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ED Implementation Matthew Mabalot HCA-626 Health IT Case Study National University

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Abstract This case study report focuses on the benefits and needs of Electronic Data Interchange to be implemented at Childrens Physicians Medical Group. CPMG receives hundreds to thousands of paper claims daily, sends thousands of paper with explanation of benefits for each claim, receives faxed eligibility inquiries, receives hundreds of faxed authorizations, and sends out paper checks to the physicians. The study will discuss what EDI is, the operational benefits and what requires integration.

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EDI Implementation CPMG is a managed care organization that services hundreds of physicians and is responsible for the care of thousands of children in San Diego. The organization currently can Electronic Data Interchange but has not utilized all of the aspects EDI has to offer. CPMG works with hospitals and small physician offices that use both electronic and paper transactions, mostly paper. CPMG receives hundreds to thousands of paper claims daily and spend high costs on printers, papers, and labor work. The easiest solution to these costs is implementing EDI services into the workflow. The work flow consists of receiving inbound claims, authorizations, eligibility request, and outbound receipts explaining the benefits. Each of these processes reduces or eliminates completely through EDI. The information systems department controls a claims system can upload and download claim files that meet HIPAA standards. The value of this system is that it is web based CPMG could have providers check inquiries and submit claims and authorizations via web using EDI transactions. The issue with convincing providers to utilize the web portal is making sure the files submitted by providers are HIPAA compliant and accurate. CPMG can reduce the total temporary employees by having one individual responsible for loading files with hundreds of claims rather than keying each individual claims, which can take days to complete with a team of data entry. The solution to the compliance and accuracy issue is to have providers submit all requests and claims electronically through a clearinghouse. A clearing house is responsible for

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sending and receiving HIPAA compliance files. The clearing house accepts all files from providers through FTP and web claims forms that can be entered manually by the provider. Most clearing houses offer all EDI transactions such as 837P, 837I, 270, 271, 276, 277, 278, and 835. 837P/I are electronic claims versions, 270/271 are eligibility inquiry and responses, 276/277 are claim inquiry and response, 278 is an authorization request, and 835 ERA are electronic remittance advice. CPMG load every EDI transaction stated and will need the Information Systems department to test and implement these transactions. The IS team will work with the clearinghouse vendor, FTP vendor, and all of the providers ready for testing. The implementation will include validation and testing from the administrative level to the clinical levels. The system will require validation from the databases to ensure accuracy. The information loaded needs to be mapped to the data fields of the claims system at CPMG. The database information includes claim information such as totals, service codes, and diagnosis. This information is mapped to the patient and the health insurance, the provider rendering the services. Each of these processes must be tested and validated back from the senders and the receivers. Electronic Data interchange (EDI) is a widely used automated business process to facilitate sending and receiving information from business to business. EDI was developed to reduce labor work, eliminate human keying errors, and faster document sending and receiving. EDI includes standards that companies follow to communicate with indifferent systems from one company to the other. EDI is used in retail, automotive, electronics, grocery, and health care. CPMG would be utilizing EDI for claims, authorizations, EOBs, and electronic fund transfers.

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EDI was originally developed for warehouses that did an extensive amount of manual work creating invoices and purchase orders. These forms were formatted on one end and reformatted on the receiving end. This process wastes paper, time, and money. With EDI, companies could follow the same format using the same fields to send information back and forth. The standard in the United States is The American National Standards Institute ANSI X12 format. The X12 transactions use a format resembled as an envelope, which includes the address of receiver and control information. Segments and loops are used within the envelope to distinguish each field and location of specific information. Protocols and controls in place facilitate information received and require acknowledgements to be sent back which is also more convenient when done electronically. The benefits of EDI are the reduction of paper, data entry, error, and postage. The advantage of EDI is using the automation processes, which require no human intervention. Sending paper documents obviously cost more money and take a longer time to receive. EDI made a big impact on retail businesses because of fast delivery and receiving time on purchase orders and invoices. Inventory was easily determined and future costs were easily calculated. EDI in the healthcare field is making a big impact on health information. CPMG operations will benefit with EDI because of the customer satisfaction, and reduced errors. The costs of operating EDI is less than the cost of hiring a team of data entry employees and hoping the claims can be tracked for future reporting. Health care has taken a big jump into the technology world of information. An example of EDI used in health care are the transactions in health services. Some transactions used are 837P Professional Claims, 837i Institutional claims, 835 Electronic Remittance,

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270/271 Eligibility Inquiry and Response, 276/277 Claims status/Response, and 278. With all of these transactions, audit trails are easily found during the transactions. All data is received and sent in the most accurate way possible. EDI in healthcare, hospitals, and doctor offices can easily send bills, verify, eligibility, and receipt of payments in a matter of seconds. CPMG and the network of providers would benefit definitely through EDI. Financial EDI is an also a big impact in todays technology. Healthcare has improved magnificently through the use of EDI and is continuing to grow larger as the years go by. Retail companies utilize the use of Electronic funds transfer for cash disbursement and receipts of sales. Using EFT makes it easier for tracking and authorizing money transfers. In comparison to healthcare, money transfer, authorization is used in a similar way. The functions of using EFT has its advantages, but also have downfalls concerning reporting back the remittance of transactions. The multiple payments and modifications that can occur throughout the transaction may make it difficult to interpret but all the information is available. Although transactions may be difficult to report back on, all the information is accurate and will return. Both trading partners utilize the standards of EDI to use EDI successfully. The EFT transactions would save CPMG high costs in paper checks and paper remittance. The providers would be able to received electronic checks along with an electronic explanation of benefits. This EDI transaction provides CPMG with a competitive advantage over other IPAs because not only will they be able to pay claims weekly but also electronically. Electronic Data Interchange reduces the amount of access controls to monitor because of the automation and the absence of human intervention. Authorizations and

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file transfers are automated processes that require valid data to be sent. The Information Systems department will need to implement the system to make EDI run smoothly. EDI makes it possible to easily find errors, flaws, or inaccurate data. With audit trails and controls the system to identify duplicates, invalid data, or unauthorized accounts. The validation process in EDI, utilizes the vendors passwords, codes, and data to pass through validation and authorizations electronically. Access controls are set up on both ends of trading partners. In retail, access controls involves the retailers access on customer information and inventory. The customers access is normally limited to view only vendor products and price list. In health care, access controls are extremely important because of HIPAA laws and patient information. In retail, customer is information must be secured because of credit card transactions and t any information that can be used in suspicious actions. Healthcare information must be secured to avoid high valued fines and laws in place. Every transaction that occurs in EDI is code with specific standards used. CPMG will contract with clearinghouses to provide EDI services and receive data more accurately, timely, and most important in compliance. The first step is to involve our information technology /systems department to find any issues that may occur during implementation. The IS team will test our current EDI server with the possible transactions to run through the current system. Because EDI is a standard format, it requires less formatting and more mapping. The biggest issues that will arise are evolving CPMGs current billing providers from paper claims to electronic claims. CPMG can receive EDI claims from the larger hospitals but the small offices tend be resistant to change.

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CPMG will have to require all claims to be submitted through a clearinghouse, is a central location for providers to submit claims electronically. CPMG will have the luxury of receiving one file daily from hundreds of providers. Once CPMG receives the claims, they can easily schedule the file to load daily and automatically send an acknowledgement back to the clearing house within minutes. The clearinghouse will send back the acknowledgement to the providers. Pay the claims and sends the EFT to the provider along with an 835 Electronic remittance advice. These simple transactions eliminated two weeks of work with the current process. For the providers still resistant to filling out claim forms on a web-based platform that CPMG can provide, they will offer those providers an OCR vendor. Providers will be able to directly mail claims to our OCR vendor where the claims will be scanned and formatted into an 837 EDI transaction and sent to CPMG daily as well. This vendor will provide satisfaction along with the benefits of using EDI such as tracking and accuracy. Another EDI transaction that can be utilized at CPMG is the eligibility inquiry and response 270/271. The providers will be able to submit an eligibility inquiry for claims that rejected through the clearinghouse. The clearinghouse will send the inquiry and CPMG will send a response back within minutes. CPMG currently receives faxes and phone calls daily just for eligibility inquiries alone. EDI will eliminate this process. CPMG also receives electronic faxes of authorizations data entered daily. CPMG receives hundreds of faxed authorizations that need to be entered into the system, which requires more tedious work. EDI will eliminate this process by accepting an electronic authorization through the EDI transaction 278. Providers will be able to enter their authorization form on a web-based platform and will be automatically loaded into the

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system for CPMG. This EDI transaction will lower costs on paper and data entry. The other benefits are more efficient process, accurate data, and timely authorization approvals. EDI will improve the process at CPMG through simple transactions. The benefits of EDI will reduce costs, improve productivity, improve compliance, and keep CPMG competitive in the health care industry. The only issues are getting the right people involved. CPMG will need the buy in from the Operations manager, the networked providers and their billers, and the employees to move into the electronic world of health care.

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References

Tan, J. and Payton, F. (2010). ADAPTIVE Health Management Information Systems. Jones and Bartlett Publishers, LLC. Ebridge Connections. (1993-2013). EDI Benefits. Retrieved on Jan 20, 2013 from http://www.ebridgeconnections.com/edi/edi-benefits.html GXS Limited. (2013). Benefits of EDI. Retrieved Jan on 20, 2013 from http://www.edibasics.co.uk/benefits-of-edi/ Hall, J (2011). Information Technology Auditing 3e. Cengage Learning www.cengage.com,