Now that Obamacare is likely here to stay, it's time to get serious about reforming key elements of our healthcare system. One area that deserves attention is the simplification of administrative processes that weigh on every transaction in healthcare. While it is not a new concept, it is one that is ready for prime time.
The Affordable Care Act does include an administrative simplification provision, which seeks to reduce paperwork associated with electronic funds transfer and eligibility and claim status determination. By adopting a set of operating rules for each transaction and creating as much uniformity in implementing electronic standards as possible, administrative costs can be reduced.
While this topic doesn't always get as much attention as the many other healthcare mandates--such as ICD-10, Meaningful Use and HIPAA 5010--a recent report from the Institute of Medicine brought it into the spotlight. The report reveals that $190 billion is wasted in excess administrative healthcare costs every year – that is 30 cents of every dollar, enough to cover the health insurance premiums of 150 million workers. Administrative costs in healthcare make up the second biggest category of waste after unnecessary procedures, and the resulting paperwork and red tape that underlies every stitch, X-ray, and prescription in our massive healthcare economy and is definitely an underlying cause for what ails us.
Our healthcare system is inefficient, relying heavily on manual, paper-based processes, but it can actually be improved through administrative simplification measures without negatively impacting access to care, or quality of care. The reality is, if the healthcare industry can simplify administrative processes such as payment processing, to a level only half has efficient as say, the retail industry, there are billions of dollars in savings to be had – savings that could be redirected toward other healthcare priorities.
Thankfully, providers and health plans are starting to communicate more efficiently with one another through technology-driven automation. And it's this communication that will drive down administrative costs, improve governance, and help the industry achieve compliance with government mandates. When the industry focuses on removing points of friction at the edge of the enterprise, health plans and providers will be able to securely and better manage the flow of administrative and clinical information as it moves through and beyond the enterprise.
We know technology adoption is on the rise in healthcare. Health information management solutions are rapidly integrating fragmented business processes and increasing data visibility, helping trading partners quickly comply with new mandates, adapt to new financial and care models, and reduce costs.
Nearly all health plans and large health systems have implemented some form of patient information systems or electronic medical records. According to a 2011 NAMCS survey, technology adoption in office-based provider practices has more than tripled largely due to Meaningful Use and the adoption of electronic medical records (EMR). While these developments are key for moving toward administrative simplification, they are not the only answer.
How data is shared between entities must be governed by a set of standards, rules and regulations that ensure filing a claim is simple and easy. Operating rules are a common form of these standards. They are necessary for electronically managing the adjudication, response and payment processing of medical claims and can serve as a 'service level agreement' that sets the standards and regulates how payers and providers should communicate to achieve administrative simplification.
Larger hospital health systems and health plans, as well as smaller provider practices, are leveraging CORE certification to comply with operating rules. This important CAQH initiative is delivering real results on the administrative side of healthcare that's translating into administration resulting in a better care experience for patients and caregivers.
CORE is the authoring entity for operating rules and has issued guidance for each phase of compliance. While many payers are leveraging internal IT staff to achieve certification for operating rules through CORE, many providers are increasingly partnering with CORE-certified vendors to leverage their current EMR systems for better data exchange with health plans. Both types of investments – IT staff and vendor partnerships – will ensure provider and health plan entities can better exchange claims and payment information outside the walls of the organization.
It's no secret that conducting business electronically and eliminating paper-based record keeping will save the industry a huge sum of money, but it will also reduce phone calls, man hours, manual labor, human errors and especially fraud and abuse – which is a costly expenditure in healthcare.
There is hope. Our waste-prone healthcare economy can indeed transform itself into a smooth, efficient, accountable system that pays for services in a manner that better aligns with our high-tech workforce today. Administrative simplification will ultimately improve patient privacy and security, make it easier for physicians to share patient information and most importantly, reduce and simplify paperwork for patients, physicians and health insurers throughout the healthcare delivery system.