New Minnesota law requires electronic claims filing by 2009

Physicians won't be charged for using the system, which features uniform billing and coding standards.

By Dave Hansen — Posted July 23, 2007

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Generating cash flow as quickly as possible can be a critical goal of private practice. Minnesota physicians will have an easier time achieving the goal under what is believed to be a first-in-the-nation state law requiring electronic filing of claims in a standard format, physicians and experts said.

Electronic filing of claims "makes a big difference," said Jed Downs, MD, a Duluth specialist in occupational medicine. The turnaround for an electronic claim is two weeks, compared with 60 to 90 days for a paper claim, he explained. It also means cleaner claims with less money wasted for reprocessing insurance company denials, not to mention 41-cent stamps and toner for letters.

"It makes it hard to get started up when you have no cash flow and money is going out," he explained.

The new law, which requires standard, electronic filing starting in 2009, was part of Minnesota's Omnibus Health and Human Services funding bill. Gov. Tim Pawlenty signed the measure on May 25. Under the law, all public and private group purchasers, along with physicians, electronically will exchange eligibility information, claims, payment and remittance advice in a standard format. Physicians cannot be charged for using the format.

The law also requires that the companion guides that health plans use to explain their payment guidelines be electronic and standardized.

Physicians won't be subject to a formal penalty for noncompliance, though insurers can reject claims that aren't filed electronically after the 2009 deadline, said Minnesota Medical Assn. spokesman Scott Smith. The MMA supports the law, he added.

Rules for the new system will be developed in 2008 by the Minnesota Administrative Uniformity Committee, a voluntary organization of payers, hospitals, state agencies and doctors.

The move could save the state millions of dollars in health care costs, according to state officials.

A survey by the trade organization America's Health Insurance Plans estimates that the average cost of handling claims drops from $1.58 for paper records to 85 cents for electronically filed claims. The Minnesota Dept. of Health expects to save between $15.5 million and $21.8 million annually just on telephone expenses from eliminating follow-up calls on eligibility and claims.

Physicians who have a practice-management system will rely on their vendors to administer electronic data interchange, said Patrice Kuppe, director of administrative simplification at Allina, a nonprofit health care network in Minnesota. The law is written so that physician practices also can enter data directly online, Kuppe stated. And remittance advice, payment information and eligibility must be entered, she added.

"If you always check eligibility first, you are going to improve your revenue cycle, because you can see where the claim goes, what the co-payment is," Kuppe said.

Uniformity's benefits

Different billing and coding standards can be a big headache for physicians, particularly those in small practices, said Terence Cahill, MD, a Blue Earth, Minn., family physician in private practice with two other doctors.

Physicians will like the changes from the new law, predicted Jim Golden, director of the Minnesota Dept. of Health Policy Division. Physicians hate dealing with every payer using a slightly different standard, he said, while payers hate using costly paper forms. The overall level of administrative costs in the health care system frustrated both sides, he added.

"There was a lot of hope when HIPAA [the Health Insurance Portability and Accountability Act] passed at the federal level that it would alleviate the need to do this at the state level," Golden said. "HIPAA does provide standards, but there may be optional fields. So all health care providers create companion guides. Every payer is using a standard but in a slightly different way. This [Minnesota's law] is intended to get at one standard for everyone in the state."

Minnesota is "on the cutting edge of all these issues," he added. "I anticipate every state doing this."

But electronic filing could have some disadvantages, said David Estrin, MD, an Eden Prairie, Minn., pediatrician. Practices that lack sophisticated software could fail to notice that an insurer left a payment out of a bundled claim, he said.

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