Administrative healthcare costs represent a staggering portion of a practice's overhead expenses. According to a report by Marlin and Associates, $150 billion per year is spent on tasks such as completing manual transactions and tracking paper records. This amounts to $125,000 per small practice, and $70,000 per physician in unnecessary administrative costs per year. What recourse does a practice have to realize cost savings and lower administrative expenses? Practices can move to electronic transactions, adopting technology that seamlessly exchanges information among all relevant stakeholders and creates a feedback loop, informing physicians when documents are received by the desired party.
Let's focus on Medicare claims submissions and how this process contributes to high administrative costs. Here's a hypothetical example: A provider mails a patient's claim to the Medicare office after completing an appointment, just one of over one billion claims processed by Medicare annually. Although a percentage of these claims are paid without incident, more than a quarter of these transactions need further attention. For this reason, Recovery Audit Contractors (RAC) and Medicare Audit Contractors (MAC) are employed to randomly review a cross-section of the claims received. In certain instances, these reviewers request additional information before approving claims payment.
The MAC or RAC sends a letter to the physician, specifying what additional information is required for payment. In this case, lab results are requested. The practice receives the request, at which point an office admin representative must then locate the patient's chart, find the specific lab results, confirm with the patient's care team the completeness and authenticity of the requested information, and mail these results back to the MAC or RAC. This process is time-consuming and lacking in transparency; practices have no way to tell when their communication was received, or whether it made it to the right hands or was granted approval. When this is all said and done, 30-45 days have gone by on average, significantly delaying payment to the physician's office and straining cash flow management.
Unfortunately, this is not an isolated scenario. With an average of 30% of a practice's patient base supported by Medicare, up to 25% of payment claims require additional documentation. Each of these requests for additional information costs practices $8-$12. This process is manual, prone to multiple errors and equally affects small practices and large medical providers, equipped with the latest and greatest technology.
The Centers for Medicare and Medicaid Services (CMS) recognized the need for increased efficiencies in Medicare claims processing and recently developed a pilot program for the electronic submission of Medicare documentation (esMD). esMD addresses a key provider pain point -- the inability to submit medical documentation electronically -- while reducing practice costs and revenue cycle recognition time. At NaviNet, we were honored with CMS's selection of our new product, NaviNet Doc Xchange, positioning NaviNet as a Health Information Handler (HIH). With this HIH status granted, NaviNet Doc XChange allows providers the option to electronically submit medical documentation to the relevant RAC and MAC and confirm documentation status from delivery to payment.
We are excited to offer this new service to medical practices. We know it will help physicians save money, get paid faster and alleviate some of the many demands they have on their practice. esMD is part of our Medicare Connect service, offered to the hundreds of thousands of physicians using our real-time healthcare communications network, and will officially kick off in September 2011 with a closed beta. The service will be generally available in early 2012.
Is Medicare payment collection one of your challenges today? How do you make the best of what's available to you? How has the current manual process affected your practice? We welcome your feedback and insights on our blog, Twitter, Facebook or LinkedIn.