A HIMSS G7 Advisory Report

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A HIMSS G7 Advisory Report

In the Spotlight: Electronic Business Transformation

Launching a new initiative that provides critical guidance as the business of healthcare goes

digital

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TABLE OF CONTENTS

INTRODUCTION ... 3

WHAT IS “ELECTRONIC BUSINESS TRANSFORMATION”? ... 4

Pragmatic Examples ... 5

REMITTANCE MANAGEMENT... 6

POINT OF SERVICE TRANSACTION PROCESSING ... 6

REVENUE NEUTRALITY: FROM ICD-9-CM TO ICD-10 ... 8

SHOWCASING TODAY’S ELECTRONIC BUSINESS TRANSFORMATION STORY ... 10

HIMSS’ INTEROPERABILITY SHOWCASE ... 10

WHAT IS A “USE CASE”? ... 10

THE NEW “HEALTHCARE BUSINESS COMMUNITY” ... 10

Conclusion ... 22

APPENDIX ... 23

We want to thank our sponsors:

The HIMSS G7 is a thought leadership and industry action platform that brings together seven key stakeholder groups – healthcare providers, health plans, banks, information technology firms, government, employers and consumers – to design the healthcare financial network of the future. It was created as the result of the unification of HIMSS and the Medical Banking Project in 2009.

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INTRODUCTION

Electronic business transformation is occurring across the entire landscape of healthcare, driven by revolutionary change in the delivery of healthcare itself. We see this from the development of powerful information technology (IT) tools that can deliver real time information about a patient at point of care, to the ongoing shift of payment and remittance information from paper to electronic venues, ANSI X12 5010 migration, ICD-10 transformational impacts on revenue cycle and more. This evolving paradigm “e-shift,” and its resulting opportunities to create significant value in workflow automation and business analytics, is creating diverse opportunities for operational improvement for the healthcare provider. Healthcare is entering a new era where digitized business data can replace repetitive workflow tasks that today require intense manual entry (for example, cash posting, contract management or denial management and other areas).

As new streams of data become more accessible the opportunity to create new and powerful forms of business intelligence is being realized. This dynamic has the potential to impact how healthcare measures quality and effectiveness, creates new associations between caregivers and the financial operations that underpin care delivery and can support better understanding of trends in public health. Understanding the technical underpinnings of this transformation is vital for maximizing the value behind these new possibilities and creating new forms of business value that extend far beyond the provider to its business partners such as payers, employers and consumers. While this HIMSS G7 Advisory Report is not an exhaustive treatment of electronic business transformation, it is intended to paint a picture of the emerging landscape and highlight specific instances where we can see this type of transformation in action.

In September 2011, the HIMSS G7 convened to construct an entirely new “community of care” – the “Healthcare Business Community” – that can demonstrate the range of impact of electronic

business transformation and its impact on the operations of the enterprise and practice, and concomitant positive impacts with other healthcare stakeholders.

Electronic business transformation, using the technical building blocks of Electronic Data Interchange (EDI) and Extensible Mark-up Language (XML) and other forms of technology and standards, creates new value within, across and external to the enterprise or practice. We describe some examples of this impact in our Report.

For the most part, this Report will focus on the specific ideas that were raised at the HIMSS G7 meeting, a multi-stakeholder collaborative event, and how we were able to reduce a number of use cases suggestions to three primary ways in which to demonstrate electronic business

transformation as they appear in practice today. Standards, operating rules and interoperability techniques, such as the prospective creation of business profiles, are poised to transform the business of healthcare and provide exciting possibilities for enterprise and practice management. In, fact in many cases, this is already occurring among innovators and is now moving to early adopters as well.

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WHAT IS “ELECTRONIC BUSINESS TRANSFORMATION”?

Electronic business transformation may be described as the art of matching the potential to automate workflows and business analytics with new, real time access to electronic health data, as a result of recent federal requirements around health data transactions and operating rules and their ongoing adoption in the marketplace.

In the 1980s, a number of organizations were experimenting with EDI in healthcare, particularly around the submission of healthcare claims from providers to payers. Of importance, those involved were reporting greater opportunities to reduce manual errors, speed business processes and reduce overall administrative complexity by migrating to an electronic mode of business information exchange.

A key body that has become the architect of healthcare EDI in the United States is the American National Standards Institute (ANSI). Through its ASC X12N Insurance Subcommittee, the group meets three times per year to provide a highly interactive forum for methodically reviewing business processes that are captured in paper flows (and now electronic flows) and ensuring that supportive data is captured in “health data transactions.”

While there are others, the health data transactions that comprise the bulk of everyday business dealings in healthcare are

claim and remittance, eligibility and authorization, claim status, and

health plan enrollment and disenrollment.

Each of these transactions is represented in digital form using an ASC X12 electronic document or “health data transaction.” These representations are the result of years of collaborative work with the healthcare stakeholders within the ASC X12N forums, culminating in this series of electronic transaction standards.

In order to assist ASC X12 to socialize these transactions into the healthcare setting, Louis Sullivan, the former director of today’s CMS (Centers for Medicare & Medicaid Services), a federal agency that oversees the Medicare and Medicaid programs, formed a new collaboration in the early 1990s called the “Workgroup for Electronic Data Interchange” or WEDI. WEDI provides an ongoing forum to promulgate the use of EDI, as developed by ASC X12, and has developed critical resources for deploying new versions (such as the new 5010 version that must be adopted no later than January 1, 2012) as well as assessing the impact of ICD-10 transformation on the healthcare stakeholders. Other groups have also worked to harness the potential of EDI in healthcare. For instance, the National Council for Prescription Drug Programs (NCPDP) maintains a critical forum for creating standards that have moved pharmaceutical claims from paper-based to real-time electronic exchanges that enable payment at point of service. This powerful model continues to inform all the other areas of healthcare as a reference model for creating real time claims processing.

Finally, the Council for Affordable Quality Healthcare (CAQH), funded by AHIP (America’s Health Insurance Plans), was federally appointed as an “operating rules author” by action of the Affordable Care Act (Section 1104), and provides a forum for the creation of operating rules that are used in conjunction with health data transactions in order to create uniformity and consistency as the

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various healthcare stakeholders implement communications protocols that have diverse system transport requirements. CAQH launched the Committee on Operating Rules for Information Exchange (CORE), a strong multi-stakeholder collaborative, with the vision of giving providers access to eligibility and benefits information before or at the time of service using the electronic system of their choice for any patient or health plan.

Collectively, these and other major groups like NACHA-The Electronic Payments Association, provide rules and structure around healthcare transaction processing that enable and equip stakeholder exchanges of health data transactions. Significantly, with the progressive

implementation of regulatory requirements around data protection and security like HIPAA, these groups focus not only on content but the way in which the data is transported – securely – in order to facilitate market acceptance and adoption.

As these efforts have evolved, a new foundation for electronic business transformation has been built. Yet electronic business transformation is a broader idea that spans across all of this activity and adds other critical components, namely, the creation of ROI (return on investment) for health IT investments that use the health data transactions to do things like automate workflows. Clearly, in order to move all of these initiatives forward, provider enterprises and practices must

understand the underlying economic benefits. These benefits lie principally in three areas: 1. Better management of business processes between stakeholders

2. Creation of new workflow automation techniques that replace manual processes 3. Use of new and/or more accessible electronic data to inform business decisions (an

emerging area that we’ll refer to as “business analytics”)

PRAGMATIC EXAMPLES

Unfortunately, the back office of the provider’s business office may be compared to a “perfect paper storm.” The range of activities that are derived from the claims process – from creation to

submission and follow-up – is an intense and iterative process that often involves numerous paper-based or driven steps. By using the transactions developed by ASC X12, many of these steps can be replaced with electronic transactions and furthermore, the results can be integrated into workflows to deliver compelling business value in terms of ROI for IT investments. While these benefits are currently enjoyed in part by enterprise settings, there is need to further “push” IT models into the practice setting for broader adoption.

It is beyond the scope of this report to define all the potential workflows that can be automated with new digital streams of business data. Yet we do want to focus on a few of the primary areas that were called out as good focal points by the HIMSS G7; namely, 1) remittance management, 2) point of service transaction processing and 3) “revenue neutrality” as we move from ICD-9-CM to ICD-10.

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REMITTANCE

MANAGEMENT

Specific examples of electronic business practices in the back office workflow in healthcare that are impacted by access to electronic remittance data are:

Cash Posting

Contractual Allowance Processing Reject Note Posting

Financial Class Updates

Secondary Billing and Advanced Secondary Billing Contract Management

Denial Management

Each of the areas listed above represent discrete segments of back office business activity and workflows that impact billions of claims that flow through our healthcare systems annually. In brief, some of these areas are as follows:

Cash Posting…With each claim, once paid by the insurer, for instance, the amount of

cash received into the bank account must be posted, reconciled and then posted onto the patient accounting system.

Contractual Allowance Processing…If the claim was adjusted due to a contract with

the insurer (i.e., during contract negotiations, payers and providers will negotiate fee structures), those amounts must be deducted from the amount expected as well as adjusted in the general ledger of accounts.

Reject Note Posting…If the claim was returned for any reason, this must be noted in

the patient accounting system for appropriate follow-up.

Coordination of Benefits…If there is a secondary insurer in the household, the primary

bill and the “explanation of benefits” must be collated and sent to the secondary carrier as proof that the primary carrier has paid its initial share of the claim.

Denial Management…Where there are disagreements between the provider over the

amount of reimbursement for line items, there is a series of billing activities that must take place in order to realize the full amount of funds the provider is expecting for his or her medical services.

Each area may involve an intense paper trail with myriad phone calls – after the claim is submitted and paid (or unpaid or partially paid). Prior to using the remittance data (or the electronic version of the ‘explanation of benefits’) that accompanies each payment, all of the processes described above were completely manual. The transformation of each of these processes from paper-intense workflows to electronic and instantaneous completion with exception reporting to handle outlier transactions is a key goal.

POINT OF S

Another area of increased focus in electronic business transformation is point of service (POS) transaction processing. In this area, healthcare EDI and operating rules can increase value across the stakeholders; namely, by improving and accelerating the business process within the payers’

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information systems, and accelerating the disposition of a claim including the potential to accelerate payment to the provider.

The payer benefits by adjudicating a claim without repeated interactions with the provider that tend to be phone-based and require staff training and development. The provider benefits by knowing the disposition of a claim during or shortly after the patient encounter.

While this scenario represents the ideal, there are discrete business steps that can occur short of real time claims processing (and in some cases, that are better to both parties in lieu of real time adjudication), that provide substantive value to both parties to the transaction.

Specific areas within POS best practices include: Patient identity confirmation

Benefit and deductible inquiry Payment processing

Benefits and payment presentment for consumer assessment

This workflow list at point of patient presentment represents a serial view of activity. The list is not exhaustive and/or may be presented in a different order (checking for benefits before the patient presents, as in the case of scheduled surgery). The key area this report focuses on is how electronic business practices can impact this area…and why it’s important. Let’s address the latter question first: why is this area important?

Over the past decade, the rate of patient-owed balances has increased markedly across all the geographic areas in the United States. The primary reason for this is increasing deductibles by health plans. The advent of high deductible health plans (for example, $2,500 for an individual or even up to $10,000 or more for a family), coupled (or not coupled) with Health Savings Accounts (HSAs) has also pushed this area into the forefront of healthcare business activity. As more

responsibility for payment is placed on the patient (or consumer), how should healthcare providers respond? What kinds of financing options are emerging and how will they be accessed?

In short, healthcare appears to be going “retail.” Just as we buy our groceries using kiosks for quick check out and/or a credit swipe, the healthcare payment experience is striving to become more retail oriented. In this experience, the patient is the focal point as opposed to the provider. Consumer service is prioritized in contrast to long waits at emergency rooms or clinical offices. Tools for real time engagement (setting appointments online, access to health records online or via mobile devices, payment for care and other areas) are evolving to both create a pleasant buying experience and improve brand loyalty in healthcare. From a business standpoint, it is necessary to improve collections as more payments come from patients and/or consumers. Fortunately, with advances in electronic business practices, this area can be substantively addressed.

For instance, new operating rules that will be mandated in July 2012 will create standardized and uniform ways to access electronic claim status and eligibility information. Included in these rules will be better access to deductible information; namely, the patient’s current deductible information and this will help to know what a patient owes prior to leaving the hospital or doctor’s office. The highest likelihood of successfully collecting the patient’s portion of payment for services is to process payment at the time the patient presents, a well-established business practice in other

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industries. We are not able to remove a new shirt or shoes from a store without paying for them first; yet this is what we often do in the healthcare setting. Of course, healthcare transactions are not as simple as those conducted in common retail settings. In healthcare, the patient presents, complications may develop and the admitting diagnosis could differ widely from the discharge diagnosis. Yet for many common types of treatment, the ability to develop a “retail experience” with IT can address the needs of the provider to improve operational and revenue performance. Patient balances can be collected and any remaining third party liability can be electronically facilitated to speed reimbursement.

Besides operational improvements, there is another lurking issue that can be addressed at point of care – medical identity theft. This issue is evolving in lockstep with increased electronic business processing of health data, according to the World Privacy Forum…and the results can be deadly. In one case, the records of a vulnerable patient were changed – including blood type – and had it not been found, medication would have been prescribed that would have had a tragic ending. In fact, as medical identity theft is on the rise, it is vital that patients/consumers have access to their records, as well as some basis to understand them, in order to ensure their accuracy.

A key area for preventing medical identity theft is asking for identification at the point of encounter – or doing so electronically. Using sophisticated automated techniques, the identity of an individual presenting can be affirmed at the time of service. Alternatively, a common but often overlooked way to confirm an individual’s identity is to simply ask for a government-issued photo.

In summary, at point of service, new electronic business processes can, among other things, improve operational performance, address increased challenges with revenue collection from patients and/or consumers and help manage the sticky issue of fraud and abuse.

REVENUE N

FROM

ICD-9-CM TO

ICD-10

Another key area in electronic business transformation today is the building blocks that create the everyday healthcare claim – the ICD-9-CM codes. These building blocks of data flow through many disparate systems in the healthcare enterprise and are eventually captured in applications that codify treatments, materials consumed and other expenses onto a healthcare claim form. As of October 2013, the American healthcare system will transform its coding practices from the use of approximately 15,000 codes to over 150,000 codes (see HIMSS G7 Advisory Report: The ICD-10 PlayBook). Cross-walking these codes into a format that appropriately approximates revenue neutrality is a critical issue. When the “switch is flipped” in 2013, healthcare enterprises and practices need to know that their operations are sustainable. If, as a result of cross-mapping, revenues are impacted negatively for example, the healthcare provider needs to proactively develop a responsive fiscal plan.

The potential pitfalls related to revenue neutrality as a result of the transformation from ICD-9-CM to ICD-10, across all enterprise and practice types, are significant. Yet awareness of this issue is not at the level that it should be, according to the 22 associations which gathered to form the ICD-10 PlayBook at a the HIMSS G7 meeting in May 2011.

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HIMSS’ Interoperability ShowcaseTM _{is an ideal setting to show the interoperable technology}

solutions that will advance the market transformation under ICD-10. It also gives the designers of the use case, according to the HIMSS G7, the ability to demonstrate inappropriate or inaccurate claims mapping approaches that could seriously impact sustainability and cause cash flow disruptions for the healthcare enterprise or practice.

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SHOWCASING TODAY’S ELECTRONIC BUSINESS TRANSFORMATION STORY

HIMSS’

INTEROPERABILITY SHOWCASE

Among the tools and resources available today for executives who are engaging health IT to transform practice, few rival the impact and effectiveness of the Interoperability Showcase at the HIMSS Annual Conference & Exhibition. Organized as a partnership with the global Integrating the Healthcare Enterprise (IHE) organization, this resource is one of the most trafficked acres of real estate at the HIMSS Annual Conference & Exhibition.

The Interoperability Showcase is comprised of “communities of care.” Within each of these communities, a series of kiosks show, in logical fashion, how data flows in between disparate systems using standards. Each kiosk shows optimum performance of a discrete workflow that is routinely done in the enterprise or practice. With this presentation, attendees can see firsthand how the use of interoperable data standards can optimize diverse single-point technologies by enabling them to “talk to each other” and thus, reduce redundant and/or error prone manual data entries, among other types of benefits.

WHAT IS A “USE C

Each of the communities within the Interoperability Showcase is designed to demonstrate one or more “use cases.” A use case, within this context, is a specific clinical or business workflow that is enabled and demonstrated by a series of supporting technologies using interoperable data standards.

For example, as payments come into the business office, they need to be posted accurately into the patient accounting system. This is a discrete workflow that is required by every provider. Rather than post payments manually, new data standards and technology point solutions enable the intake of electronic remittance data, from the payer to the provider using banks as intermediaries, and the automated posting of that data onto the patient accounting platform.

This technical innovation evolved rapidly in 1992 when Medicare implemented the electronic X12 835 remittance transaction inasmuch as the ROI is significant. Many teams of cash posting

personnel were reassigned to other areas of the revenue cycle. Yet numerous challenges remain in repeating the success of automated Medicare cash payment posting to other financial classes. New technology, the 5010 version of the ASC X12 835 transaction standard and operating rules now mandated for adoption beginning in July 2013 have the potential to overcome many of these barriers and speed overall adoption of automated payment management programs enabled by technology. Demonstration of these technologies could form a “use case” at the HIMSS

Interoperability Showcase.TM

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Beginning in 2012, the scope of the HIMSS Interoperability ShowcaseTM _{will expand beyond its}

traditional focus on clinical data exchange use cases. HIMSS G7, in cooperation with the Showcase, will launch a new initiative – the “Healthcare Business Community” – to demonstrate the

technology innovations that are occurring across the landscape of electronic business

transformation in healthcare. The use cases selected for the Healthcare Business Community will help healthcare stakeholders to achieve operational improvement and provide practical and useful information. A guiding principle in selecting use cases at the HIMSS G7, though topics around the healthcare financial network of the future are entertained in this forum, was showcasing proven technology that provides compelling operational impact.

Accordingly, a call was issued to the HIMSS membership that sought to isolate prospective use cases that were the most impactful and could be demonstrated today. This call provided the

preliminary areas of focus for HIMSS G7 on September 14, 2011, where 26 executives ranging from technology firms, healthcare providers and plans, consumers and others convened (see appendix for list of attendees).

The table below shows the use cases that were gathered prior to the HIMSS G7 from among the HIMSS membership. They ranged from back office management of remittance data to a case for the intervention of hospice care earlier in end of life care to improve quality during the terminal stages of life and reduce the nation’s overall spend of healthcare dollars (most of which occurs during the last two years of life).

HIMSS G7

Sept. 14: Designing the Healthcare Business Community for the HIMSS Interoperability ShowcaseTM _at

the 2012 Annual HIMSS Conference & Exhibition

Use Cases submitted by Medical Banking & Financial Systems Community

Use Case: Efficient Remittance Management Via Electronic Integration of Banking and Health IT Systems

Scenario: Many providers use a bank lockbox to collect payments coming in through mail (and other points) into one payment stream. Most of the payments entering this stream are paper-based today. Banks have created imaging technology that “images” the remittance data (taking a picture from the paper), creates a digital file and archives the image and the file. That file can then be picked up by the provider and posted to the patient accounting IT platform and can initiate other types of workflow automation and business intelligence.

Actors: Bank, Lockbox Vendor, IT Platform, Patient Accounting Vendor

Secondary actors: any number of use cases can be demonstrated that use this data

Who raised this issue: Kaiser Permanente, Optum, Sentry Data Systems, Systemware, Wells Fargo, US Bank, BNY Mellon, Comerica, SWIFT/Trellis Integration Partners, Mayo Clinic

Use Case: Enterprise Sustainability Post-ICD-10 Implementation

Scenario: Providers need to understand the criticality of crosswalking from ICD-9-CM to ICD-10 from a revenue perspective. Examples have shown that inappropriate crosswalk/coding can have a dramatic negative impact on revenue. We want to demonstrate this around a few key examples

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to create awareness of sustainability measures that need to be developed around ICD-10 implementation.

Actors: HIS (clinical), HIS (revenue cycle), Claims Clearinghouse, Bank, IT vendor Who raised this issue: Emdeon, NextGen, Availity, 3M

Use Case: Point of Care Payment Processing

Scenario: A growing portion of every provider’s A/R is coming from consumers creating the need for more robust point of care payment processing. A number of scenarios are presenting (such as kiosks) that can be discussed that link point of care patient presentation, eligibility

determination, authorization, deductible calculation, and payment processing. Actors: POMIS/HIMS vendor, specialized IT vendor, bank

Who raised this issue: Kaiser Permanente, Cleveland Clinic, InstaMed, Wells Fargo, US Bank, Emdeon

Use Case: Patient Identity Integrity Using Banking Systems (Enterprise Fraud and Abuse)

Scenario: How do you uniquely identify snippets of a personal healthcare record to create one consolidated record, without a unique patient identifier? How do banks do this with financial data? A global expert in this area (LexisNexis) is sending us information that can demonstrate this use case. (Related to Use Case around PHR/Online Banking)

Actors: Consumer, bank, bank IT vendor, HIE/EHR vendors Who raised this issue: LexisNexis, Milliman, Patient Command

Use Case: Speeding Adoption/Understanding of PHRs Using Online Banking Platforms

Scenario: Today over 70 million households use online banking 3-5 times each week to manage their finances. Linking a PHR to this platform seems a natural fit for advancing better adoption and understanding of PHRs (using a health-wealth information portal).

Actors: Bank, IT PHR platform, other? Who raised this issue: Tolven Healthcare

Use Case: Integrating Hospice into End of Life Care To Increase Efficiency of Healthcare

Scenario: It is estimated that over 40% of our nation’s healthcare dollars are spent providing end-of-life care – care that is delivered in the last two years of life. There are a number of

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could be likened to an ACO in that the caregivers appear fully aware of what all the other care givers are doing – it is patient-centric. In the acute hospital care setting, the information flow is often siloed and appropriate care at end of life seems best handled by a patient advocate. In this case, the use case authors propose that we demonstrate the technological “harness” (including e-records) used by hospice and the impact on end of life healthcare expenses.

Author: Sentry Data

Actors: Sentry Data, North Florida Hospice, others

Use Case: This Use Case Seeks to Demonstrate the excessive Costs CMS Forces Providers To Go Through for a “Notice of Change” or NOC.

Scenario: Today, CMS insists on a paper process for changing all bank accounts – even when the provider’s bank is acquired (i.e., when Wells Fargo acquired Wachovia). If an integrated delivery network has hundreds or thousands of providers, as is often the case, conversion of bank

accounts using paper costs over $500 per transfer. This same process for other industries happens transparently behind the scenes between banks at no cost to the end user. We seek to show how to electronically accomplish NOC to inform policy and to lead to a change in CMS business practice in this area.

Actors: Banks, CMS, providers

Who raised the issue: Wells Fargo, though NACHA and ABA are also seeking to change CMS NOC policy.

Final Use Case Selections

Through a series of exercises led by the staff at the Vanderbilt Center for Better Health, the use cases were reviewed, “unpacked” and then repackaged into three use cases that the HIMSS G7 agreed would be the most impactful:

Electronic Payments Hub

Point of Care Transaction Processing

Revenue Neutrality Moving from ICD-9-CM to ICD-10

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Proposed Use Case #1: Healthcare Payments Hub

Demonstration Issue: Today we spend far too much chasing paper in healthcare payments. This

use case will examine this issue from two “enabling” points: the extended lockbox and the optimum use of electronic funds transfer (EFT) and electronic remittance advice (ERA). Working in tandem, these two innovations mitigate paper use and the manual errors and workflow inefficiencies that result from such use.

Framework: To guide our discussion into the complex world of healthcare payment processing, we

separated discrete areas of the payment and remittance process (after claims adjudication) into “Zones” as illustrated below. Each Zone could capture a number of innovations that are rapidly occurring in the marketplace. Zone descriptions are as follows:

Zone 1: Payment and remittance processing that occurs post-claims adjudication (by a

payer or health plan) to submission of the payments and/or remittances to a bank for electronic payment processing. Note: Zone 1 can also include paper payment and

remittance processes. I would argue that this zone where it submits to the bank would be a good candidate for swift or chips role.

Zone 2: Payment and remittance processing that occurs from financial institution to

financial institution, as funds and data move from the “Originating Depository Financial Institution” (ODFI) or the payer’s bank, to the “Receiving Depository Financial Institution” (RDFI), or provider’s bank (see the diagram below). Within Zone 2 are the financial payments clearinghouses, including NACHA, the Federal Reserve, The Clearing House and other specialized clearinghouses, as well as bank-to-bank clearinghouses. In addition, SWIFT and CHIPS would fit into the Zone 2 region - clearly a role here for the major networks’ banks use.

Zone 3: Payment and remittance processing that occurs from the RDFI, or provider’s bank,

to the provider’s health information management system (or practice management system for physician groups). This area involves EDI transfers of data received from Zone 2 structures (or ultimately received from the payer) and their reconciliation with the provider’s operating accounts (DDA or demand deposit account), as well as, posting of the remittance data to the provider’s patient accounting system(s).

Zone 4: Remittance processing that occurs at the provider site, supports a number of

workflow processes and feeds into business intelligence modules and other operational performance and maintenance systems. A key area of focus for ROI in the “Healthcare Payments Hub” will be Zone 4.

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A growing best practice today is the use of “extended” or “specialized” lockboxes to collect payments and EOP/Bs coming into the provider from the US mail system. Of course, this area of focus deals with managing paper payments and remittances. Ideally, payments and remittances are issued electronically by the payer; yet still today, some 40% of all payments are conducted via paper.

Using imaging technology that is built into the lockbox “transport system,” remittance data is captured and digitized. The image and digitized file can then be archived for retrieval by the provider using a secure, online portal. The digitized file may be posted to the patient accounting IT platform. Using the “newly unleashed” electronic data, other types of workflow automation and business intelligence can be initiated (Zone 4), as shown in the figure below. This area represents a considerable area of focus for innovation in electronic business transformation and often can provide a solid basis for ROI for the provider, speeding adoption of electronic business standards.

Actors: (Payer), Bank/Lockbox Vendor, IT-Enabling Platform (Clearinghouse), HIS/PMS. Secondary

actors: any number of use cases can be demonstrated that use this remittance data to automate workflow streams or support business intelligence/analytics.

Steps and Actors:

1. EOP/B captured and digitized by bank lockbox Actor: Bank and/or Lockbox vendor

May be others that are part of this process (software providers, etc) 2. Image and digitized file is archived for retrieval by provider

Actor: Bank and/or Lockbox vendor 3. Digitized file is posted to HIS/POMIS

Actor: HIS/POMIS and/or IT-enabling platform provider (clearinghouse) 4. Other types of workflow automation and business intelligence initiated

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A systemic innovation in healthcare payments that would impact all the stakeholders is persistent use of the financial systems to move the EFT (electronic funds transfer) and ERA (electronic remittance advice) together as opposed to separately. This innovation would enable easier reconciliation with the provider’s bank account, as well as provide the basis for a whole new generation of tools that would support workflow automation and business intelligence. To enable this requires the active participation of Zone 1 and Zone 2 stakeholders (payers and banking financial networks); however, this issue is a bit like a “chicken and egg” syndrome. The end user, in this case the provider, must be prepared to capture and use the electronic funds and

remittances otherwise they will insist on using the paper equivalents to complete their internal workflows. Unfortunately, this is too much the norm today. While many payments are being made electronically, the payer is hit with a two-fold expense: issuing electronic payments but continuing to send the paper equivalents (remittance data or Explanation of Benefits).

A “straight through process,” as this area is referred to in the financial world, would find rapid uptake of electronic payment and remittance processes and automated uptake of remittance data by the provider to enable a string of workflow automation processes.

A key obstacle in this scenario is the potential size of the “payload” in the typical ACH transaction. A CTX transaction is capable of holding 9,999 addenda (or about 750 kilobytes of data) and for large healthcare remittances, this will not suffice. Thus, a potential solution has been raised -- use of the SWIFT “FileAct” standard, which is highly secure and can fit up to 250 megabytes of data.

In this Use Case, a payer would send large remittance files (and small as well; however, it would be useful to demonstrate the robustness of the file) to its ODFI (payer’s bank). The bank would process the file as a SWIFT transaction to the provider’s bank (RDFI), as shown in the figure below. The associated payment would be processed as a routine SWIFT transaction.

In summary: The payer adjudicates a claim batch and sends it to a bank or bank service provider for payment routing. For electronic payments only, a SWIFT (Xfile) or NACHA (CTX) file is created that contains EFT/ERA and is submitted to the provider’s bank and/or provider’s service provider.

Actors: Payer/Payer IT-Enabling Platform (Clearinghouse), SWIFT, NACHA, Commercial Bank and

HIS/POMIS vendor and/or IT-Enabling Platform. Further discussion:

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While we have looked at one aspect of a potential solution using a “Healthcare Payments Hub” in the proposed use case #2, it is important to step back and look at the overall picture. At the HIMSS G7, the discussion centered on the range of data feeds and the cost to maintain each. For instance, let us take a look at a large healthcare system.

Today’s large healthcare system has evolved into a series of strategies for electronic claims management, many times pieced together through acquisition or as a result of HIMS changes. The result is that there may be a number of direct to payer data connections (Medicare, Medicaid or other special plan types) as well as clearinghouse connection to route claims electronically to non-direct connections (see the yellow arrows in the illustration below). While this covers the front door, the back door is left wide open – so to speak – so that payments are coming from bank EDI departments, clearinghouses or other venues (see the green arrows in the illustration below).

One way to address this issue is to create a “clearinghouse of clearinghouses,” much like what the banking industry does. This is an interesting architecture because processing transactions in banking is done for pennies per transaction versus the dollars per transaction that we spend in healthcare. Certainly this is not true for all the transactions, but we can see this happening in the non-Medicare payment transaction segment quite easily.

The graph below represents a new paradigm for healthcare where a “Healthcare Payments Hub,” like SWIFT or another global clearinghouse, could become a single point for payment processing (and this could hold true for claims, too, but the claims area is more ‘hard wired’ today and may not

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readily yield to this type of set-up). Thus, the large provider can collect all of its payment and remittance information from a bank. Interestingly, none of the clearinghouses are displaced in this scenario.

The idea is to create a major link point for payment and remittance data access by clearinghouses as opposed to building and maintaining multiple connections. That becomes the function of one entity as opposed to the 100 or so clearinghouses that are serving the industry today. It is also a good reason why financial transactions are in fact much less expensive relative to the health data transaction ‘complex’ that we have today.

Healthcare Payments Hub – Interoperability Stations

To pursue this Use Case, we will need to define the objectives and requirements of the live demonstration, including defining what the “hub” is, transport method and joined payload (EFT/ERA) option for efficiency, payments process(es) to be demonstrated, the actors and their respective roles, the physical station configuration and process flow details, like data standards, security, transport protocols, packaging and functions.

A potential scenario is as follows:

Steps and Actors

1. Payer adjudication system electronically sends payment and remittance file to

vendor

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May be others that are part of this process (software providers, XBRL service providers, etc)

2. Payment/Remit file sent to commercial bank that uses a payment platform Actors: Commercial banks

Platform providers: SWIFT, NACHA, other 3. Payment file updates the provider’s bank account

Actor: Bank and/or other IT-enabling platform/vendor 4. Associated remittance file archived for retrieval by provider

Proposed Use Case #2: Enterprise Sustainability Post-ICD-10 Implementation

Demonstration Issue: As shown in the diagram below, providers need to understand the criticality

of crosswalking from ICD-9-CM to ICD-10 from a revenue perspective. Inaccurate conversion will have a negative impact on revenue. We want to demonstrate this around a few key examples to create awareness of “revenue neutrality.”

Actors: HIS (clinical), HIS (revenue cycle), Claims Clearinghouse, IT vendor Who raised this issue: Emdeon, Others

Steps and Actors

1. Clinical System: A claim is created with an ICD-9-CM coding scheme showing all major specialties of the crosswalk challenge (i.e., prenatal code goes to three codes, one for each trimester to show differences).

Actor: HIS and/or other IT-enabling platforms

2. Charges are used to create the 837 claim: A testing portal is created by a clearinghouse where it creates a claim, and replicates it. The original claim with ICD-9 codes will be processed as usual while the replicated claim can either go through a mapping tool (GEMS, 3M, HLI) or manual coding.

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Actor: HIS and/or other IT-enabling platforms

3. OPTIONAL: Check for Claims Fraud and Abuse: A potential interim step can be running the claim through an automated check to assess if the claim meets Medicare CCI guidelines and/or Local Medical Review Policies (LMRPs).

Actors: IT-enabling platform and/or clearinghouse

4. Claim is sent to payer: Both claims are sent to payer(s) and receive a test 835 payment that can show comparison of reimbursement.

Actors: IT-enabling platform

Proposed Use Case #3: Point of Care Payment Processing

Demonstration Issue: Extreme growth of patient-owed balances in healthcare translates into an

acute need by providers to use best practices for point of care payment processing (see the following two diagrams). This issue is driving healthcare payment processing to become more retail, and involves health IT in the care setting that tightly links banking and healthcare systems like the kiosk, better eligibility and authorization practices, deductible calculation and payment estimation and processing.

Actors: POMIS/HIMS vendor, specialized IT vendors (both financial services and healthcare firms),

commercial banks

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Steps and Actors… (for the HIMSS Interoperability ShowcaseTM _{at HIMSS12)}

1. Patient presents card to provider and data is inputed Actor: HIS registration / POMIS

Could be a terminal provider (for card swipe functionality) 2. Identity is verified

Actor: IT-enabling platform, consumer intelligence service bureau, etc. 3. Eligibility and authorization information is collected

Actors: HIS registration / POMIS Health Data Clearinghouses

4. Deductible and co-pay is “processed” (including patient estimation) Actors: IT-enabling platforms

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CONCLUSION

In order to be an effective platform, the HIMSS G7 engaged the HIMSS Interoperability

ShowcaseTM _{as a way to demonstrate electronic business transformation in practice. Some $2.5}

trillion is spent annually in the US healthcare system. Just the manner in which this money is processed alone could yield up to $30 billion in administrative efficiency each and every year. The use of IT that optimizes increasing streams of health data, as a result of interoperability using established standards and legislative fiat (like section 1104 of the Affordable Care Act), is an area that is ripe with possibilities. The appropriate use of this technology forms the backbone of the healthcare financial network of the future.

Within this focus of activity lie interests across many stakeholders. The HIMSS G7 aggregates many of these stakeholder types to define issues and advance industry recommendations, as well as to implement programs that can be highly impactful in informing the stakeholders about how to implement discrete areas of functionality within healthcare financial management, like remittance processing, point of care transaction processing and revenue neutrality moving from ICD-9-CM coding schemes to ICD-10.

The HIMSS Interoperability ShowcaseTM _{represents an ideal forum for evolving a new “Healthcare}

Business Community” that can capture the various technological manipulations of data that are forming best practices in electronic business management and project transformations. HIMSS G7 intends to meet annually to sift through the many use cases possibilities to define those that are most impactful and then, coupled with assistance from the HIMSS Interoperability

ShowcaseTM _{personnel, implement discrete instances of these use cases that can inform providers}

that attend the HIMSS Annual Conference & Exhibition (some 30,000 and growing each year). In this manner, the HIMSS G7 recommendations around electronic business transformation can be most impactful.

Beyond the Interoperability Showcase, there is a compelling need to focus healthcare stakeholders around electronic business transformation. For while the prospects of reimbursement based on previous growth of national healthcare expenditures is clearly portentous of an unsustainable pattern, the focus of healthcare administrators will be to optimize efficiencies with existing resources. Within this area of focus, operational improvement using electronic business management finds a strong voice that we can and must do better with our limited financial resources.

Guided and driven by practical demonstrations of electronic business transformation at the Interoperability Showcase, the HIMSS G7 seeks to provide both thought leadership and a focus of industry action that can galvanize the stakeholders and provide critical guidance during this time of inevitable change and transformation within the healthcare system in America and beyond.

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APPENDIX

HIMSS G7: Healthcare Business Community@ HIMSS12 Interoperability Showcase

Participants

Ana Croxton, Vice President of EDI, NextGen Healthcare Information Systems Inc. Ann Brisk, Vice President, Health Care Banking, OptumHealth Financial Services Bill Fox, JD, MA, Senior Director Healthcare, LexisNexis Risk Solutions

Billy Parrish, Director of EDI, Products & Services, NextGen Healthcare Brian Connor, Vice President, National Accounts, Vitas

Chris Wyatt, Director, Financial Services, Emdeon Debbie Pung, Senior Product Manager, U.S. Bank

Erin Podany, Product Manager, Business Solutions, Availity, LLC Gordon Sellers, Director, Medical Banking Solutions, Systemware Jim St. Clair, Senior. Director, Interoperability and Standards, HIMSS John Casillas, Senior Vice President, Business Centered Systems, HIMSS John Meyers, Vice President, Senior Product Manager, Fifth Third Bank Juliet Santos, Senior Director, Business Centered Systems, HIMSS

June St John, Senior Vice President, Healthcare Product Manager, Wells Fargo

Mary Kratoville, Product Manager, Electronic Payments & Statements, Optum Health Mike Webb, Vice President, Finance, Informatics Corporation of America

Pam Jodock, Director, Business Development, Lexis Nexis

Patrick Sutherland, Senior. Product Manager, Administrative Solutions, Business Solutions Group, Availity, LLC

Peter Lang, Managing Partner, Trellis Integration Partners Russ Anderson, Director, Financial Solutions, Availity, LLC

Sandra Vance, Director, Global Interoperability Showcases, HIMSS Sanjiv Datt, Principal Consultant, Kaiser Permanente

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Vladimir Kaminsky, MBA, Solutions Consultant, Kaiser Permanente William D Kirsh, MPH, DO, Chief Medical Officer, Sentry Data Systems Tom Lloyd, Vanderbilt Center for Better Health