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Jan 10 2013   12:10PM GMT

The fiscal cliff: 5 Steps to reduce health care spending

Posted by: Jenny Laurello
fiscal cliff, HIPAA, HIPAA 5010, HIPAA compliance, ICD-10 transition

Guest post by: Baskar Mohan, director, healthcare practice, Virtusa Corporation

In the last few years we have been busy worrying about the national budget and the possibility of defaulting on our payments, which can put a damper on holiday celebrations. The “fiscal cliff” is the new buzz word in town. Each party has its own agenda and ideas on how to cut the deficit. We have ourselves to blame for this difficult situation and not the political parties. The following data on daily spending in this country was recently released.

Source: Fox News

The government takes in $5 billion in revenue every day. It spends almost $12 billion daily, the majority of which is on health care. In 2010 it was estimated that $48 billion, or roughly 10% of Medicare spending, was lost due to improper payments.

I would like lay out five steps to fight waste, fraud, and abuse and help save money in health care.

  • HIPAA 5010 mandate: The Health Insurance Portability and Accoutability Act (HIPAA) 5010 version for health care electronic data interchange (EDI) transactions came into effect Jan. 1, 2012. Few organizations have fully realized the benefit of this major release, even after millions of dollars in IT spending, because their mindset is to simply comply with the rules by adopting shortcuts and so-called crosswalks which do not add any value to their organizations. The internal claims systems still use the old code with minimum patches. Very few fields in 5010 submissions are used for actual claims processing, though a lot of good data is collected. Implementing a claims system that could process the 5010 files without any data loss would enhance the quality of data while reducing fraud and abuse.
  •  ICD-10 transition: This will be one of the bigger changes to the U.S. health care system in the coming years. Many organizations are still not ready for the impending compliance date; instead they are implementing crosswalks or waiting for extensions. Many studies have shown that the ICD-10 transition will not cause any change in Medicare payments. There is now more specificity available in the diagnosis and procedure codes to enable organizations to implement more sophisticated control systems to prevent fraud and abuse.
  • Providers loyalty program: Hospitals and doctors can be looked upon as villains, despite performing an excellent service to society. Insurance companies have very few systems that recognize providers. This poses the question: why aren’t there loyalty programs in place for doctors? Almost 90% of fraud and abuse is initiated by the submission of claims by providers. Claims could be routed and processed faster if there was a system in place to identify the claims based on the submitting provider, resulting in happier providers.
  • Claims verification: The claims processing systems within most health care organizations are so outdated that it’s hard to detect fraud and implement complex rules. The claims need to be routed based on additional characteristics like claim value, diagnosis and procedure codes, and location of services, among others. This would enable a better and more detailed understanding of the claim while helping adjudicators with specific skills to quickly identify fraudulent claims.
  • Innovation:Most organizations have welcomed the idea of having a chief innovation officer whose primary task is to come up with creative ideas and think outside of the box. If we have like-minded people in organizations, we can use technologies like dynamic case management, mobility, big data, and cloud to empower organizations and help our country come out of debt.

Information technology within the health care industry can play a major role in eliminating our national debt. Please feel free to share your thoughts.

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