HIPAA: Overview and Impact On Revenue Cycle

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1 HIPAA: Overview and Impact On Revenue Cycle Transaction Standards and Code Sets and Their Effect on the Revenue Cycle Lee Barrett, Director, Health Care Practice PricewaterhouseCoopers, LLP (860) (cell) 1

2 Agenda Brief HIPAA Overview and Background Approach to HIPAA and the Changing Landscape HIPAA: Where s the Beef? End.2 2

3 A Context for Change HIPAA intersects with three key industry drivers identified in Health Cast 2010 E-Health - transformation in health care to private, personalized, interactive and secure use of Internet Genomics - breakthroughs will shift system from cure to prevention while placing an even higher premium on security and privacy Consumerism - empowered consumers create impatient patients demanding information and access HIPAA endorses exchanges of PHI via the internet with appropriate privacy & security controls. End.3 3

4 Overall Objectives: End.4 HIPAA Capabilities Model Conduct a HIPAA assessment that will provide a representative analysis of its security and privacy risks. Analyze TCI, Privacy and Security (internal and external) Develop GAP Analysis Develop a Comprehensive Implementation Plan Develop detailed projects with resource requirements Determine in-source and out-source options Provide ongoing HIPAA updates & support Benefits: Enterprise wide security and privacy framework that reflects the strategy and mission of the organization Risk mitigation EDI benefits and cost reductions Revenue enhancements Better clinical and business data Greater data availability Customer satisfaction 4 Strategy Management Knowledge Technologies Support Capabilities Model Leadership Executive Sponsorship Security/Privacy Framework Security Program Structure Security Program Resources and Skillsets Policies & Procedures Security Policies, Standards and Guidelines Management Security/Privacy Operations Security/Privacy Monitoring User Management User Management User Awareness?Behavior Information Asset Security Host Security Database / Metadata Security Electronic Commerce Application Security Internal Network Security Internet Security Technology Protection and Continuity Physical and Environment Controls Contingency Planning Controls People Process Technology

5 HIPAA & The Revenue Cycle Preadmission Admission Financial Counseling Insurance Verification Front-End Charges Charge Capture Coding Documentation Billing Billing Follow-up Collections Posting Contract Monitoring Bad Debt Processing Back-End

6 HIPAA Regulatory Timeframe Extension Transactions and Code Sets Security Privacy 8/ / /2000 4/ /2003 Testing Final Rule Provider ID Employer ID Health Plan ID Individual ID Enforcement These NPRMs have not been issued in initial draft 6/98 12/98 6/99 12/99 6/00 12/00 6/01 12/01 6/02 12/02 6/03 End.6 NPRM Published Final Rule Date Date Compliance Required 6 Expected Final Rule Date Expected Copyright Date Compliance 2002 PricewaterhouseCoopers Required LLP

7 Standard Transaction Flow Providers Functions Payers Functions Sponsors Functions Eligibility Verification 270 (Eligibility Inquiry) 271 (Eligibility Information) Enrollment 834 (Benefit Enrollment & Maintenance) Pre-Authorization and Referrals 278 (Referral Authorization and Certification) 148 (First Report of Injury)* Pre-Certification & Adjudication Service Billing Claim Submission 837 (Claims Submission) 275 (Claims Attachment)* Claims Acceptance 270 (Eligibility Inquiry) 271 (Eligibility Information) Enrollment Claims Status Inquiries 276 (Claim Status Inquiry) 277 (Claim Status Response) Claims Adjudication Accounts Receivable (AR) 835 (HealthCare Claim Payment Advice) Accounts Payable 810 (Invoice)** 820 (Payment Order/RA) These are not contained in the initial Transactions and Code Sets Final Rule* End.7 7

8 How HIPAA Impacts The Revenue Cycle? Front Office Physician Interaction Ordering lab/x-ray tests Using reference labs Communicating with outside agencies Eligibility/Pre-Certification Claims billing Claims Follow-up Hospital Admissions Documentation and Coding Tracking systems Medical Students Consults Pre-authorizations Claims management Contract payment compliance End.8 8

9 Code Sets and Transaction Standards Reduced Accounts Receivable Cycle Improved Customer Service Quicker Cash Flow Improved Accuracy (5% data entry errors) More Efficient Operation End.9 9

10 EDI Benefits - Tactical Lower FTEs Reduce/Eliminate Rework Reduce Operational Costs (office supplies, postal costs, and telephone charges) Chance to Automate Resolutions End.10 10

11 Assessment Impact of Transaction Standards and Code Sets on a 200 bed hospital Impact Assessment FTE Impact Financial Impact Pre-Cert/Registrars Collection Specialists Billers Cashiers/Cash Posting Financial Counsellors Supervisors $49,920 $199,680 $-0- $24,960 $49,920 $37,440 Total Savings Fringe Benefit Reductions % $361,920 $79,622 TOTAL Potential FTE Savings $442,542 End.11 11

12 Assessment Impact of Transaction Standards and Code Sets on a 200 bed hospital Impact Assessment Impact Area Financial Impact Telecommunications Number of Phone Lines Number of Fax Machines $14,500 $3,600 Space Cost per foot (allocated in budget) -1,500 sq. ft $22,500 Paper Products Claims and related attachments -4 tons $8,000 Other: -Misc. Overhead $20,000 Total $68,600 End.12 12

13 Assessment Impact of Transaction Standards and Code Sets on a 200 bed hospital Impact Assessment Calculations Financial Impact Annual Revenues Gross Accounts Receivable Average Daily Gross Revenue Gross Days Revenue in Accounts Receivable Potential GDRO Reduction (Over Time) $125,000,000 $20,000,000 $342, Days $3,424,660 GDRO Savings Invested at 5% Annually Interest Income $171,233 End.13 13

14 Assessment Impact of Transaction Standards and Code Sets on a 200 bed hospital Potential Total Costs Savings for one 200 bed Hospital $682,375 End.14 14

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