NEHEN: An Electronic Transaction Exchange for Massachusetts'' Health Care System
The New England Health EDI Network (NEHEN) was formed in 1998 by a collaborative of nonprofit payers and providers to implement HIPAA administrative simplification for the region. Three of the provider organizations, Partners Healthcare, CareGroup, and Lifespan helped found NEHEN. Boston Medical Center (BMC) joined in December 1999. UMass Memorial and Childrens Hospital joined in February 2000. Tufts Health Plan, Harvard Pilgrim Health Care, and Neighborhood Health Plan are the three payer members exchanging HIPAAcompliant eligibility transactions. NEHEN also provides connectivity to Medicaid and Medicare, which are affiliates rather than members. Together, these payers insure more than 80 percent of all people with health care coverage in Massachusetts.
Architecture
NEHEN is fundamentally different from the typical health care electronic transaction models seen in the marketplace. Today, the electronic solutions available generally fall into the payer proprietary model or the clearinghouse model. In the payer proprietary model, the providers conform to the specification provided by the payer, leading to a different solution for each payer that a provider deals with. In the clearinghouse model, the clearinghouse handles any translation between the providers preferred data formats and that of the payers the provider wishes to trade with. This model is typically funded through per-transaction fees.
In the NEHEN model, the participants agreed to the following guiding principles that drove and continue to drive the architecture decisions:
- Standards-based approach;
- Security and privacy are of paramount concern;
- Common program management; and
- Share innovation.
One of the members initially developed the software used to route transactions to the appropriate trading partner and then donated that software to NEHEN, enabling the other members to quickly ramp up their transaction volumes with minimal cost. Because the members feel that their primary arena for competition is not in administrative costs, but in clinical care, all are willing to collaborate on such tasks as software development for the purpose of driving down costs.
To make concurrent development possible and to ensure HIPAA compliance, the members agreed to implement their communications according to the standards proposed by HIPAA. This approach allows all members to implement the same base solution for each of their trading partners, greatly reducing the overall cost of their EDI solution. In addition, by relying solely on publicly available and universally recognized standards, prospective members can easily estimate their cost to join and begin trading. When those members join, the incremental cost to the existing network to beginning trading is minimal because of the standard approach.
To ensure privacy and security of the highly confidential data being exchanged, the NEHEN members have implemented a private network rather than using the Internet as the transport mechanism. In addition, there is no central database that tracks or even counts the transactions, thus all patientidentifiable data is transitory in nature.
To derive the greatest benefit from electronic transactions, initiating and reviewing them must be integrated into the standard workflow within a provider organization. This has meant integrating transaction initiation and review into the hospital information systems at each of the large provider members. This integration ensures that it is easy for employees to request information and use it when it is returned.
Work to Date
When NEHEN formed, the members decided to concentrate first on developing the eligibility inquiry and response transaction. Because this transaction takes place at the beginning of the patient visit and can lead to costly rework and write-off of claims if eligibility is not verified, this was a natural first step. Eligibility has now been live since June 1998 and the providers currently are making over 1 million inquires per month. With the addition of BMC, UMass Memorial, and Childrens Hospital, and increased usage by existing members, NEHEN now processes 2.1 million transactions per month (as of December 2003).
In addition to eligibility, NEHEN also provides referral, claims, claim status, and remittance transactions. As of the HIPAA deadline, October 2003, all NEHEN members were fully compliant with all mandated transactions.
The typical return on investment for a new provider that joins is measured in months and will continue to decrease as the connectivity options that NEHEN provides its members expand.
Future of NEHEN And Administrative Simplification
Over the past five years, NEHEN has focused first on implementing the initial set of electronic transactions, and then on expanding its base by recruiting other large provider organizations to join. Now that several of the large providers have joined (BMC, UMass Memorial, Childrens), NEHEN and its program managers are thinking about the best way to expand effectively to allow smaller provider organizations the potential administrative cost reductions that have been realized by their larger cousins.
There are several potential solutions, with distinct options targeted at the community hospitals, medium-sized physician practices, and individual or very small physician practices. Any of the solutions, however, can leverage the investment that the NEHEN members have made in developing a standards- based, secure approach to administrative simplification. Today, the NEHEN payers and the other major payers in Massachusetts, through NEHEN software, can respond to a standard eligibility inquiry in less than five seconds in a fashion that can be integrated into the providers practice management or hospital information system. In the future, NEHEN will continue to develop the supported transactions, and it should also develop the connectivity options for smaller providers because the existing connectivity solution becomes unmanageable after the number of members expands much beyond 10 to 15.
Once these connectivity issues are solved, the end result in terms of administrative cost reductions for the entire Massachusetts health care system has the potential to be industry changing. The following example of the Life of a Claim illustrates this point by describing the differences that will take place once the electronic transactions, which NEHEN is working to develop, are a reality.
Life of a Claim Before NEHEN
Patient A comes in to her primary care provider for her yearly physical and forgets to bring her new insurance card showing that because of a change in jobs, she is now covered by Insurance B rather than Insurance A as she was last year. Since eligibility is difficult and time-consuming to check without electronic means, the registration clerk relies on the information already in the system about Patient A to check her in.
After that days visit, the providers practice management system prints a claim for Patient A and it is sent to Insurance A, because that is what the patient had last year. After about one week of traveling through the mail, and after the sorting, scanning, and data entry process in the mailroom of Insurance A, the claim is loaded into Insurance As system. That night, the claim bounces because Patient A is no longer covered. Without an electronic means of claim status inquiry, the provider doesnt know this fact until they happen to call or Insurance A sends out the monthly tape with updated claim status information.
After learning that Insurance A will not pay the claim, the provider bills Patient A directly. Patient A receives the bill and, if she is conscientious, calls the provider immediately to inform them that Insurance B is now her insurer. If Patient A is not so conscientious, it can easily take 60 or 90 days before the pro-vider learns that they should have sent the claim to Insurance B initially.
By this time, even if the provider submits the claim to Insurance B, there is no guarantee that Insurance B will pay the claim since it has been so long since the date of service. Even if the claim is eventually paid, it will very likely need more intervention from the billing and accounts payable departments in the provider and payer organizations, respectively, before it is complete.
Finally a paper check will be cut and mailed to the providers lockbox, adding another four to five days to the amount of time it takes to be paid. Overall, the current manual claims submission process requires an average of 100 or more days to be paid in Massachusetts.
Life of a Claim After NEHEN
With electronic eligibility, claim status inquiry, and claims submission, the overall financial picture changes dramatically. With the same situation as above, the following changes are immediate: Patient A comes in for a physical without a card. While the registration clerk is validating demographics like address and birth date, their system automatically requests eligibility verification from Insurance A. Before the registration is complete, Insurance A notifies the provider that Patient A is not covered. At this point the registration clerk can ask the patient about her correct insurance carrier; another inquiry is initiated, and the correct copay and insurance are recorded.
That night, the practice management system submits the claim electronically to Insurance B. Because the standard requires it, all items on the claim are coded according to the national standard. Later that night, Insurance Bs claims engine runs and suspends the claim because one of their claims adjudication rules was violated. The next day the providers staff can use their electronic claims status inquiry facility to check on the claim and, if necessary, call to proactively try to resolve the issue.
After all issues are resolved (many current issues are directly related to problems solved by electronic access to data at the front end of the process), the payers system sends electronic funds transfer instructions to their bank and payment remittance advice to the provider.
Overall, with electronic access to data on the front end and electronic claims submission available to every provider, it is a realistic possibility for claims to be paid in three to five days rather than the current 100+ days. Obviously, there is a great deal of work to be done to the existing payers and providers systems to make this vision a reality. However, with the NEHEN consortium already trading standards-based common transactions, the framework is in place and ready to be expanded.
Value of the NEHEN Model to the Massachusetts Health Care System
There are several components to the value of NEHEN for the Massachusetts health care system. The first is that because payer connectivity exists for such a large proportion of the total covered market, providers can quickly see a return on investment when they integrate electronic connectivity into their standard processes. In addition, because so many of the large providers are members, new payers that join could see a large proportion of their Massachusetts membership start using electronic transactions.
In addition to providing significant value to new and existing members due to the high penetration of the marketplace, the NEHEN model has at its core several key principles that significantly differentiate it from the usual health care electronic commerce model. These core differences are:
- Flat fee for membership, no transaction-based charges; and
- Collaboration; share innovations in administrative simplification.
The flat fee is perhaps the most significant because it provides an incentive for every member to raise its own transaction volumes. Over time, the per-transaction cost to the most active of the NEHEN provider members has already dropped to 5 cents per transaction with just eligibility being traded today. As upcoming transactions are created and come online, this cost will drop even further, to a projected 2 to 3 cents per transaction later this year. When this is compared to the typical 35 to 40 cents per transaction charged by a clearinghouse for this service, it becomes clear that the NEHEN model allows most of the value gained by the electronic transaction exchange to remain inside the health care system with the payers and providers. The value does not leave the system and go to the clearinghouse or other third party.
As an example, a specialty hospital in Massachusetts with 300,000 patient visits per year will minimally use five electronic transactions to support each claim (eligibility and referral inquiries, claims submission, remittance advice, and actual payment). Under the NEHEN model, the hospital would keep at least $450,000 more of the administrative cost savings than under a clearinghouse model because they would be paying 30 cents less per transaction.
When NEHEN formed, the members decided that in order to achieve electronic trading at large volume they needed to act collaboratively rather than competitively. In addition to agreeing to standards and employing a common program management to help drive decisions, the members donate software developed to solve a specific member problem to the NEHEN consortium for use by other members. This sharing of the development cost has greatly lowered the bar to entry for provider organizations that are often cash poor and prefer to concentrate their resources on providing clinical care rather than administration.
Because the NEHEN members have developed a working solution with a relatively low incremental cost for new members, the opportunity is now available for the rest of the health care system in Massachusetts to effectively lower their administrative costs through electronic transaction exchange.
