Saturday, December 13, 2008

Is X12 technology right for healthcare

By Sandrick Melbouci

Is X12 Format right for Healthcare.

In every corner, we hear about the rise of healthcare costs and how to reduce them. I would like to add one area where the cost can be reduced significantly.
We all agree that the cost can be reduced by automating certain procedures, such as the medical billing, electronic medical records, scheduling, reporting and so on.
The first question I asked was, what if the cost of automation is so huge that it will raise even more the costs of healthcare.
So, how can we reduce the cost of the automation.
The scheduling, automation can be accomplished at very minimal cost.
The Electronic Medical Records is specialty dependent, but there is some common data that can be defined as "standard" for each practice.
The medical billing is the big elephant in the room. The cost of its automation is significant and its implementation is complex. We will look at two aspects:
  • Medical Coding
  • Claim Processing
Medical Coding specialists are in high demand because of rapid growth in the number of medical tests, treatments, and procedures that will be increasingly scrutinized by health insurance companies, regulators, courts, and consumers." (See U.S. Department of Labor, Bureau of Labor Statistics.) , It is probably the fastest growing profession withing the healthcare industry. The 2005 statistics from the United States Department of Labor and Bureau of Statistics, showed the healthcare information industry is expected to grow faster than normal through 2014.

In practical terms, the medical coder adds cost to the clinician and that cost will be transferred to the patient. But this is required position that we may not be able to cut. So, where can we cut costs ?
We will look at how to reduce the cost HIPAA transactions processing.

HIPAA Transactions.
HIPAA defined a set of transactions to support Electronic data exchange:
  • Health Care Claims or equivalent encounter information (837);
  • Eligibility for a Health Plan (270/271);
  • Referral Certification and Authorization (278 or NCPDP for retail pharmacy);
  • Health Care Claim Status (276/277);
  • Enrollment and Disenrollment in a Health Plan (834);
  • Health Care Payment and Remittance Advice (835);
  • Health Plan Premium Payments (20); and
  • Coordination of Benefits (837 or NCPDP for retail pharmacy).
While many entities in the health sector have developed, or are in the process of developing, electronic data interchange (EDI) format standards, the lack of common, industry-wide standards is a major obstacle to realizing potential efficiency and savings.

The problem starts with the choice of EDI format, X12. For those who had some experience with X12, they know what I'm talking about. It is a complex format that is very hard to maintain and terribly complex to implement.

Today, the software industry offers other technologies that can actually reduce the cost of the implementation of the HIPAA transactions and HIPAA specifications. One of these technologies is XML Web services (Dont confuse it with a web site) that operates under SOAP (Simple Object Adapter Protocol) or REST.
The data for each transaction can be defined with an interface called WSDL (Web Service Definition Language) and the companies can implement the business behind each transaction independently.
This protocol is platform independent (Windows, Mac, Unix, Linux, MVS ...etc) and it can reduce the implementation costs by 500% and increase efficiency at every level of claim processing because this technology provides hooks to validate, secure, transport data. This reduction of cost in claim processing will imply reduction in insurance premiums as well as the reduction of the cost of billing systems.
Compared to EDI where the claims are submitted in batch format, the Web Service technology can submit the claims in realtime or immediate send or in batch mode. The number of errors will be reduced to under 1%.

The combination of efficient medical coding along with web services technology as the protocol of choice for HIPAA transactions will reduce the cost of claim processing by at 200%.


The ultimate goal is to take care of the patient at reduced cost. Many things need to come together in order to accomplish this goal. One of them is Medical Practice Management Systems implemented at reasonable cost that offers the functions that will optimize the provider time and costs. I believe that it start by applying the right technology that can help the business.

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