The quest for uniformity in billing goes on - Issues Analysis

Healthcare Financial Management, June, 1993 by Dan Rode

The 1992 election debates and the activities of the 102nd Congress foretold that health care would be an area of exceptional interest in 1993. Currently, the nation awaits the introduction of the Clinton administration's healthcare reform package, while in Congress, debates continue on several reform proposals from various sources.

The reform proposals and related discussions of the last several months have drawn attention to some related topics of interest. One such topic is administrative simplification. The need for administrative simplification--specifically, simplification of the activities surrounding the functions of patient accounting and claims processing--has become increasingly obvious as ways to streamline healthcare procedures and cut healthcare costs have been debated. This topic has also been a subject of concern on the part of healthcare financial managers for the past two decades.

Early in 1993 HFMA presented a draft bill on healthcare administrative simplification and uniformity to members of both parties in Congress and to the Clinton administration. The history behind this advocacy effort as well as the content and intent of the draft bill are described in this article.

The search for uniformity

Since the early 1970s, patient accounting and claims processing managers have struggled to develop a process for facilitating the exchange of data between payers and providers as efficiently as possible. HFMA members were among the early developers and advocates of the uniform billing concept.

By 1975, HFMA efforts to promote the concept of a hospital based uniform bill were augmented by similar efforts on the part of the Health Care Financing Administration (HCFA), the American Hospital Association (AHA), the Blue Cross and Blue Shield Association, the Federation of American Health Systems, the Health Insurance Association, Medicaid, and the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS). As a result of this group effort, the National Uniform Billing Committee was founded and subsequently the UB-82, a uniform bill, was adopted in 1982 and went into effect in 1983. Not only did UB-82 provide a single, common form for the purposes of billing, but it also provided a common, uniformly defined data set.

Originally, UB-82 was to be a document that not only created uniformity in billing, but that also would be the only form necessary to bill. The UB-82 was to be a summary billing. Unfortunately, it was not long before payers began to ask providers with large dollar inpatient accounts to "attach" copies of the facilities' itemized statements or invoices. Since the bills would not be paid until the payers received and reviewed the itemized statements, patient billing personnel were generally forced to comply with these requests for additional data.

As time went by, the billing amounts for which payers were requesting additional data moved lower and lower. For many patient billing offices, generally was easier to send a copy of the invoice with all UB-82s rather than to try to determine which payers required the invoice copies. During the early years of its use, the uniform bill also was converted to electronic flat-file data, which allowed providers to send their claims via a magnetic tape or, in a few cases, by direct dial-up processes.

Unfortunately, each payer developed a different flat file. A provider wanting to take advantage of the speed and efficiency of electronic filing was forced to meet the specific interpretations or needs of each individual payer. In addition to this drift from the original uniformity concept, variances in the different state versions of the uniform bill also created problems. Providers with patients from other states or those who sent claims out of state found great difficulty in meeting the requirements of out-of-state payers/processors.

Vendors of healthcare software also found that the different requirements between states and healthcare providers and payers necessitated labor-intensive changes each time the uniform bill was altered to accommodate new needs. While the basic uniform data set remained the same, the different uses of the uniform bill's "field locators" placed additional demands on vendors to meet the desires of those exchanging the forms.

The differences in payer requirements also had the effect of elevating the billing error rate because it became increasingly confusing to provider billing personnel to remember the requirements of each provider. And, as inpatient care moved to an outpatient setting and managed care became more prevalent in various parts of the country, the restrictive format of UB-82 made it yet more difficult to use. While the concept of a finite data set associated with 96 field locators imposed some restraint on the overall demands for data, most providers using the UB-82 found themselves faced with the need to provide attachments in response to requests for additional data.

The only alternative to meeting the variations required by some payers were the use of clearinghouses established by the various payer groups and some independent contractors. The clearinghouses could not meet the demands for clinical attachments, but they could handle data from electronic-capable providers in the form of electronic transmission (which the clearinghouses then re-edited for each payer that contracted with the clearinghouse). Only a few large providers were able to do this editing and electronic transmission. Many small providers and payers were unable to participate except on paper.