Tag Archives: Andrew Naugle

Electronic funds transfers

Managed Healthcare Executive looks at the move toward standardized electronic funds transfers. Here is an excerpt:

Savings of $4.5 billion over 10 years is the projection by the federal government relative to a new rule to standardize electronic funds transfers. HIPAA-covered entities have until January 1, 2014, to comply.

Payers will need to develop infrastructure and processes to support electronic remittances, but much of the work to implement this rule will fall on providers, says Andrew L. Naugle, a principal at consulting firm Milliman. The biggest piece of the puzzle is what the provider does with the electronic remittance advice.

“Although most health insurance companies already have the capability to send an electronic remittance advice, the typical healthcare provider is not set up to accept this electronic transaction or automatically post the payment to the corresponding receivable,” says Naugle.

Indiana posts exchange papers

The state of Indiana has posted a number of issue briefs written by Milliman consultants. The issue briefs concern Indiana’s state exchange and health reform in general. The full library is available here. Of particular interest:

50 states…50 Health IT solutions?

Managed Healthcare Executive poses this question with regard to the establishment of state exchanges: Will each state build their new statewide health IT infrastructure from scratch? Fortunately not.

The idea that states will be able to share some core exchange components is driving $241 million in HHS “early innovator” grants awarded in February to Kansas, Maryland, New York, Oklahoma, Oregon, Wisconsin, and a multi-state consortium led by the University of Massachusetts Medical School.

In Kansas, the grant will fund a solution that lives “on the cloud,” which other states can use. New York will build from its Medicaid management information system (MMIS), which already processes payments for about one of every three healthcare dollars paid in the state.

“What’s interesting is that there are no two states that are thinking about it the same way,” [Brian] Russon [of Microsoft] says. “But from a core exchange component, we’ll see heavy similarity in the consumer portals and the ability for the exchange engine to plug into what we’re hoping to see: very data hub-centric approaches, especially as states look at connecting into federal systems.”

Andrew Naugle, a principal with the consulting firm Milliman, notes the challenges associated with the many different MMISs in use.

“Hopefully, the federal government will come up with a standardized way to access its systems,” Naugle says, “but on the state side, there could be many different ways to interface with the various state Medicaid systems. So there will be a lot of customization even if a state pursues a commercial product off the shelf.”

Whether states build their exchange technology from existing systems or start with a commercial exchange solution, linkages to other state and federal data systems, which currently are silos of information, need to be built. The biggest challenge right now is the infrastructure, says Naugle.

New book: The Healthcare Imperative

The Institute of Medicine, as part of its “Learning Health System Series,” has published a book called “The Healthcare Imperative: Lowering costs and improving outcomes.” The book is available for free download here. The book includes an essay called “Excess Health Insurance Administrative Expense,” by Milliman principal Andrew Naugle. The essay includes both an estimate of total administrative cost in the system:

We estimated 2008 total administrative expense for fully insured commercial products using benchmarks developed from administrative expense data collected from more than 100 payers. According to these proprietary benchmarks, median payer administrative expense for fully insured commercial products, expressed as a percentage of fully insured commercial premiums, was 11.3 percent. Note that this definition of administrative expense is inclusive of external broker commissions, but excludes premium taxes.

Using the combination of the total fully insured premiums in the commercial market and the median administrative expense level (using the median to approximate the mean) we calculated an estimate of $42.4 billion ($375 billion × 11.3 percent) to represent total payer administrative expense for fully insured commercial products.

If that is the starting point, what is the potential for more efficient administration? Here’s a key excerpt:

In terms of administrative expense, we defined the best-practice level, based on our experience, to be approximately 7.6 percent of fully insured commercial premiums. Although it is possible for organizations to operate effectively at lower administrative expense ratios, we find it is more common for organizations with administrative costs below this level to exhibit characteristics of poor performance (e.g., high claims turnaround times, long customer service call hold times, inadequate or ineffective medical management programs) that are due to insufficient staffing.

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ICD-10: Urgency setting in?

Even with the direction of reform now in question, change continues throughout healthcare. One evolution that should be well underway is the mandated, industry-wide conversion to ICD-10. Here is a summary from GovTech:

They say it’s a bigger deal than the Y2K bug.

Not so much in terms of mass hysteria, but in scope: In 2013, the U.S. will upgrade to the latest version of the International Classification of Diseases (ICD) system — the standard diagnostic taxonomy by the World Health Organization — a move which represents “the largest health-care systems modernization effort in history,” said Bartlett Cleland, senior director of policy at TechAmerica, a technology industry association.

As hospitals switch to the latest disease diagnosis and procedure codes, industry observers say, the technical and economic impact to the U.S. government and health-care community could eclipse the much-hyped system upgrades at the turn of the century.

“It’s going to affect anybody who touches the health-care system,” Cleland said. “If not done correctly, this change has the potential to be even more painful than anything in the health-care debate that’s going on.”

ICD-10 is starting to get more press and attract a greater sense of urgency. This blog article has appeared several places. Why the increased attention? First, because 2013 no longer seems so far away; and second, because many in healthcare are not yet prepared for the conversion. The industry’s preparation was recently highlighted in this survey.

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