Bill Parrish, senior product director for Optum Link, explains why Optum® would abandon its electronic data interchange revenue stream.
In an information economy, data flows freely. As health care adjusts to its own information economy, it is experiencing the same economic pressures for a free flow of data that all such markets face.
Optum recently announced it is offering standard electronic claim transactions for free via Intelligent EDI (Electronic Data Interchange).
Here Bill Parrish, senior product director for Optum Link, explains why Optum would abandon its reliable EDI revenue stream.
1. You're offering free electronic data interchange services to providers. What inspired Optum to do that?
The spirit of the Health Insurance Portability and Accountability Act of 1996, known as HIPAA, was for administrative simplification and cost reduction.
Like the evolution that is taking place with the sharing of clinical data, we realize that the only way to spread EDI standards and gain the knowledge and efficiencies that can come from transactional data is to make EDI transfer more available.
Our primary motivation is in the spirit of HIPAA and in removing the cost barriers that limit the adoption of the overall standards.
2. If HIPAA assumed that standard EDI transactions would be free, why have providers been paying for EDI transactions for the last 10-plus years?
There are two factors that contributed. One, in the beginning, there were quite a few discrepancies in the ways that payers adopted the standards. Clearinghouses would assume the burden of ensuring the files conformed to the payer standards.
Two, the convenience of being able to submit and retrieve files from one place was something providers were willing to pay for.
Plus, there are value-adds that come within clearinghouse services — analytics, revenue cycle management, payment analysis, those types of features and functions — that have sprung up on top of the business of EDI transactions.
These days, more practice management or patient accounting systems can produce and consume the standards, and payers have gotten closer — though not exactly the same — in how they have adopted the standards.
In addition, there has been greater consolidation of the administrative functions with billing services and revenue cycle solutions becoming more and more common.
These shifts have really begun to create an environment where the value provided by traditional clearinghouse models has been diluted when compared to the cost of the services.
3. What type of charges does EDI add to the cost structure of a typical practice?
Typically, there are fees associated at a per provider or per transaction level.
For a smaller provider group, the costs are anywhere from $75 per month per provider in some circumstances to maybe $200 per month per provider, depending on the level of service they choose.
For a group of 20 providers, that’s anywhere from $18,000 to $48,000 per year.
Then there are large-volume provider groups, who maybe already have those analytics themselves and they're just looking for a means of moving the data back and forth.
With the transaction volumes that those services see, you're talking tens of thousands of dollars up to a cap, and then a per transaction fee after. They can be quite substantial, depending upon the business and the volume.
4. For those who still submit claims via fax or mail, how will free EDI help them improve efficiency?
When was the last time you sat down to write paper checks to pay bills?
Automation and e-commerce have created so many efficiencies in how we pay for goods and services. Imagine that on a grand scale within a provider office, where thousands of transactions worth hundreds of thousands of dollars happen every year.
For organizations that move from a manual claims submission process to an electronic process, there’s potential difference, depending on your estimates, of anywhere from $2 to $4 in per transaction savings.
From an efficiency standpoint, not having to chase paper, pay postage, look for explanation of benefit forms (EOBs) that are coming back in paper format and tying them back to the claims that went out. It saves a ton in overall administrative overhead.
5. How can providers access free EDI?
Our free Intelligent EDI service is offered through the Optum Link platform. Link is a web-based service that reduces administrative friction between providers and payers.
The full gamut of the traditional EDI transactions is there — claims submissions, electronic remittance advice returns, etc.
There is a small surcharge associated with real-time transactions, which include eligibility, claims status inquiry, referral authorization and notifications, etc.
Those costs are minimal and much less than other clearinghouses typically charge. Those fees simply cover incurred costs.
The exciting part about that is it's not simply Intelligent EDI for free.
Optum Link also includes additional services, such as the Optum Advanced Communications Engine, which helps payers and providers limit claims denials and thus drive administrative costs even lower.
Other applications are also available, which we hope will drive additional savings and provide more value.
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