E-billing and its Impact on State Funds

Friday, November 13, 2009 | 0

By Scott Brener and Greg Krohm

When it comes to processing and paying medical bills, workers' compensation is distinctly different than general health insurance. Some of these differences are unavoidable, like the need for detailed office notes and prior medical history to be sent with bills.  However, workers’ compensation can improve its efficiency by adopting electronic billing and payment systems that parallel the electronic standards long used in general health insurance.  The efficiencies gained from sending medical claims information in a uniform, electronic format offers the potential to reduce overhead costs for providers and payers alike.

Texas was the first state to mandate e-billing with a prescriptive approach and sweeping legislation. Allen McDonald, Director of Information Management Services, Texas Department of Insurance, has sought to inform stakeholders, explain the requirements, and work through some of the unforeseen difficulties. Mr. McDonald said, “We have been working diligently to resolve the initial problems and through hard work and cooperation the acceptance and use of e-billing in Texas is growing.”

California’s legislation is more permissive, hoping that the economic incentives will be sufficient to motivate providers to comply with e-billing requirements. “It remains to be seen whether rewards or demands will produce the best results. Being too rigid at this early phase in electronic standards may be costly,” said Michael Reed, Texas Medical Society.

With Texas and California paving the way, other states including Oregon and North Carolina are considering similar requirements. In 2007, Minnesota enacted a comprehensive e-bill statute that covered workers’ compensation.

One fear many have about enacting e-billing legislation is that it will limit an injured worker’s access to care. Small clinics, or larger ones that treat few injured workers, may have limited incentive to implement a special e-billing system for workers' compensation.  Moreover, forcing workers’ compensation bills through a different system than general health insurance may cause doctors to stop treating occupational injury cases.

The provider and payer community noted both successes and failures with implementation of e-billing requirements.

“We are delighted with the improved payment speed and efficiency of e-bills. We encourage electronic protocols with our client-payers,” commented Greg Gilbert, senior vice president at Concentra. Mr. Gilbert noted that e-bills result in average payment in 45 days, compared to 65 days for paper claims.

This positive experience was shared by Michael Berkowitz, KSF Orthopaedic Center in Houston, Texas. “Unfortunately, a lot of the bills we submit electronically do not get to the insurer in a purely electronic format,” reports Berkowitz. “Too often some intermediary agent will not know what to do with our bill and just print it and send it by mail.” This “drop back to paper” phenomenon is a glaring failure in the current e-bill environment.

Payers also have many reasons to both like and dislike e-billing. As indicated by Scott Brener, vice president and general counsel of SFM, the promise of e-billing to help eliminate payer data entry and realize efficiencies of scale has the potential to be quite significant. “At SFM we recognize some of the initial constraints associated with e-bill early adoption, however, subsequent to some system and standards maturity, we expect electronic billing will drive efficiency within our insurance space.”

Vendors, or e-bill agents, play a critical role in facilitating e-billing between providers and payers. Technology vendors are directly responsible for finding the route from their client to the ultimate recipient of the electronic bill and supporting documents.

The need for supporting medical attachments, generally physician notes, is a unique feature of workers' compensation claims. Documentation is generally required by the payer to properly adjudicate a workers’ compensation bill. Texas law actually gives the sender several options, from paper to the advanced “275 format” for completing electronic billing.

In the end, there seems to be consensus among the experts on the payer and provider sides that two problems need to be overcome for e-billing to be fully realized. Firstly, there must be greater cooperation among vendors in transferring e-bills to the intended recipients. Secondly, a solution must be found for moving all electronic attachments from provider to payer. The IAIABC Provider to Payer Working Group is addressing these and other issues through the development of a model law for e-billing in workers' compensation.

To learn more about the Provider to Payer Working Group or e-billing initiatives across the country, sign-up as a user to receive updates on the IAIABC website at http://www.iaiabc.org.

Scott Brener is vice president and general counsel of SFM Mutual Insurance Co. in Minnesota.  Greg Krohm is executive director of the International Association of Industrial Accident Boards and Commissions. This column was reprinted with permission from the quarterly newsletter of the American Association of State Compensation Insurance Funds.