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MBProject, WEDI and Uptake of 835s (electronic healthcare remittance advice) in the healthcare industry

Posted by ED

John Casillas writes:

WEDI (Workgroup for Electronic Data Interchange) recently testified before NCVHS, an HHS Advisor (National Committee on Vital and Health Statistics) about the uptake of 835s (electronic healthcare remittance advice) in the healthcare industry. The testimony refers to two groups: providers and payers.

In 2001, MBProject estimated that electronic remittance management can save up to $35 billion in annual healthcare costs by reducing the sheer volume of payments-related paperwork (think of the trail of paper that follows you when you leave the hospital). "Ramping" the current paper-based process to a digital environment using the X12N 835 is part of the process...and challenge.

Here is the testimony, taken from a survey WEDI conducted in which MBProject and many others helped to design.

835 Survey Summary

The following summaries represent the workgroups analysis of the responses to the survey.   There were a total of 34 respondents to the survey.  The respondents were representative of the payer, provider and vendor community.   There was an extremely small response to this survey due to the limited length of time the survey was available to the public.  It may be beneficial to open this survey again to expand the survey respondent base.



    • There was an extremely small response to the 835 survey. 
    • 100% of the payers are able to exchange the 835
    • This survey expanded the transaction list to the payers about acknowledgment transactions, 100% stated they utilize the 997 while only 50% utilize the TA1
    • There was representation from all sectors with the majority being Medicaid
    • The majority of payers utilize in-house staff for 835 implementation.
    • The majority of 83% COB claims appear not to be electronic.
    • Average costs for implementing 835 ranged from ‘No Cost to ‘More than $5 Million’.
    • When asked about the FTE count for implementation – the common answer was either unsure or no cost.
    • When asked about benefit – the payers were split between, not sure, slight benefit to no benefit
    • The majority of the respondents agreed with the modifications described by the survey with the exception of new wording of situational usage rules, 50% of the payers disagreed.
    • Open comments included a note concerning the lack of a filed for ‘remittance number’ as assigned by the payer.
    • 100% of the payers still utilize paper to communicate remittance advice

    BENEFIT opportunities

    • When polled the majority of payer respondents did not agreed there is a benefit to moving to version 5010. The Task Group feels strongly that there are not enough responders to make this as a final conclusion.
    • The 5010 837 provides additional rules and requirements that may benefit the industry, specifically for coordination of benefits and secondary/tertiary payment information

Provider (835 Survey Summary cont.)


    • Small number of providers responded overall – however, the providers represented the largest respondents of this survey accounting for almost 50% of the total survey.
    • Most provider organizations are able to conduct 835 transactions , of the other transactions the 837 institutional and professional were the highest utilized by providers.
    • 43.8% of the providers reported they were able to utilize concurrent versions of the X12 standard.
    • Coordination of benefit (COB) claims volume ranges from less than 10%  to 25% of total claims volume.
    • Most providers were able to auto post 50+ of the claim payments from the 835.
    • 62.5% of providers could not submit COB claims utilizing data received in the 835 Healthcare Remittance Advice.
    • Costs of upgrading software can be significant ranging from ‘No Cost’ to ‘Greater than 1,000,000’.
    • There were no Open comments of note:

    BENEFIT opportunities

    • When polled the majority of providers stated they were unsure if there were benefits to migrate to the 5010 837.  This may be due to lack of exposure to the 5010 documentation.
    • From the responses of the survey, providers appear to be paper based for COB.
    • When asked about the proposed changes the majority of providers either agreed with the modification or had no opinion.  This may be due to the lack of exposure to the 5010 documentation.
    • The 5010 835 provides additional rules and requirements that may benefit the industry, specifically to increase the use the 835 for electronic coordination of benefits claims and

Vendor (835 Survey Summary cont.)


    • Small number of vendors responded.
    • Representation from all sectors.
    • The overwhelming majority of the Vendors’ report their software is capable of receiving/sending the 835 today.
    • When asked about acknowledgements, 75% were capable of utilizing the 997 while only 58% utilized the TA1
    • 83% of the vendor’s have customers that have implemented the 835 when asked what percentage of their customer base – 50% of the vendors report less than half of their customer base have actually implemented.
    • When asked 80% of the vendor’s customers have implemented an automated AR posting utilizing the 835
    • 100% of the vendors listed federal/state regulatory mandates as the reason to provide a solution  followed by customer demand
    • 75% stated they would not charge for the upgrade from 4010A1 to 5010.
    • The majority of vendors were not able to answer to the investment their company would make to address the migration from the 4010A1 to the 5010 version.  Two vendors did list a significant investment of more than 5 million dollars.
    • Overwhelmingly the Vendors agreed with most changes proposed in the version 5010 835,
    • 58.4% of the vendors stated there would be some form of benefit to migrate from version 4010A1 to 5010.
    • Open comments of note:
    • One of the best things would be to provide examples of each 837 and resulting 835 combination. We still have not run across every possible combination of 837/835 and have no real way to ensure our software will "do the right thing".BENEFIT opportunities

    BENEFIT opportunities

  • 58.4% when polled saw some level of benefit of migration from version 4010 to 5010 837.
  • The benefit for vendors is minimal without customer demand whether driven by the industry or by federal mandate.
  • The vendors agreed with the suggested modifications, it appeared that these respondents may have been more exposed to the information.  This may be a good indication of the value of the changes.

On average less than 50% of the respondents stated some type of benefit, while the remaining were either unsure or stated no benefit.  The 835 transaction is exchanged by 80% of the respondents, however, when compared to the responses of utilization 835 COB claim payment the average fell significantly to 50% or less – with most between 10% - 25%.  There may be potential benefit to electronic COB utilization with the version 5010 835.

The findings of this survey demonstrate there are improvements between the versions 4010A1 and the 5010 which may benefit the healthcare industry, potentially concerning coordination of benefit claims electronically.  When surveyed the respondents agreed with the changes being made as documented within the survey questions, except for the technical improvements, where most had no opinion.   There is concern that the lack of access to the 5010 documentation may have been a factor where the technical improvements where concerned. The survey responses may have been more robust if the documentation were available. 

Due to the lack of responses and short time frame of this survey, it may be beneficial to open this survey to the public for a longer period of time.

July 30, 2007 in A Bank-Driven eHealth Ecosystem | Permalink | Comments (0) | TrackBack

The “Futures” of Medical Banking -- A Systems View

By Ed Dodds, a Systems Architect at <Conmergence />

Occasionally John Casillas and I have chats about possible content for MBlog, the Medical Banking blog, and the various technological factors which are developing in parallel to the field of medical banking. One of my major themes (you'd have to ask him if he's convinced yet) is that once one buys the premise of the distributed, digital enterprise there is really only one business domain – data. Every distinction people perceive is imposed by legal contrivance, legacy tradition and personal interest. If you buy this premise then the “bit” of the argument is that just because healthcare and finance (and indeed any other business) have been done in a particular manner, this is no real predictor of how they will function in the future.

The intersection of two technologies, XML and IP (extensible markup language and internet protocol) mean that just about any information source can be digitized and delivered anywhere. While not perfect technologies, they provide an interconnectivity platform which makes convergence and interoperability more possible now than at any previous time. Some of the developments that these technologies will enable and that will likely intersect medical banking are:

Collaborative intelligence tools:

Semantically informed proprietary and open source blogs, opensearch, portals, wikis ( think “web 2.0” ) will be coupled with “Z” models ( Zecco, Zillow, Zopa – think “finance 2.0” ) and global, mobile “intelligent mobs” (both actual and virtual, like Facebook, IndyMedia, MySpace, SecondLife) empowering consumer driven healthcare, class warfare and class action suits.

Corporate hierarchy consolidation pressure:

The adoption of open standards and balanced scorecards, compensation metrics and disclosure via universal charts of accounts and extensible business reporting language due to the SEC and media attention on C-suite fraud, insider trading, and hedge fund regulation will encourage per-worker productivity gains. Globalization and green politics will drive the adoption of work over IP, results-only work environments and long-lived transaction technologies will foster new financial instruments. Where standards exist, mergers happen. In the domain of data, this type of consolidation often requires the merger of infrastructure alone.


Terrorism fuels the political discourse but methamphetamine addiction-inspired identity theft rings are the actual cause of many current woes. Medical banking is already caught in the cross-winds of a digital ID storm as more consumers seek convenience for things like accessing money, healthcare records and even traveling through airports. The perfect storm is forming as “paper to digital” conversion gathers momentum, (much data leaving our shores using poor data encryption practices), and new technologies make this data ubiquitous. Business is off shoring, down-salarying IT functions, and thumb drives are literally as cheap as sand.

Ubiquitous global broadband connectivity (via 3G/4G, airship/dirigibles, broadband-in-gas, broadband over power lines, cable, DSL, Fiber to the home, fixed wireless, ISDN, Ultra Wide Band, WiFi, WiMax, satellite, etc.) means virtual medical tourism, distance medical education, remote disease sensing from automobile and home healthcare servers, laptops and smart phones will be able to offer voluntarily provided de-identified PHI to the medical banking data grid. Unified communications (email, H.323, IM, IVR, SIP, VOIP, etc.) as well as contactless payments, mobile payments and smart cards will also deluge data centers, which always seem to be located on or near fault lines, fires or floods.

Today, emerging technologies that are transforming political fault lines provide ample content for John and I to discuss. Sifting through it all to discover how transaction costs in healthcare can be rationalized using medical banking principles has become a hot topic. We can envision a sea of opportunity as technological convergence is manifested through new commercial programs that bring ever increasing value to our healthcare system using banks. From a technology head, medical banking has a long life span, many tentacles and a very promising future indeed.

Conmergence is a strategy consultancy facilitating convergence and enabling the distributed, digital enterprise. Dodds edits the Medical Banking Project's MBlog.

July 26, 2007 in Medical Banking Blogging | Permalink | Comments (1) | TrackBack