J. Robert Barbour, JD, MPS, CPHIMS VP Finance for Physician Services Montefiore Medical Center

1. The Providers’ Perspective on How to Re-Engineer Clinical/Business Processesto Make Consumerism Work J. Robert Barbour, JD, MPS, CPHIMS VP Finance for Physician Services Montefiore Medical Center July 2006

2. Providers’ Response to CDHC • Generally – Good Idea • Encourages patients to be cost conscious • May encourage lifestyle changes • Encourages pt to follow treatment plans • Could Lower Costs/Improve Life Quality • May Lower Access Barriers • More employers provide coverage • Less initial costs for employee

3. The Real World – “Keep in Mind” • Today, providers do not know what to charge patients until after services are provided • Patients do not want to pay until after insurance has adjudicated the claim • Patients do not have to disclose whether they have an HSA or not

4. Providers’ Concerns • Patient Delays Seeking Treatment • Shift of Risks • Payer shifting payment/process risks • Patients hear “Its your money” and keep it • Providers least capable to manage this risk • Our culture – Healthcare lowest payment priority • Credit industry does not penalize for healthcare bad debt • No adequate systems for billing patient balances • Managed care contracts prohibit asking the patient for money until remittance is received…. • No premium/payment shift to providers for increased risks taken • Painful Transition as HSA Funds not Sufficient or even allocated

5. Can CDHC Work as Designed? • Arguably – NO • As Designed it Will: • Lead to increased provider bad debt • Result in patient dissatisfaction with billing process • No thought to timing of EOB/statements • Confirmed by X12 • Payers, banks, other third party HSA managers will add to the chaos as they do not understand provider information needs for payments

6. Can CDHC Work as Designed? • No, so long as patients control the funding to and distribution from HSAs • NY Times – January 26, 2006 • But in many cases, people have evidently signed up not because they are eager to direct their own medical spending but because the plan looked cheap or they had no other insurance option. And at least half of those enrolled have not put money in their health savings accounts. So there will be no money building up for next year's out-of-pocket expenses — a big selling point for these health plans. • BAD DEBT + Pt Dissatisfaction = Failure

7. Formula for Success Partnership + Simplification + Trust = Success

8. Some Elements of Partnership • Relationship is non-adversarial • For Providers/Employers/Payers/Patients • Trust is the foundation • Risks are allocated where they belong • Shared systems balance parties fiduciary, ethical, privacy, and re-search duties • Patients are partners in care, lifestyle, and financial responsibilities

9. Some Elements of Simplification • Real-time transactions are key • Benefit pools vs. Benefit items • Dollars available rather than specific covered or non covered procedures • If Pt is the Consumer, then the Consumer should decide • Have real standards that include HSAs • Providers paid for services rendered before patient leaves the office • Costs for all parties to produce and process claims should be less than $1.00

10. Some Elements of Trust • Trust Factors • Charges are a by-product of documentation and clinical standards • If Payer is a partner … • Provides systems it trusts for EHR and billing • Provides industry leading systems to providers • Pays in full with little or no denials • Provides the transfer of payment risk to itself and employer • Providers will use the systems and accept discounts • Payer has easy access to records for review • Removes requirement for claims to have all this data • Claims becomes a “thin transaction” • Identified fraud handled by dropping provider from these preferred processes for life

11. What Will it Take to Make it Work? • Simplify Benefits • If patients can manage the 80% of their costs why can’t they manage them all? • Create pools of coverage not what is covered • Payers Roles Evolve • Not the adversarial watchdog • Partner with vendors to provide integrated trust/processed based systems • Support patients needs to determine who to see and what services to seek • Assist in lifestyle management and change • Monitor quality, costs, and create large databases for research and bioterrorism monitoring • The Partnership Broker • Employers Become Responsible Partners – Eligibility is Their Burden • Opens door for banks, credit card processors and other entities to become low cost, efficient market entrants

12. Payers & Employers New Roles • The New Paradigm – No More Risk Transfer • Employers are responsible for updating rosters in real time or bear the financial risk • Providers will rely more on the accuracy of this in the future… • Employers will payroll deduct any balances due providers • Payers will work with Employers to manage this risk – New insurance products

13. Payers & Employers New Roles • Payers provide/certify EHRs • All charges flow from documentation • Evidence-based/template driven tools available to physicians • If followed, then payment is immediate • Otherwise, reviewed under current rules • Data for reimbursement in thin transaction • Data for analysis in separate transaction • This is now a “Credit Card Transaction” • Once approved - provider paid in full

14. What Do We Need? • Real Time Eligibility • Support CORE Standards • If given within 3 days of service, cannot be retracted • Must report out of pocket responsibility and create “Reserve Transaction” • CPOE automatically creates Eligibility transaction and determines patient obligation BEFORE services are provided • Real Time Claims • Providers need EHRs that create charges as a by-product of documentation • If certified EHR, no medical necessity denials or attachments requests • X12 Standard needs modification to support

15. What Do We Need? • Real Time Remittances • Claim immediately adjudicated • HSA obligations immediately calculated • HSA paid using standard formats • Included in Payer Electronic Remittance • If not, patient can receive a statement • Patient does not manage what gets paid • Any denials are managed while patient is still in the office

16. Don’t Forget!! • Who Bears the Risks of Non Payment? • Where else does the seller bear the same risks and can be statutorily prohibited from denying services? • Providers should be paid in full • First look to what insurance or HSA can cover • Shortfalls paid through mandatory payroll deductions • Great-West Healthcare has Payroll Deduction debit card

17. Don’t Forget!! • Why Providers should not bear the risk of non-payment • Patients control the HSA disbursement • Lowest payment priority in our culture • Cannot payroll deduct • Have inadequate systems • Are simply ill-equipped • Are in the business of caring …

18. Summary • CDHC as currently designed cannot succeed • Rx for Bad Debt • Current adversarial relationships will be accentuated • Built on an already failed foundation • Can Succeed if based on: • Partnership + Simplification + Trust • Providers get back to the business of serving the patient • Patients are responsible for their financial obligations (the heart of CDHC) • Payers morph into new service/support entities with processes that approach the simplicity of a credit card transaction • New standards, common systems, and business processes are implemented that close the revenue cycle the same day

19. Good links • www.wedi.org • www.x12.org • www.hl7.org • www.caqh.org • http://www.claredi.com/whitepapers.php • www.ehi.org Robert Barbour Montefiore Medical Center rbarbour@montefiore.org