August 19, 2011 2 Comments
By Matthew Kopetsky
On 5-26-11, Vermont became the first state to sign a bill into law mandating the development of a statewide single-payer healthcare system. In this two-part post, Tom Best and I will explore the potential implications of single-payer healthcare – both positive and negative.
Although the critical path in implementing Vermont’s new system (called Green Mountain Care) is estimated to be a minimum of six years, in my current world of hospital revenue cycle improvement, this development brings with it exciting implications for my good friend TIM WOOD:
Although most large payers today process claims and communicate with healthcare providers electronically, some small payers still require faxing, phone calls, or even mailing documents such as required medical records. This inefficient means of communication could be eliminated and claims could instead be sent electronically to a single-payer. Additionally, many payers rely on intermediary companies to produce Electronic Remittance Advice (ERA) files (835s). These intermediaries provide 835s for numerous payers all in one bulk file and if delayed in processing payments, money from every payer could be delayed. With one payer, there is less opportunity for variability in this process. Finally, technical and procedural support could be much more readily available and in a closer physical proximity. Healthcare providers would no longer have to work with out-of-state or even overseas support for claim processing issues.
By Little’s Law, a decrease in processing time will eventually result in an overall decrease in inventory in steady state. If a single-payer is successful in achieving larger efficiency gains than individual payers are currently capable of, the volume of pending, Work In Process (WIP) claims will be reduced. In practice, I have seen commercial payers averaging about 28 days from submission of a claim to actually paying it. I have seen Medicare, however, average merely 19 days from submission to payment. Whether Vermont is able to achieve these same processing times that have been achieved on the federal level is yet to be seen and will be explored further in the opposition article.
|Payer||Timely Filing Claim
|Timely Filing Appeal
|Aetna||180 days||365 days|
|Beech Street PPO||90 days||90 days|
|Beech Street W/C||90 days||90 days|
|Blue Cross Healthy Families||90 days||90 days|
|Blue Cross MCS||180 days||180 days|
|Blue Cross||90 days||90 days|
|Blue Cross Non-MCS||180 days||180 days|
|Blue Cross Out of State||180 days||N/A|
|Blue Cross W/C||180 days||N/A|
|Blue Shield||180 days||180 days|
|Brown & Toland||180 days||N/A|
|Care Advantage||180 days||N/A|
|Caremore||90 days||90 days|
|Choicecare Humana PPO||365 days||365 days|
|Cigna||180 days||365 days|
|First Health/CCN||N/A||180 days|
|Greatwest/One Health||90 days||90 days|
|Health Net||180 days||365 days|
|Hills Physicians||180 days||180 days|
|Kaiser||180 days||180 days|
|Multiplan||360 days||365 days|
|On Lok Senior||365 days||365 days|
|Pacificare Commercial||120 days||N/A|
|Pacificare UHC EPO/POS||120 days||120 days|
|Pacificare UHC HMO||120 days||180 days|
|Pacificare UHC PPO||120 days||365 days|
|PHCS||360 days||365 days|
|PHCS PPO||90 days||N/A|
|Physicians Foundation||N/A||180 days|
|PMGSJ||Follow Health Plan||Follow Health Plan|
|SCAN||180 days||365 days|
|SCFHP Medicare Advantage||120 days||N/A|
|Secure Horizons-UHC||120 days||N/A|
|Three Rivers Provider Network||N/A||180 days|
|Valley Health Plan Commercial||180 days||180 days|
|Valley Health Plan Medi-Cal||90 days||90 days|
The hundreds of payers that compete in the current healthcare world each bring with them shockingly different technological capabilities, payment contracts, expected reimbursement amounts, and processing requirements. As one example of the standardization that hospital billing and claim follow-up offices would benefit from, a list of timely filing requirements for many of the current California payers is included to the right. The difficulty in tracking the statuses of thousands of claims as they approach the hundreds of different timely filing deadlines would be streamlined under a single-payer system and healthcare organizations will collect many claims which were previously written off.
For healthcare organizations, following-up on claims pending hundreds of different payers (each with different contracts and requirements) is very time consuming. A single-payer could maintain a single source of the statuses of all of an organization’s pending claims. The availability of online claim statuses could greatly reduce the need to follow-up on claims and one day it could even become unnecessary. However, this process change, while greatly simplifying hospital processes, places a much greater burden on the single-payer entity (Tom will explore this further in Part 2).
With many payer contracts requiring different levels of detail for payment of a claim, excessive amounts of detail are often also provided unnecessarily to the less stringent payers. For instance, a complete 100+ page medical record may be provided to a payer when only a small section of the record was actually required to process the claim. This excessive work could be avoided because organizations would only have a single contract to adhere to.
Since tracking payers’ receipt of claims sent both electronically and hardcopy can be difficult, many claims are sent to a payer more than once before payment is actually received. A single-payer will hopefully greatly improve this process.
Upstream from the revenue cycle, doctors would no longer be incentivized to issue unnecessary medical tests/treatment and overall cost of care will hopefully subside. However, Vermont’s plans to curb preventative medicine and the legal ramifications of medical malpractice remain to be seen.
Complex payer requirements, coupled with the ever changing world of procedure codes (ICD-10 will replace ICD-9 in the US on 10/1/13), can result in claims being billed to payers incorrectly. Incorrect claims, and hence the need to send corrected ones, will hopefully be greatly reduced with a single-payer.
This article is continued in Part 2 – Opposition: Don’t Scrap Multi-Payer Healthcare – Redesign it!