HIPAA Standardization Signals New, Streamlined PFS Processes and Organizational Structure - Health Insurance Portability and Accountability Act of 1996, - patient financial services - Brief Article

Healthcare Financial Management, April, 2001 by Bobette M. Gustafson

Future success for patient financial services (PFS) professionals will depend largely on their ability to successfully implement the administrative simplification standards of the Health Insurance Portability and Accountability Act (HIPAA) of 1996. The final rule establishing electronic transaction standards for most of the transaction types covered by HIPAA was published in the August 17, 2000, Federal Register. The standards are scheduled for implementation October 16, 2002 (October 16, 2003, for small health plans).

The new standards will enable healthcare providers to speed the revenue cycle, deliver enhanced services to patients, and reduce costs by eliminating or automating labor-intensive activities. To realize these benefits, however, PFS professionals will need to redesign their revenue-cycle operational processes. The redesigned processes will need to account for the different effects of HIPAA standardization on the revenue cycle before, during, and after care is delivered.

Preservice processes. In the typical nonstandardized revenue cycle, many processes such as insurance verification and preservice managed care screening could not be performed manually for all patients due to volume and staffing limitations. By reducing conflicting, complex processes and formats to a single, standard format, the HIPAA transaction standards will make it possible for PFS staff to perform these critical activities routinely. In addition, the ability to easily confirm payer requirements will facilitate the effective management of patients' access to care, eliminating unnecessary claim denials and inadvertent delivery of services not deemed medically necessary.

PFS professionals also will be able to quickly provide patients with accurate and timely information regarding insurance coverage and anticipated charges, thereby avoiding the confusion that can lead to time-consuming inquiries after service and high levels of patient dissatisfaction. Further, because insurance benefit information will be maintained and reported by the payers on a more timely basis due to the HIPAA standards, providers will be able to more easily and accurately calculate anticipated patient liabilities and assist patients in identifying acceptable options for resolving their personal balances. This will eliminate ineffective postservice collection efforts and reduce bad debt.

Time-of-service processes. Incorporation of comprehensive, standard claim edits into the preregistration and registration data sets will make it possible to concurrently flag and resolve erroneous information. This new capability will eliminate labor-intensive, postservice billing activities, including the need to contact patients for missing or correct information.

Ongoing electronic insurance verification and managed care screening will help PFS departments secure optimum payment for services and immediately inform patients of changes in their coverage. In addition, the comprehensive electronic edit applications will effectively support concurrent clinical coding and documentation reviews by flagging inappropriate, erroneous, or potentially noncovered diagnosis and procedure codes. Furthermore, once standards for electronic signatures are defined, appropriately managed gathering and maintenance of electronic signatures will greatly streamline the registration process.

Postservice processes. HIPAA standardization will make it possible to electronically transmit appropriately prorated claims to the right payers with necessary attachments immediately after healthcare services have been delivered and without further manual intervention. PFS staff also will be able to identify and monitor payers' clean-claim cycles. An automated claim follow-up process using exception-based reporting (eg, flagging unpaid claims within a specified time frame) will accelerate cash flow and enable providers to routinely supply up-to-date claim-status information to patients. Because providers will be able to electronically manage the unpaid-claim follow-up volumes, it no longer will be necessary to routinely enlist the assistance of patients in this activity.

In addition, because of HIPAA's standardized payer identification and payment transaction information, timely and accurate coordination-of-benefits (COB) information will enable automatic crossover secondary billing from payer to payer.

Finally, electronic remittance processing, with automatic flagging of payments that do not reflect the originally anticipated amounts, will replace time-consuming and often ineffective payment posting and reconciliation processes.

Organizational Model and Employee Profile

As the revenue cycle incorporates the more efficient processes made possible by HIPAA standardization, PES professionals will need to craft a new PFS organizational model. Electronic processing could open the door to expanded or complete outsourcing of the revenue cycle. In any event, appropriate implementation of electronic transactions will virtually eliminate traditional, labor-intensive activities performed after healthcare services are delivered, while enabling significantly expanded processing to be performed before and at the time of service. Moreover, because time will no longer need to be spent on time-consuming manual processes, the PFS staff will be able to devote their efforts to interacting with patients at all critical points throughout the revenue cycle. In the new PFS organizational model, therefore, staff charged with performing traditional, postservice activities can be redeployed to perform preservice and time-of-service activities.