As most Carepaths customers know, Office Ally raised its rates dramatically last month. With 6 weeks notice, they added a charge of $35 or more per month for most providers. CarePaths has shifted claims for many payers to another clearinghouse, Availity, to avoid the Office Ally charges and maintain our policy of not charging for claims submission.

Needless to say this has caused a lot of frustration.

Office Ally added new charges because many payers stopped paying them claim rebates. In the 1990s, when payers were eager to receive electronic claims (so they could could save money by laying off the armies of data entry clerks inputting paper claim data) they started offering rebates of $1 per claim to the clearinghouses. Now with most claims being electronic and with federal regulations encouraging payers to reduce administrative overhead, payers are dropping the rebates and pushing those costs onto providers.

This constitutes a back door pay cut!

It wasn’t supposed to be like this. The 1996 HIPAA law had, among its goals, the radical simplification of claims processing. The law’s authors envisioned a national standard that would enable providers to submit claims without a clearinghouse and that claim processing would be as smooth as credit card processing.

So why is claims processing not more like credit card processing? How was the banking industry able to create a world-wide system that accommodates the needs of literally thousands of different banks, and is quick and predictable for the party receiving credit card payment. The answer lies in the incentives. Credit card processors earn transaction fees whenever a transaction is successfully completed. It is in their interest to make the process smooth. But successfully completed claim transactions are an expense for the health insurer.

The claims submission standards were designed by industry insiders who wanted the the system to be sufficiently flexible to accommodate their existing claims processing systems. The system the payers came up with has made claims submission easier in some respects, but is still more complex, opaque and arbitrary than it needs to be. We see evidence of this in the enrollment process and the rejection of claims for technical reasons such as payer-specific requirements.

A significant number of payers require an enrollment process before the provider can use a particular clearinghouse. Enrollment can involve multiple different companies operating behind the scenes that handle one or another aspect of the process. Why is this process so cumbersome, so time consuming? Why do clinicians have to hunt down multiple different vendors to find out the status of enrollments? Some of these companies can not be reached by phone and only occasionally answer email.

Payer-specific claim requirements are another part of the claims obstacle course. These include special billing code modifiers based on the profession of the provider or the age of the patient, various payer-assigned identifiers, and complex authorization rules. Perversely some payers reject claims because they include valid information that they don’t want included, when they could just ignore the data. Nationally, about 5-10% of ambulatory claims a year are rejected for such technical reasons.

We recognize changing clearinghouses has been a tremendous burden to many or our users. On our end we have spent considerable resources re-writing code to prevent unnecessary rejections and we have reassigned staff to our support team during the transition. We have made substantial progress and hope to have all claims moving smoothly soon. We appreciate your cooperation.