What are the benefits of sending electronic claims as opposed to paper claims? To some medical offices, sending electronic claims is an important way of conducting their business. However, it is soon to be a mandatory way of sending claims to the majority of insurance companies.

As it currently stands, there are a few criteria that waive the Medicare requirement that all claims must be submitted electronically. For example, if the physician, practitioner, facility, or supplier (other than provider of services) has fewer than 10 full-time equivalent employees, or the entity that has no method available for the submission of claims in electronic form. 

It is safe to assume that the majority of medical offices in the country are submitting their claims on paper as only 38% of all claims filed today are using electronic billing, the other 62% are still filed manually, using over 450 different forms. Paper claims are crippling the insurance industry!
 
If you are submitting your claims on paper, are you seeing an increased delay in payment of your paper claims? It is not your imagination! Paper claims carry a mandatory 28-day hold and can only be reimbursed if the payment reserve has not been exhausted once the claim is eligible for determination.  Electronic claims are adjudicated first and with the growing number of providers jumping on the electronic claims submission bandwagon, your paper claims are continually being forced to the back of the reimbursement line!

Your paper claim cost is not equivalent to just the postage, stationary and staff time! A study by the American Medical Association estimates that it costs physicians between $6 and $12 in labor and overhead to process one paper claim. Factoring in errors at an average of 25% of all paper claims and the time it takes to reprocess unpaid claims, the inefficiency and wasted dollars is startling!
 
When you submit a paper claim it goes through many obstacles that will take anywhere from 30-60 days

1. First you print it from your software (Make sure all information is printed correctly)
2. Employee folds and puts in envelope
3. Employee weighs it and applies correct postage (hopefully)
4. Mail carrier picks it up and it is sent to the insurance carrier
5. It arrives at the mail carriers division at the insurance carrier
6. It goes to the data entry clerk
7. Data entry clerk enters in the proper information from your claim form in the carriers computer system.  (If it is correct, we move to Step 11).
8. If claim is denied then it's sent back to the mailroom (We're now at the 20-30 days stage)
9. Then it's sent to the post office (At least a 2 day process)
10. Then back to your office to make proper corrections. Possible problems are:
a. Clerk entered incorrect information
b. Your office entered incorrect information
c. Your office forgot to fill in a box on the claim form
d. Can't read handwriting
e. Coding issues
f. Wrong ID# and group #'s
g. Patient's name spelling
h. Wrong date of birth of patient
i. No guarantor information
j. Sent to the incorrect insurance carriers
11. If it's a clean claim it will be processed and payments will be made (7-10 days)
a. Check is printed along with EOB
b. Check sent to mailroom
c. Check sent to Post Office
d. Check enters your office

This process can take up to 30-60 days!

Now electronic claims are simple, fast and easy!

1. Employee puts patient information and charges in software system
2. Employee batches the claims at the end of the day according to their software system/office policy.
3. Employee submits claims electronically through a clearinghouse (or direct to insurance carrier)
4. Within 20 minutes (most clearinghouses) will have a remittance notice in the reports for you to know that all the boxes that should have been filled out was not missing. (If you have a clearinghouse that has a claim scrubber you can see if you have the correct ID#, Date of birth, etc.  This way it's a clean claim and gets paid faster).
5. Within 24 hours you will know if the insurance carrier has received the claim and if it was missing any information they need to process the claim. (Now this does not prove that you will get paid on the claim, this will just let you know that all boxes were filled in that was needed to process the claims).
6. In a couple of days you will usually receive a Payer report, some payer reports show the amount that they paid on the claims, others will only acknowledge that it's being processed.
7. Then if it's approved insurance carrier processes the claim and returns the EOB with payments

All this around 7-14 days! So you save time and employees can spend more time with patients and office work and get paid in half the time. 

Reasons why Practices are still not going electronically:

• They don't have to face HIPAA regulations in regards to privacy
• Too busy to set up electronic claims
• Not educated enough to know that it's cost efficient.

HIPAA Regulations:
Let's face it sooner of later every medical practice WILL need to face HIPAA and privacy issues.  A good percentage of patients will not even go to the doctor's office if they know that their condition will be discussed with everyone.  HIPAA is common sense. Would you like someone to find out your social security number or credit card number while they were just sitting in the lobby? 
So eventually, we are all going to have to face HIPAA... so why not just set your practice up with electronic claims and get paid faster?

Too busy to set up:
Well you would have plenty of time if you were set up.  It doesn't take long, most clearinghouse's have software that you can download immediately or you just upload a file to their website.  For the time that it's going to save you when you are set up, it's well worth it.  Some clearinghouses take 4-6 weeks to process Blue Cross and Medicare claims electronically, but commercial carriers are within 1 business day. 

Not Educated:
Most Physician's don't have time to take a seminar on billing and benefits to electronic claims.  In this case you should find a billing manager that will take care of this and make sure they stay up to date with all changes in regulations and coding.

Overall look on Paper Claims Vs Electronic Claims

Paper 

• 40-60 turnover time
• 35 % rejections due to clerical errors
• Cost of a claim - around $7
• Time on claims - 10 minutes per claim

Electronic Claims

• The average rejection rate of the electronic claim is only 2%.
• Electronic claims are considered priority and are paid between 7-21 days.
• Following up to insurance companies by your staff is drastically reduced.
• The electronic claim saves you an average of $7 each to file.
• Processors need not re-key your claim into their system, which reduces adjudication error

So it makes more sense to send your claims electronically. The benefits far outweigh any costs.

•  Processors need not re-key your claim into their system, which reduces adjudication error

Lisa Paoli, CMRS is Secretary/Treasurer ILAMBA Chapter and works for MedOffice Solutions, Inc www.medofficesolutions.net