Electronic Claims Processing Facts

It is estimated that more than 6 billion insurance claims are filed each year or around 500 million claims per month. Of those claims, only 50% are filed electronically. About 50% are still filed manually or on a paper claim form called a HCFA 1500. Medicare alone receives more than 500 million claims per year.

FACT: Electronic Claims Processing reduces payment turn-around time by shortening the payment cycle.

FACT: Electronic Claims Processing has been mandated by Congress. You can help by providing electronic claims processing and medical billing services for all types of healthcare providers in your area.

FACT: Electronic Claims Processing and Medical Billing can reduce average error rates to less than 1 or 2% by filing claims electronically.

Paper claims contain errors on them which significantly reduces payment turn-around time. About 30 to 35% of all paper claims are rejected due to typos, errors and omissions. Electronic Claims are submitted to the carrier via modem after being checked for accuracy either by a billing service's software or a claims Clearinghouse.

This audit/edit process reduces the normal rejection rate of 30 to 35% down to around 1 or 2%. By checking electronic claims for accuracy up front, the claim is put in a payable status when it is received by the insurance carrier, thus reducing payment turn-around time.

Annual healthcare expenditures increase by more than 10%. Each year, for the rest of this decade, it is estimated that there will be more than 4 million babies born, 20 million children will be below age 5, over 4 million people will reach the age of 45, and more than 2 million people will turn age 65. The average person accounts for 6 physician encounters per year. More than 220 million Americans are covered by some form of health insurance. That's a lot of electronic claims processing services to provide!.

According to HCFA, it's estimated that by the year 2000, there will be 656,000 doctors, 161,000 dentists and 40,000 osteopathic physicians practicing in the U.S.

• Faster payment turn-around time (90-120 days down to 7-14 days)
• Requires no staff training or retraining
• Usually no startup investment for the practice
• Allows staff to focus on their patient's ills rather than their bills
• Get paid on more claims because of reduction in errors
• Reduces staff work hours and overhead expenses

In a study conducted by the American Medical Association, it was estimated to cost healthcare providers an average of $6 to $12 to file a claim. Using the services of a billing company, a physician will spend around $2 to $3 on each claim with Electronic Claims Processing.

After years of discussion, Congress passed legislation on administrative simplification called the Health Insurance and Portability Act of 1996 (HIPAA). This act signed into law August, 1997 calls for the electronic transmission of core financial and administrative transactions, including billing, electronic claims processing, eligibility, and payment and remittance advice.

The Secretary of Health and Human Services has 18 months to adopt standards for data exchange so everyone (carriers and providers) submit and receive information in the same format. Health insurance carriers and providers have another 24 months to comply. The passage of HIPAA is considered to be a landmark victory for the advancement of computerization in healthcare.

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