Title: Message
Chris -
 
Having worked many years for an independent software development company, I understand that "revenue rules."  Typically, however, the business model is to reduce the upfront price of the software by providing ongoing upgrades and support via maintenance agreement.  "Per transaction" and usage-based fees have tended to be unsuccessful over time, as innovations drive the cost of such services down to the point where competitors can provide the same level of service for free.
 
I do not dispute that clearinghouses provide valuable services under the existing transaction model (and perhaps moreso under the coming "HIPAA-mandated arbitrary data content" model).  But the idea that fiscal viability of intermediaries are guaranteed by external market forces is questionable, at best.  Do you pay a nickel (or 40 cents) to Microsoft everytime you send an email from Outlook?  When you send me an email, do you need to know the phone number of my ISP, or what baud rate you need to use to connect to them?
 
The reason healthcare needs clearinghouses, as far as I can tell, are as follows:
  • Aggregation of contracting costs
  • Aggregation of communications (and security) costs
  • Aggregation of expertise required to maintain payer-specific requirements (before, this was file formatting and local codes issues; post-HIPAA it will be "Companion Guide" specifications)
  • Aggregation of testing, change management and code maintenance costs
  • Proprietary value-adds (transaction archiving, data analysis, claims scrubbing, etc.)
Future standards, policies and regulations directed at reducing those costs (as HIPAA was purported to do, in some cases) could erode the value proposition for the clearinghouse industry as it currently exists.
  • What if trading partner agreements could be standardized -- even automated?
  • What if a secure message transport was used that didn't rely on external, point-to-point addressing schemes?
  • What if, instead of incorporating the superset of all payer requirements, the standard eliminated arbitrary "one-off" variations?  Or at least, handled such customizations internally, rather than requiring a manual remapping of an output file?
  • What if the messaging format itself had some intelligence, encoded its own rules for use in machine-readable terms, rather than relying on external, non-automated rules like an implementation guide?
It's one thing to expect to be compensated for value provided; it's quite another to insist that market inefficiencies continue to be subsidized. 
 
Despite your arguments, if you could deliver a system that allowed your customers to plug in a phone line or network cable, click [Send] and deliver their claims at no cost to any of the payers in the country, would you do it?  Of course you would!  Because if YOU could do it, so could your competitors, and they would steal your customers away if you kept charging them for the same capability.
 
So I guess, in my way, I am agreeing with you, that the clearinghouse provides a viable (in fact, necessary) value-add under the existing terms of exchange.  I just don't think the terms of exchange are beyond correction.
 
(Of course these ideas are my own, and do not necessarily reflect the opinions of my employer.)
 
Martin Jensen
Project Manager
St. John Health System
 
 
-----Original Message-----
From: Chris Brancato [mailto:[EMAIL PROTECTED]
Sent: Tuesday, June 03, 2003 14:32
To: WEDI SNIP Transactions Workgroup List
Subject: RE: Transition paper

Harry,

I am confident we've discussed this at least several times. Pardon me if I misunderstand but, your note implies that this is a secret. I bring your attention to numerous documents at the national forum level that discusses this very issue. WEDI/SNIP, AFHECT, NCHVS, all note that this remains a concern.  On that we wholeheartedly agree.

Please openly consider these points:

1)      It remains to be seen if the direct submission model using a PMP package is cost        effective and efficient for the provider.

2)      It remains to be seen if the direct submission model using PMP is cost effective and    efficient for the payers.

3)      It remains to be seen if the "ditto" is profitable for both payer and PM software       company.

Additionally, consider this. In any software you use, you don't actually buy it and own it. You might want to take a closer look at the End User License Agreement or EULA of the software you use to read this note.  You purchased the right to use it. You do not own it.  Who determines what is reasonable for a company who makes millions of dollars in investment to license a product that will enhance the revenue of the user?

Is not the author entitled to some revenue for the use of his or her intellectual property?  OK...no more transaction fees.  The vendor now sees that revenue dry up from his revenue stream and now the provider ultimately pays a higher price to use and maintain that software package. The same one the helps him do his accounting, helps keep track of his collections and his productivity, etc... I should note that many PM vendors often uses transactions fees to offset capital costs of their R and D costs and ultimately make their software more affordable to the lowest common denominator, the small doc, who benefits greatly from having this capability. 

What is that worth to you? Is x cents per transactions worth it? I can't answer that question but for some it is, for some its not.

Given these profound market forces as described above, I content the silence is deafening both from payors and providers and that silence is the secret you hear.  If customers were screaming for this capability, I would have it on the market tomorrow. In fact, I can today...but again, no one is asking for it because no one at the small mid size provider level (our target market) has the resources to use and maintain it.  They want to practice medicine and get paid what they are owed quickly.

I offer that you it is an illusion that HIPAA locked you into a vendor clearinghouse relationship.  Nonsense.  There are software companies out there that will allow you to output and input a native X12N.  The way I see it, there is nothing stopping you except cost, complexity and efficiency.

Chris Brancato

[Yes, admittedly a PM vendor and a clearinghouse and a billing company.]

Director, Client Development

Chief Compliance Officer

Health Data Services

Charlottesville, Virginia.


-----Original Message-----
From: Fox, Harry [mailto:[EMAIL PROTECTED]]
Sent: Tuesday, June 03, 2003 1:33 PM
To: WEDI SNIP Transactions Workgroup List

With all the talk about EDI I am continuously surprised that no one talks

about what I think of as one of the open secrets of HIPAA TCS--Most

providers, through their practice management systems are not submitting EDI

at all, but rather, using a variety of 'HIPAA Compliant' flat file or legacy

upgraded formats to clearinghouses who are converting these flat files, (and

in some cases adding or correcting data content for compliance), into an EDI

837. Many of these flat file formats are proprietary to a clearinghouse

further locking a vendor into a specific clearinghouse. Rather than

disintermediate the clearinghouses, HIPAA has locked us further into working

with clearinghouses indefinitely since most PMS vendors, particularly for

professional claims, have not added EDI to their systems. So when someone

writes about "the wisdom of using EDI", most of the PMS vendors I have

talked to have upgraded their systems for HIPAA required content, but EDI is

not in their plans.

Thanks,

Harry Fox

-----------------------------------------------------

Harry D. Fox

Vice President, e-Commerce

Coventry Health Care

6705 Rockledge Drive, Suite 900

Bethesda , MD 20817

Work:   301-581-5797

Fax:    301-493-0720

Coventry Health Care has a new look on the internet!

Visit http://www.coventryhealth.com <http://www.coventryhealth.com/

 [snip] 
---
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