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Health Care Reform: What's Missing From the Debate?

Posted: 01/19/10 04:08 PM ET

Although the topic of efficiency has been surprisingly absent from the national debate on healthcare reform, a recent study conducted by Milliman Inc. estimated the nation's healthcare system could save an estimated $86 billion annually if it were to adopt only one procedural change: utilizing existing technology to automate claim filing, claim status inquiries, referrals, pre-authorizations and eligibility. Eleven billion of the $86 billion would come just from converting paper-filing physicians to electronic healthcare claim filing offices, estimated to save more than $40,000 per healthcare provider. And, these dollar savings don't even take into account the extra benefits that would accrue from faster payments, faster turnaround on claim errors, improved cash flow, patient satisfaction and more.

With so many benefits, why has the adoption of electronic filing been so slow? According to the American Medical Association, approximately 25 percent of all healthcare claims are still submitted on paper. The majority of these claims are being submitted by smaller practices of 1-5 providers, whose reluctance is costing insurers billions of dollars in unnecessary expenses while driving up unnecessary expense for the providers as well.

In the infancy of electronic filing, there were plenty of reasons why providers were slow to implement, ranging from the availability and cost of broadband service, to the lack of entrenched forms and standards, to compatibility with practice management software. Today, most of those challenges have been addressed and the biggest reason for not converting to electronic submission is force of habit.

Habits, as we know, are hard to break unless one has no choice or is given an incentive to do so.

The state of Minnesota has taken the "no choice" approach, having made the decision to no longer allow paper claims to be filed in the state. Other insurers are beginning to do something similar in their new provider contracts. Perhaps it is time to draw a line in the sand. Perhaps it is time to force the savings.

The U.S. government, by comparison, has generally taken the incentive approach, providing incentives and stimulus packages to lead to desired outcomes. In fact, the government is planning to make up to $45,000 available per physician over a 2-7 year period to offset the costs of EHR technology beginning in 2011. Yet, a stimulus of only $100 per paper-submitting provider is all that would be needed to cover the cost of software to get a practice up and running with electronic claims capabilities. This $100 stimulus would have the potential to save billions.

Forgetting for a moment about cost savings, there is another reason why providers should get accustomed to working electronically. The fact is, electronic connectivity is moving from just a cost savings opportunity to a healthcare necessity. If the healthcare system hopes to accommodate new innovations, emerging technologies and planned changes in healthcare, connectivity becomes ground zero.

As many know, electronic health records, new diagnostic codes and changes in standardized forms are all planned over the next two years. How can the system expect a provider to participate in the electronic transfer of medical records if that provider hasn't yet become comfortable with the electronic transmission of medical claims - the simplest and most rudimentary function they could perform? Expecting this would be akin to expecting consumers to embrace online banking even if they had never sent an e-mail.

So the challenge, and the opportunity, is before the U.S. healthcare system. There must be a way to convert paper-submitting providers to electronic-submitting providers not only as a means of realizing tremendous cost savings, but also as a necessary step to allow them to embrace the new and important technologies on the horizon. Time shouldn't be spent talking about electronic health records until healthcare professionals are comfortable using technology. The good news is, getting them to that point shouldn't be very difficult. Once comfortable there, the floodgates to new technology can be opened, benefiting both the providers and their patients.

Bill Bartzak is founder, president and CEO of MD On-Line, a leading provider of electronic data interchange (EDI) solutions that facilitate the critical connection between doctors and payers.