Administrative tasks simplified: Electronic transmission saves time, money

January 1, 2007

There is no doubt about it-transmitting claims and other healthcare information electronically saves time and money.

There is no doubt about it-transmitting claims and other healthcare information electronically saves time and money.

Multiple research reports confirm this. A 2006 Milliman study found that electronic transactions can lower annual insurance administration costs by more than $42,000 per physician. As a smart alternative to paper, the study points out that costly insurance administration can be remedied simply through pain-free measures, which encompass electronic operations. Another study, "An Updated Survey of Health Care Claims Receipt and Processing Times, May 2006," by America's Health Insurance Plans also supports this trend. The report, based on aggregated data from nearly 25 million claims, processed by 26 large and small plans throughout the United States, finds that electronic submission of health insurance claims more than tripled in the last decade, reducing administrative costs, and allowed 98% of claims to be processed within 30 days of receipt. This study also confirms that the electronic way of doing business costs less and that the average cost of processing a clean electronic claim was 85 cents-nearly half the $1.58 cost of processing a clean paper claim.

Competition is another reason for providers to use electronic transactions. Experts in Managed Healthcare Executive's 2007 State of the Industry Survey said that "increasing efficiencies with technology" is the top method respondents will execute in 2007 to remain competitive in the market. In fact, 56% of those surveyed rated electronic transmission as one of their top three priorities, stating that lowering system complexity, eliminating duplication, integrating across varied and numerous "silos," and replacing aging systems will remain at the top of their agendas.

Existing in an electronic environment

While there appears to be no debate over whether or not to use electronic transmissions, there are still some differences on how to operate best in this environment.

Part of this challenge remains with smaller physician practices, which by virtue of their size, have smaller operating budgets, smaller staff and less time for administrative functions. Historically speaking, many physician practices rely on practice management systems (PMSs) to streamline and automate the claims process, accepting the fact that in spite of their handsome fees, practice management systems are a cost of doing business.

These days, however, as small physician practices are faced with higher operating costs, they are seeking new practice alternatives and are beginning to review their dependence on large practice management systems for their claims submission and for other insurance functions. Some small physician practices have neither the manpower nor the budget required for a big practice management system, while other smaller practices just have less time. Many revenue cycle management consultants agree-checking eligibility status, remaining deductible and accurate copayment amounts are vital practices for offices of any size. Smaller offices, however, usually do not have the personnel resources to spend hours on the phone with insurance companies nor the information technology resources to maintain complicated systems

New options

Today, new alternatives have emerged-some developed by frustrated practitioners themselves who are seeking simple ways to send electronic transactions but not rely on practice management systems. They want to exchange data with insurance companies on a real-time basis and their goal is to accomplish this business function more efficiently and more cost-effectively.

Now, with the use of Web-based solutions, small providers or solo practitioners' offices can achieve these goals in minutes. New systems now make managing claims and performing other administrative functions as easy as, or even easier than, using the Internet to order airplane tickets or purchase consumer goods by offering Internet-based solutions and smart user interfaces-both of which result in reduced costs and enhanced efficiency in healthcare transactions.