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Enormous payment errors are occurring within the healthcare industry as a result of inaccurate coding and reimbursement practices. While a significant part of this problem is the result of the Centers for Medicare & Medicaid Services' (CMS) cumbersome regulatory update practices, another substantial part of it is caused by the decaying infrastructure within the core administrative systems at most healthcare provider organizations.
Twenty years ago, hospitals replaced their core administrative technology, on average, every seven years. Now that cycle has stretched to 10 years and beyond. Many hospitals continue to use technology developed in the 1960s and 1970s. A recent HSS study, "America's Hidden Healthcare Crisis," shows that the healthcare industry is losing in excess of $100 billion per year as a result of these payment errors.
Adoption of new technology can help resolve these payment errors. One technology that shows promise is Web services, which allows software developers to integrate domain-specific expertise into highly complex applications. There is no better case in point than the need to integrate highly complex coding, compliance and reimbursement management information into the hospital-billing environment.
Consider the number of methodologies that need to be kept current to support Medicare billing, such as DRGs, APCs, PPS, OPPS, ICD-9-CM, CPT-4, LMRP, OCE and NCCI. These methodologies change on an annual, quarterly or even monthly basis depending on the system.
What Are Web Services?
Web services are business functions that are made available to Web-connected programs. They operate like Web sites, except they are designed to talk to other programs rather than directly to end-users. Instead of a user interface, they have a standards-based, self-defining method of connecting to other programs via XML (Extensible Markup Language) and SOAP (Simple Object Access Protocol). They are business functions encapsulated in a standards-based envelope that can be used within other applications.
Web services can be built using any development platform, such as Microsoft's VisualBasic and .NET or Sun Microsystem's Java, and they do not need to be consistent with the applications that want to use the Web service. The underlying implementation, while relevant to the developer of the Web service, is not relevant to the user of the Web service (application developer), because the Web service runs in its own environment using the standards-based XML/SOAP inter-application communications protocol to access the Web service.
This removes dependency on underlying technology and provides the freedom to choose the best technology platform for each situation. For instance, a patient accounting system built in C++ for Unix can use a coding and reimbursement management Web service written in .NET.
Web service developers build a Web service in their chosen development environment, and it resides on a server. The developer publishes the definition of the Web service (where it is and how to communicate with it) in a Web services directory, either public or private. The application developer wanting to integrate the Web service uses the "standards-based" description in the Web services directory to develop the XML and SOAP messages for accessing and retrieving information from the Web service. All of this is transparent to the end-user.
Web services may run on the same physical computer as the application with which they are communicating, but it is not required. They may be hosted within the firewall or outside the firewall. This provides tremendous flexibility for distributed computing within an enterprise's intranet or across the Internet at large.
Four Benefits
Web services technology solves the regulatory update problem associated with reimbursement and coding management in four ways. Web services:
1. Promote integration of domain-specific expertise into complex healthcare management systems;
2. Allow regulatory updates to be deployed without healthcare information system (HCIS) vendor intervention and minimize the time that a provider is without accurate software;
3. Enable multiple applications to reuse Web services across hardware/software platforms while eliminating redundant software purchases;
4. Empower end-users with accurate information as soon as possible, to minimize the error rate resulting from users who are unaware of, or do not understand, recent regulatory changes.
Web services provide a standards-based method for integrating domain expertise into complex systems. HCIS vendors, who are experts in data collection, workflow and process management, can easily rely on content experts for coding and reimbursement domain expertise without compromising the look, feel and flow of their applications. For instance, instead of having to toggle or "hot key" from an abstracting system to an encoder and back again, Web services provide a seamless integration.
Web services insulate the HCIS vendor from the burden of deploying regulatory updates. One of the basic architectural benefits of Web services is the separation of the host application from the domain expertise. Regulatory updates contain both executable code and data. In most legacy systems, the host application would need to be recompiled and redistributed to end-users to accommodate changing regulatory needs. By using Web services, a coding system can be updated without impacting the host system. Since the coding- and reimbursement-management Web service runs on an independent server and can be accessed via SOAP/XML, the new content and executable code is made available without having to change the host system.
A major side benefit of this approach is that updates can be deployed automatically via the Internet. Because a Web service is just another standard Internet application, all the benefits and power of the Internet can be used to provide automatic electronic updates seamlessly to multiple locations. For an HCIS vendor needing to support hundreds of clients, this represents a major performance improvement.
The combination of eliminating direct integration of code and content into an HCIS vendor's system, and automating regulatory updates electronically, can take weeks off the regulatory update process. This reduces cash flow problems and eliminates the timely and expensive process of reworking claims billed in error because the most current regulatory update is not available.
Provider of Economies
Web services are reusable. Multiple applications can access a single instance of a Web service. Because the Web service uses standard XML/SOAP protocols, any host system that can talk XML/SOAP can use the Web service.
By extension, multiple disparate systems within an enterprise can use the same coding and reimbursement-related Web service. For instance, the patient accounting system can access the Web service for DRG grouping and pricing functionality. The medical records abstracting system can use the same Web service for ICD-9-CM coding, DRG grouping and pricing. The registration system also can use the Web service for coding and medical necessity validation.
Web service reusability provides business leverage. The domain expertise is purchased once and drives the content and decision-making in multiple independent systems. This eliminates trading partners and provides economies in software licensing and maintenance.
Web services ensure that accurate and consistent information gets into the hands of all of the relevant users as quickly as possible. With the evolution of code-based reimbursement, the need for information management software has spread throughout the healthcare enterprise.
Consider the case of APC (ambulatory payment classification) reimbursement, where coding needs to be done:
* At registration to determine medical necessity and produce an ABN (advance beneficiary notice);
* In the ancillary departments to capture charges;
* In the health information management department to code the medical record;
* In the back office to validate APC assignment and process billing system errors, fiscal intermediary rejections and denials.
All of these revenue-producing departments need access to timely and accurate rules for APC reimbursement. That's quite a challenge with today's information systems and content deployment. Integrating Web services-based coding and reimbursement management ensures that the entire healthcare enterprise uses the same rules and provides the most timely access to rapidly changing content. Empowering end-users with accurate information also helps minimize the error rate that currently comes from a lack of understanding of recent changes.
Improved Workflow and Productivity
Implementing Web services architecture for the coding, compliance and reimbursement regulatory process improves workflow and productivity by eliminating multiple, poorly connected applications. It promotes standardization of content integration, reduces redundant software licensing and facilitates the rapid deployment of changing regulatory content.
Having access to accurate content deployed consistently throughout the enterprise will dramatically mitigate the $100 billion in erroneous payments due to improper claims processing. The up-to-date content also will help resolve the increased workforce costs incurred by both providers and payers that result from increased workload generated by rejected and denied claims.
For more information about HSS solutions for payers and providers, www.rsleads.com/507ht-211.
Robert J. Leary is the CEO of HSS Inc., Hamden, Conn. Contact him at blear@hss-info.com.
COPYRIGHT 2005 Nelson Publishing
COPYRIGHT 2005 Gale Group
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