A new "cop" on a new beat: the State of Ohio takes giant steps toward helping physicians receive full and timely payer reimbursements with "Prompt Payment Robocop." - Claims Processing/Coding

Health Management Technology, Nov, 2002 by Todd Park, Carol Wright Mullinax

Physician practices have to cope with many of the same issues as small businesses in other industries--cash flow, lofty overhead, high cost to recoup payments--but in no other industry except healthcare have such severe lapses in billing turnaround become routine and systematic by corporate payers.

To combat this, physicians in 47 states have lobbied for and created prompt payment laws to mandate the timely payments or denials of medical insurance reimbursement claims. While no federal laws have been enacted yet, these state-based prompt payment laws, which were met with much fanfare, increasingly have created controversy for not meeting initial expectations. In addition, the sheer ambiguity of the different laws and the tremendous time it can take to enforce them often create more billing complexities than most physicians can handle.

Many practices do not have the administrative resources to track reimbursements and calculate accrued interest that is owed on outstanding payments. These laws are difficult to enforce, as documentation is cumbersome and unwieldy to tackle. Because of the complexity and cost to enforce these laws, what started out as a means to help practices combat the uncalled for elongated payment turnaround time and collect what they deserve has, in many cases, become a losing battle for doctors and practice administrators.

A Call to Action

The Ohio State Medical Association (OSMA), the professional association representing more than 15,000 Ohio physicians, medical students and medical residents, recognized that long reimbursement cycles have always been a major issue facing its physician members. The OSMA, which represents Ohio physicians before the Ohio General, Assembly, the U.S. Congress, the State Medical Board of Ohio and other state and federal regulatory and administrative bodies, has traditionally assisted physicians with problems involving government agencies and third-party payers. Helping physicians lobby for and enforce prompt payment laws seemed like a natural next step in helping doctors to run successful practices.

Through its grassroots efforts, the OSMA was instrumental in the passage of Senate Bill 4, a new Ohio prompt pay law that requires insurers to pay clean claims within 30 days, or pay interest on those claims to the physician. Introduced by Sen. Larry Mumper, a Republican from Marion, this law took effect on July 23, 2002 and requires commercial insurers to reimburse physicians and other healthcare professionals for health services rendered to patients within 30 days of submission for clean claims or within 45 days for claims requiring documentation.

It also prevents insurers from lengthening that time frame in their contracts with physicians and prevents insurers from "looking back" longer than one year at alleged overpayments. The legislation also allows the Ohio Department of Insurance to impose stiff fines on insurers who are habitually noncompliant.

Tracking Claims

The challenge of enforcing the prompt payment law falls to individual physicians and their practices. Each claim has its own "time clock" to calculate the interest due based on its "starts" and "stops" depending on the insurance company's receipt, evaluation, denial or request for more documentation of the claim.

Even the most experienced office staff can find it next to impossible to manually track the status of hundreds of claims. To ease this administrative nightmare, the OSMA turned to athenahealth to devise a way to automate the tracking of claims and also to calculate the interest due from each payer.

The OSMA initially partnered with athenahealth in 2001 to help its members deal with practice management responsibilities and insurance claims processing. After evaluating more than 70 systems, the OSMA chose Waltham, MA-based athenahealth, a provider of practice automation and revenue cycle optimization services, as a partner based on its ability to lower claims rejection rates, automate office workflow and save physicians time and money. Several Ohio-based medical practices are currently using the revenue cycle optimization services.

One of the primary reasons the OSMA endorsed athenahealth was its continually updated rules engine, that allows specific payer requirements to be incorporated into the claim, prior to the claim being filed while the patient is still in the doctor's office. This enables practices to identify claim errors when the patient, the provider, the chart and the insurance ID card are all in the same place at the same time. The rules engine reduces claim errors that prevent doctors from getting paid, and thus reduces denial rates. Electronic data interchange technology enables athenahealth to document a payer's receipt of claims so there are no more "lost claims."

Building upon their joint success, OSMA and athenahealth decided to investigate the feasibility of creating a new technology that would help physicians enforce the prompt payment laws by creating a similar rules engine that incorporates the prompt payment regulations.