HIPPA, EOB, ROI - Can you speak my language?

 Author: Rob Hudecek, RHudecek@profitstars.com

Whether you are a commercial loan officer, a licensed pilot, or an operator in a small manufacturing firm, every industry seems to have their own set of acronyms to make their language almost indistinguishable to those on the outside.  The medical industry is no different and in many ways can be considered the leader in industry specific acronyms, even using an acronym to describe their own acronyms (i.e. CPT - Current Procedural Terminology, the American Medical Association’s accepted language for use to describe medical procedures and services).

WDIMTM (What Does it Mean to Me)

In a time when financial service margins are low and profitable customers are getting harder to come by, the U.S. healthcare system is a trillion dollar market generating over 8 billion claims per year and growing.  This growth makes attracting hospitals, clinics, and private practitioners as banking customers a natural fit to a financial organization, not only for deposits and loans but for treasury management services as well (i.e. lockbox processing, document imaging, remote deposit capture, etc.).  Healthcare providers, like any commercial customer, want to be assured you have their business needs in mind, and as such, desire (and sometimes require) their banker to understand their language.

Before engaging medical providers as prospects for your financial institution, here are some general terms you should know:

• Provider – Refers to the doctor, physician, clinic, hospital or other health care entity that is assigned a required National Provider ID (NPI).
• Payer – Refers to the entity or individual person paying claim (typically the Insurance Company).
• Clearing houses – Organizations that aggregate and disperse medical claim information between providers and payers in either electronic or paper format.
• Self-Pay/Patient Pay – Refers to the amount paid by the patient either at the time of service or based on bills after the service is provided (e.g. insurance claim denial).
• Revenue Cycle Management  – Refers to the automation of financial analytics and payment reconciliation through the conversion of paper EOB, remittance claim matching to payment response, and exception processing management (denials / underpayments), and often includes the ability to research images and electronic data.

Your Medical ABC’s:

• EOB (Explanation of Benefits) – The statement sent by an insurance company to the patient (as a summary) and the provider detailing the services and payments made based on the treatment provided.
• ERA (Electronic Remittance Advice) – The general term referring to the electronic version of payment and denial data (i.e. provider’s EOB).
• EDI (Electronic Data Interchange) – The general term referring to a structured data format for exchanging information electronically.
• EDI 837 (Super Bill) – The government standard remittance file format sent by a provider (doctor, clinic, etc.) to the clearing house for payment by the insurance company (Payer).
• EDI 835 (Electronic EOB) – The standard government payment response file format used as a response from the insurance companies through the clearing houses to the provider containing payment and denial data.
• ICD9/ICD10 codes (International Classification or Disease) – These refer to the diagnostic codes and version.  All parties are required to be compliant with ICD-10 which greatly expands the number of codes in use by October 2013.
• PHI (Protected Health Information) – Refers to any information about medical status, type of care, or associated payments that can be linked to a specific individual.
• HIPAA (Health Insurance Portability and Accountability Act) – The 1996 Congressional act that covers the use and disclosure of PHI to protect the confidentiality, integrity, and availability of the data in electronic, written, and oral forms as well as establish uniform standards for Electronic Data Interchange (EDI).
• BAA (Business Associate Agreement) – Refers to the agreement between parties who conduct medical transactions on behalf of covered entities.
• HITECH (Health Information Technology for Economic and Clinical Health Act) – The 2009 Congressional act that covers HIPAA breach notification, enforcement, Electronic Health Record access, and extended HIPAA requirements to Business Associates.
• HIMMS (Healthcare information and Management Systems Society) – The not-for-profit organization that provides leadership in the use of healthcare information technology and practice management systems (provider billing system).

Medical practitioners were educated to become doctors, dentists, pharmacists, and so forth – not to be payment experts.  Today many hospitals, clinics, and medical offices will outsource financial and account reconciliation tasks whenever possible.  When targeting medical providers for your commercial profile, being able to speak basic “medical” will go a long way in establishing financial service relationships with these often highly profitable customers.