the data from the HCFA 1500 form is transferred to the carrier via modem, usually at the end of the day. After submission, the claims are checked by the clearinghouse or carrier for completeness and accuracy. If the claim is clean and ready to be received by the carrier the process is complete. Other claims that need correction are either sent back to the chiropractor, or held with the doctor for correction, depending on the EDI system. The systems that do not allow correction of claims on-site will send correction reports to the chiropractor. The claim is then reviewed by the office staff, corrected, and resubmitted.
Generally the chiropractor will pay an additional fee per claim for resubmission. However, the better systems alleviate these resubmission costs by catching the edit prior to submission. It is obvious that EDI saves the time that would have normally been lost had the claim gone to the carrier in its incorrect form. The real benefit with EDI is not so much in getting claims back faster as it is in getting the paper costs out of the office and being able to send clean claims.
The Roles & the Players
As your informant I will outline the roles and players involved should you choose to pursue the mission. First it is important to distinguish an accounts receivable (A/R) vendor from an EDI firm. A/R vendor software is patient information software that manages patient ledgers. Depending on the management capabilities, A/R software can also be referred to as practice management software. An EDI firm, on the other hand, functions as a clearinghouse. An EDI clearinghouse serves as an intermediary sending all electronic claims from the provider to the different carriers. A/R vendors will contract with EDI firms to offer electronic billing from within their A/R software. The majority of A/R vendors are certified with at least one of the EDI firms in this study.
Through my research I have screened hundreds of companies and found three that I believe are the key leaders in EDI. Selection criteria for companies included in the study:
- EDI experience
- Claim edit capabilities
- Size and financial strength
- Number of user installations
The main criteria for selection was that a system should not just offer ECS but EDI. In order to remain competitive it will be obligatory for ECS companies to make the transformation to EDI.
The selected companies are:
- Envoy Corporation (formerly NEIC)
- Equifax Healthcare EDI Services (formerly CHN and ETS)
- Inter-Link Health Services Corporation (IHSC)
Envoy gained the market lead in pharmacy-claims processing in 1992-1993 before recently purchasing National Electronic Information Corporation (NEIC). NEIC has been known as the clearinghouse’s clearinghouse. NEIC was started by a conglomerate of insurance companies. This is a very incestuous industry and most of the other clearinghouses I researched send a significant portion of their claims through Envoy/NEIC. Envoy accepts claims directly from practices for an initial fee and an agreement by the practice to format their system to Envoy’s specifications.
- A/R Vendor Compatibility
- Envoy is compatible with over 500 A/R vendors.
- Claim Correction
Envoy discovers claim errors at the clearinghouse level and then sends an electronic error report during the next submission cycle. The chiropractor then corrects the claims, resubmits and is charged an additional per claim fee. All carrier-specific edits are updated and implemented at the clearinghouse level.
EDI On-line services
Envoy offers eligibility requests, referrals, claim status checks, credit card activity and check guarantees. Electronic claims are sent to paper receiving carriers and charged extra.
Equifax Healthcare EDI Services
Equifax acquired ETS (Electronic Tabulating Services) and CHN (Cooperative Healthcare Network)-both in the chiropractic market segment. With the ETS acquisition, Equifax gained one of the largest national libraries of individual payor formats. Equifax is phasing in a product known as Statlink which was started by CHN. So far there are only about 100 certified A/R vendors with Statlink, the other 100 or so use ETS. ETS is not an EDI system; it only allows for one-way claim submission. Be sure you understand which system you have if you currently send electronically through Equifax.
A/R Vendor Compatibility
Equifax is licensed with about 200 A/R vendors: ETS-100 and Statlink-100.
Equifax sends what they call an “”Audit Edit Report”” back to the chiropractor immediately after claims are submitted. In addition to the per claim submission charge there is a separate fee charged for editing. All carrier-specific edits are updated and implemented at the clearinghouse level. ETS offers no on-line, carrier-specific edits.
EDI On-line services
With StatLink, Equifax offers eligibility requests, claim status checks, and remittance advice. Electronic claims are sent to paper-receiving carriers and charged extra.
Inter-Link Health Services
Inter-Link has been a pioneering force in EDI since 1984. It was the first EDI firm to offer on-site carrier-specific edits and universal A/R software compatibility. Inter-Link’s DataTrack 2000 is what it terms “”Living Software,”” meaning any updates to the software are sent via modem. Since Inter-Link’s inception EDI has been its principal focus; this has allowed it to produce an EDI engine that offers anything from A/R funding to electronic checking. The DataTrack 2000 even correctly formats the 94,000 Medicare coding edits introduced under the Correct Coding Initiative.
A/R Vendor CoMpAtIbility
Inter-Link works with all A/R software systems. Print-image technology captures the claim data allowing the DataTrack 2000 to work with virtually any system.
Inter-Link updates all edits on-site via modem. The chiropractor corrects claim errors prior to submission at no additional charge. Inter-Link guarantees zero rejection and a one time per claim fee. All carrier-specific edits are updated and implemented on-site.
EDI On-line services
Eligibility requests, explanation of benefits, patient statements, A/R funding, CPT & ICD9 coding edits, credit card activity and electronic check payment. Electronic claims are sent to paper receiving carriers at no additional charge.
Technology is now allowing us to do what yesterday was an impossible mission. Those who are resistant to technological changes will only make it hard for themselves. I remember in 1978 when chiropractic was first introduced to my family. It was then at age 12 that I went to see a chiropractor for the first time with my mother. We were initially resistant, lacked understanding, and were even somewhat fearful. It was obvious to this professional that my mother was a little cautious toward this new form of treatment. This guy was really zealous about his profession and I watched as he whole heartily swayed my mother from her skepticism by explaining the benefits of the treatment. Now it’s almost as if I was given a divine opportunity to be on the other end explaining the benefits of EDI to a profession that has helped me through the years.
Don’t get me wrong, EDI is not a panacea. Insurance carriers will still continue to blame the clearinghouses and systems for their own problems. They will still stall, still have administrative shortcomings, and still cause problems for providers. Get into EDI because you have to stay competitive. Have the expectation that it will reduce the time spent submitting claims, save you some money and, to some degree, reduce the amount of time it takes you to get paid. You will find it a very satisfactory alternative. Remember, the mission is possible! Find the right system and don’t worry, it won’t self-destruct. Agent Meister signing off.” “Anthony M. Meister, is CEO of Clinical Record Systems Corp., a company committed to improving practice management. He is also a nine-year veteran of the United States Navy, having served in the area of administrative management for several departments on board the aircraft carrier USS Theodore Roosevelt CVN-71. Anthony holds a Bachelors degree in Business with a concentration in Marketing. His hobbies include drumming, song writing, painting, basketball and golf. For information about EDI or other topics Anthony can be reached at 414-250-0630.