HIPAA Technology Upgrades Can Pay For Themselves
Have you considered an Internet-based Application Service Provider?
By Frank Marshall

As you determine exactly what you need to do to comply with the upcoming Health Insurance Portability and Accountability Act (HIPAA) regulations, undoubtedly some of your most pressing questions are "Will I have to upgrade my computer system?" and "How much will it cost?"

Your software and systems will need to be in compliance, and waiting until the last minute to upgrade won't save your practice money. In fact, sticking with obsolete hardware and software may cost you money by prolonging inefficient business practices.

It's important to understand that HIPAA isn't like Y2K. When HIPAA is fully in effect, it will mark a new era in healthcare data collection and analysis. It will bring industrywide standardization and greatly simplify the administrative side of practicing medicine.

Your practice can take advantage of this new era of standardization and mass exchange of electronic data by adding financial management capabilities.

In this article, I'll outline what I think is your most powerful option for coming into compliance with HIPAA and improving your practice's financial health at the same time: contracting with an outside vendor called an Application Service Provider (ASP), which will install and maintain via the Internet an advanced practice management system that utilizes SQL-based software.

What are my choices?

SQL, which stands for Structured Query Language, is a type of relational database system. SQL programming is often used for high-end custom database work, when the back-and-forth processing of complex information is required, such as with e-commerce ­ or your practice finances. SQL enables you to analyze data for a variety of factors (e.g., diagnosis, plan type, payment history) almost instantly.

It's certainly possible to continue to use a Windows-based or Unix-based practice management system in light of HIPAA. In fact, most current practice management software is based on the Unix system, and the stable nature of that platform combined with the data-mining capability of an SQL reporting system can provide you and your practice manager with a solid base of financial management systems.

Exactly how can SQL benefit me?

But as the vice president of an ASP, MedSynergies Inc., I've seen that many small and medium-sized practices are realizing that it makes sense to use an outside vendor, rather than purchasing, installing and managing a new computer system or software themselves. A reliable ASP vendor will guarantee that its software is installed and maintained at a high level of efficiency and take responsibility for installing upgrades as they become available. This can eliminate the need for you to hire highly paid IT staff. Also, SQL systems give you online analytical abilities that could benefit your bottom line in a number of other ways.

As I stated previously, once HIPAA is fully in effect, the standardized data requirements will prompt mass adoption of electronic claims filing either through EDI (electronic data interchange) warehouses or by filing directly with insurers. The new formats will greatly speed-up claims submission and payment. By enabling online electronic communications with insurers, the claims adjudication process can be automated, reducing the burden on office staff. In addition, a vast amount of new information will be available for practices to conduct enterprise-wide operational analyses. The Boundary Information Group of Denver, Colo., estimated recently that medical groups will be able to save some 37% in bad debt and postage and some 50% in overall business operation costs.

The proper system should be able to pay for itself by reducing claim denials, improving collections, increasing patient self-payments and providing daily financial performance reports that can point out practice inefficiencies. (See "Technology in Action," at left.)

Three main benefits made possible by SQL technology are:

Faster claims payment. An SQL system can compile claims rejected by insurers and match them against a practice's own information base daily. Practice staff or an outside vendor can then compare all relevant data, correct the claim (e.g., fill in missing information) and route the revised claim to the appropriate payer. The practice would no longer work accounts receivable (A/R) by an aging.

In addition to handling initial or primary claims, the technology can automatically handle the management and submission of all secondary claims (e.g., to a medical supplement or coordinating health plan) at a fraction of the cost of manual processing. This new revenue can add up quickly. Because most secondary claims are for amounts under $25, many practices believe they cost more to process manually than they are worth.

Real-time practice financial reports. By collecting and analyzing information using an SQL relational database, a practice can develop a complete profile of its strengths and weaknesses. You can pinpoint what services are making the most money for you and break down the daily activity of each physician by procedure code.

By identifying these patterns, practice managers can reduce denials, improve self-payments and increase overall revenue. They can focus on managing denials rather than on managing A/R. Reducing denials, in turn, means reducing A/R and improving the rate of cash collections.

Online retrieval of electronic imaging. Adoption of an online, integrated imaging system enables practices to scan, store and retrieve documents such as EOBs (explanation of benefits), payer checks and patient registration forms. This capability allows practices to instantly access the documents for improved customer service and increased self-pay collection. These capabilities can put an end to the disputes between the patient and front desk about self-pay amounts.

Thinking long-term

These abilities can produce major benefits over the long-term and shouldn't be sacrificed in the interest of maintaining a familiar but obsolete practice management system. No matter what type of technology upgrade you choose, HIPAA is forcing you to make changes, so you might as well get the most from your efforts.