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Up Front | May 2002

Revolutionizing Office Efficiency

Electronic remittance is a simple way to reduce your practice's costs and maximize billing efficiency.

Do multipage Medicare explanations of benefits (EOBs) seem intimidating? Does the time that it takes to post those multipage reports reflect the value of the size of that check? Is your posting staff plotting evil deeds against you? If you answer ?Yes!? to any of these questions, you may be a great candidate for one of the most valuable services that your practice can implement—electronic remittance.

Electronic remittance is the process of posting payments automatically to your billing information system using an electronic file provided by your insurance carrier. This payment file can contain vital information needed to post your payments, including carrier-allowed amounts, amounts and dates of charge payments, and reasons for rejection. Depending on the size of your practice and the corresponding sizes of payor EOBs, a single check can take a day or more to post. Such posting can take just a few minutes with the implementation of electronic remittance.

For practices incorporating electronic remittance, the complete billing cycle proceeds as follows: First, enter the patient charges into the billing system. Next, prepare the claims for electronic transmission and send the electronic submission to the payor. Finally, after you download the EOB remittance file from the payor's system, the payments are posted automatically to your patient accounts on the billing system. This process eliminates waiting for the EOB to arrive in the mail as well as the time spent posting these payments to the patient accounts manually.

Two key factors determine whether you can actually implement electronic remittance in your practice. The first is whether your information systems vendor can perform this service. Although there are many medical billing systems in the marketplace, it is not certain that every vendor can perform this service. If you do not currently have this capability, ask your vendor if they have an electronic remittance offering. If they do, here are questions you may want to ask to understand the scope of the project: How much is this service? Is it a one-time charge, or are there recurring payments for usage or maintenance? You might also ask to speak to some of the vendor's clients who already have the electronic remittance solution.

With the passing of the Health Information Portability and Accountability Act (HIPAA), you should inquire as to your vendor's plans to address the new guidelines in relation to electronic remittance. You may also want to ask the following: What will I need to pay to ensure that I have an HIPAA-compliant solution? What is your implementation schedule for electronic remittance? What, if any, are the manual processes? How will I be able to handle rejections with the electronic remittance file? Will electronic remittance affect the performance of my billing system?

Although there are more questions to ask, these will get you started. If your vendor does not have electronic remittance capabilities, it may be time to look for another billing solution. One limiting factor may be whether your system is an open-item or balance-forward posting system. An open-item system is designed to accept specific line-item payment postings, and so electronic remittance can easily be incorporated into this environment. It may not be so easy, or even possible at all, to have this functionality in a balance-forward environment, because it is both problematic technically and operationally to apply electronic remittance line-items to lump-sum balances. Only your vendor will be able to clarify this, as well as the present options to you based upon the design and technology of your billing system.

The second key factor in your ability to implement electronic remittance is the sophistication of the payor. If a payor does not have the capabilities to supply practices with an electronic version of the EOB, electronic remittance is not applicable. The good news is that the number of payors able to participate in electronic remittance is growing daily. Blue Cross/Blue Shield and Medicare lead the pack, with the commercial companies following their lead. The roster of companies equipped with this technology changes daily, so contact your payors directly to learn whether they can provide this service now or if they will be able to provide it in the future.

There are three significant benefits to realize through implementing an electronic remittance solution. The first is saving time, which results in decreased labor costs. Second, you can customize your system to meet the specific needs of your practice. Third, data entry errors are far less likely, and fewer patients will complain about incorrect billing. Finally, electronic remittance reduces your accounts receivables. Denial reports clearly identify the reasons for claim rejections, enabling corrections to be made in a timely manner, and this report can indicate the difference between the carrier-allowed amounts and the actual payment amounts.

As an employee of an information system vendor in the healthcare industry, I know that we and other vendors spend untold dollars yearly to develop applications designed to bring value to our clients. Electronic remittance is one of the best and most valuable offerings of recent years. If you are still unsure about this service, just ask someone who has implemented electronic remittance. They might even be hard-pressed to remember what it was really like before the days of one-touch posting! Based upon the potential benefits of automating electronic remittance, it is a wise investment of time and effort to see what electronic remittance could mean to your practice.

John Boland is a Director of Business Partnerships for the IDX Systems Corporation in Lombard, Illinois. He may be reached at (630) 317-3682; John_Boland@idx.com
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