Payers, Providers Drive Changes to Health Care Connectivity

With the ongoing need of payers and providers alike to reduce costs and improve care, combined with the establishment of industry standards and the increased adoption of advanced technologies, the legacy health care clearinghouse models quickly are becoming obsolete and clearinghouses need to redefine their role to remain viable players in the industry.

“In the past, clearinghouses formed the nexus of the hub – serving as intermediaries between providers and payers. Clearinghouses owned the connections and profited from the exchange,” according to Ana English, senior vice president, Ingenix EDI Solutions. “However, clearinghouses seeking to evolve along with the industry will need to decrease their emphasis on traditional business and connectivity models and look at the full continuum between all health care constituents and find ways to increase their value.”

Integrating with other front-end services and developing products that enable their clients to manage connections themselves can add real value and long-term business growth, particularly if the objective is to facilitate administrative, financial and clinical-based data exchange.

“The ways payers and providers want to connect vary, as do their technical capabilities, strategic plans and resources,” English explained. To meet this demand, Ingenix offers open, adaptable and flexible electronic data interchange (EDI) transaction and payment solutions that allow payers and providers to choose how they want to connect and how to manage the connections.

“To be successful both today and in the future, clearinghouses will have to change – and change quickly – to respond to the market’s needs,” English said. They have to move from “being legacy intermediaries whose business models rely primarily on the exchange of transactions under restrictive agreements, to entities that enable an open connectivity network that allows for more effective and efficient pathways for data exchange between all health care constituents,” she advised.

Clearinghouses evolving, but too slowly

The clearinghouse industry was formed in the 1980s when a number of payers came together to form the National Electronic Information Corporation (NEIC). Since then, clearinghouses have played a key role in establishing EDI by translating paper claims to electronic ones and disseminating claims electronically, among other functions.

As recently as the early 1990s, adoption levels of electronic data interchange (EDI) still were low, running between 1 percent and 5 percent, mostly because early mishaps with lost data remained fresh in providers’ minds. “Technological advancements have improved vastly and current EDI adoption rates are much higher – ranging between 30 percent and 90 percent – depending on the transaction type,” English said.

The federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) encouraged the use of EDI as the most efficient means of simplifying and reducing administrative costs. In addition to calling for new standards in security and safety, HIPAA called for the use of electronic transfer for claims, remittance advice, enrollment, eligibility and other data.

“HIPAA actually opened up the ways we could interface with other entities,” English said. “It outlined a basic template that allows for great variability, which was a good start, but has proven to be somewhat problematic.”

Elevated levels of variability and customization typically have supported relatively high transaction fees, but as providers and payers shift toward independent connectivity and self-management, clearinghouses will need to devise new revenue models. Standardization, English said, is one important step toward both driving down clearinghouse costs and improving data consistency.

Standardization will speed progress

“We have made a lot of headway with electronic claims, but now we as an industry need to focus on standardization and interoperability,” according to English. “We need to redefine the role of the clearinghouse and create more value for the provider by moving beyond basic functions to meet both providers’ and payers’ short-term need for self-managed administrative systems and their long-term need for administrative, financial and clinical data exchange.”

Because of the complexity of clinical information, if personal health records (PHRs) are not standardized, providers will not be able to share data effectively. There are a number of initiatives to push forward with clinical data exchange, some of which are moving very slowly because the disparate systems currently being used cannot communicate effectively. Clearinghouses, with extensive networks to handle administrative transactions, can serve as the backbone for true health information exchange networks.

“The industry needs to be able to roll out the clinical part of the electronic data equation because that’s where the major workflow changes will occur,” English said. “The companies that have PHRs versus claims-based records or claim summaries will bring a lot more continuity to the process.”

Several groups, such as the Workgroup for Electronic Data Interchange (WEDI), the Healthcare Information and Management Systems Society (HIMSS) and the Council for Affordable Quality Health Care (CAQH) and its Committee on Operating Rules for Information Exchange (CORE), all are working to promote standardization.

“CORE has really tried to broaden those real-time transactions and get more entities to utilize fields that truly add value for the provider at the point of sale, so that when a patient comes in to the doctor’s office, they are receiving enough information to determine patient liability, what they need to collect from the patient, and which services can be performed,” English commented.

She said that Ingenix is working collaboratively with other clearinghouses – as part of a group called the Cooperative Exchange – to drive change and tackle issues within the clearinghouse industry. The goals of the Cooperative Exchange are to: promote electronic transactions for the health care industry by ensuring optimal quality, value and functionality. “We get a lot more done when we work together,” English added. [Note: for more information on Cooperative Exchange, go to: http://www.cooperativeexchange.org.]

Meeting provider and payer and needs nimbly

Ingenix, which offers a comprehensive suite of EDI transaction and payment solutions to both providers and payers, has a unique perspective on what both of these groups want.

With Ingenix EDI Solutions, payers and providers can select from flexible options that connect providers to payers from their desktop through standards-based transactions, and from the payers to the providers with routing, reporting and payment delivery. These EDI products benefit payers and providers alike with improved revenue cycles, reduced cost and errors, simplified connectivity, and improved compliance assurance.

For example, Ingenix Connectivity Director enables payers to give their providers a self-service “clearinghouse in a box,” hosted from their Web site, that allows providers to enroll, test, and submit all HIPAA transactions direct to the payers via the Internet. This benefits the provider with more direct interaction and speed to process their receivables while virtually eliminating clearinghouse fees for the payer and the provider. All parties win by significantly reducing costs and increasing efficiencies – not to mention the added relationship benefits of direct communications, according to English.

“Connectivity Director is a revolutionary step forward in the industry,” English emphasized. Historically, if a payer wanted to develop an internal clearinghouse and portal for their providers, they would have to invest in multiple systems and technologies that were cost prohibitive, with significant development time needed to get it up and running. “Working with an external clearinghouse simply made more sense.” However, because of advanced technologies like Connectivity Director, Ingenix can work with payers to quickly deploy a direct provider to payer clearinghouse while realizing significant financial savings.

In addition to direct options, Ingenix also offers portal, Internet, and clearinghouse connections. In another scenario, payers and providers can outsource to us and use, for example, our intelligent, enterprise-class clearinghouse model, Transaction Exchange, to enable transactions that are HIPPA-compliant and gain efficient access to an extensive nationwide network.

“Or they can choose a hybrid model, which is the most common,” according to English. “The hybrid model allows the payer to move gradually to self-managed direct connections through a combination of direct and clearinghouse connections while seeing the immediate benefits of streamlined transaction connections.”

“We don’t develop products in an ‘if you build it, they will come’ manner,” English said. “At Ingenix, we work to understand the business needs of providers and payers – and choice and flexibility is a big part of that – and then we deploy our solutions to meet those needs.”

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