HIPAA Transaction Standards: Legislative Mandate with a Silver Lining

Healthcare Financial Management, May, 2001 by Christine Malcolm, Cynthia Bailey

Assessing Connectivity Opportunities

To choose the most appropriate connectivity options from those currently available, providers should conduct a systematic assessment that answers the following questions:

Where should implementation begin? The provider should determine which transaction sets should be electronically integrated first, focusing in particular on areas that offer the greatest opportunity for improvement. One way to identify the areas that should receive immediate attention is to evaluate the major reasons that claims are rejected. Among the transactions covered by HCFA's final rule outlining the HIPAA-mandated electronic transactions standards, [c] five are most likely to pose problems that result in higher rates of rejections: two of these, eligibility verification and referrals/authorizations, are involved in front-end processes, while claims submission, claims status inquiry, and remittance advice receipt reflect back-end processes.

What connectivity offerings are currently available in the provider's market, and what options may soon become available? The provider should carefully compare the advantages and disadvantages of the available options. For example, if a collaborative commerce model already exists or is being developed in a provider's market, it may be the best and easiest option, because all the provider has to do is become a member to obtain quick access to all payers at minimal ongoing cost. If no consortium exists, the provider should assess its relationships with other providers and key payers in the area to determine whether a consortium might reasonably be developed. The time and effort involved in establishing a consortium may be prohibitive, however, making this approach less advantageous than other approaches.

In some instances, commercial options may be the quickest and easiest to implement, but their cost on a per-transaction basis tends to offset that advantage.

Automating transactions on a payer-by-payer basis also may be a relatively quick solution, but the need to use multiple systems tends to make it too cumbersome for internal staff and IT resources. A better option is to use tools (eg, a gateway mechanism) that can translate a provider's data into HIPAA-compliant format and route them seamlessly to at least 80 percent of payers.

What level of integration with the provider's current work processes and systems is available? If a fully integrated solution is available, a cost benefit analysis should be performed to determine whether full integration currently is preferable to partial integration. For example, although the ideal solution would allow an insurance verification transaction to flow seamlessly from the provider's legacy system to the payer's system and back again with no rekeying, it may be more cost-effective to include an interim step in which the registrar reenters or copies certain data points into a separate screen that sends the information to the payer.

What incremental net revenue increases, cash acceleration, and cost savings are possible with each connectivity option? The provider should compare the potential benefits of each connectivity option with respect to automating each of the transactions covered by the electronic transactions final rule, particularly claims submission, claims status inquiry, claims remittance, eligibility verification, and referral/authorization.