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For Kansas, It's All In the (ID) Cards

MANAGED CARE August 2006. © MediMedia USA
Employer Update

For Kansas, It's All In the (ID) Cards

Inaccurate data on patient ID cards is the top headache that a Kansas commission has decided to address using improved information technology
Lola Butcher
MANAGED CARE August 2006. ©MediMedia USA

Inaccurate data on patient ID cards is the top headache that a Kansas commission has decided to address using improved information technology

Lola Butcher

One of the largest purchasers of health care in Kansas is none other than the state of Kansas, and officials there want to make sure that "large" doesn't necessarily mean "bulky." A group of providers, payers, government officials, and other stakeholders — from vendors to third-party administrators — is looking for ways to streamline the state's health care system. The goal is to control the cost of covering thousands of workers and Medicaid recipients while improving quality of care and patient safety.

"As an employer, we benefit by lowering the cost of health care administration," says Lt. Gov. John Moore, who chairs the state's Health Care Cost Containment Commission, whose members were appointed by Gov. Kathleen Sebelius. "Our initial thrust is to attack the 25 percent to 30 percent of all health care costs that go to administration."

Moore believes that up to $3 billion of the $12 billion spent on health care in Kansas each year is attributable to administrative costs, many of which can be reduced by improved processes and new technology.

One of the commission's first targets is a notorious bane of health care providers and payers alike: the patient insurance identification card. When commission members met to brainstorm, patient ID cards quickly emerged as a high-priority problem for everyone who touches them.

"Both providers and insurance plans talked about the millions of dollars they spend each year because of the information that was either incorrectly or inadequately provided on patient ID cards," Moore says.

The commission retained Mid-America Coalition on Health Care to get agreement on the technology — bar codes or magnetic stripes are most likely options — that will be used to read the cards electronically. Teresa Titus-Howard, coalition vice president, says health plans are ready to make the change.

"I am hearing a lot of favorability in moving toward this direction," she says. "I'm hearing that we need national standards, and once we have them, let's go."

For health plans, the payoff of so-called advanced ID cards could be dramatic. A study found that 20 percent of justified claims were initially denied because of inaccurate or incomplete information about a patient's coverage stemming from ID card problems. Some health plans estimate that it costs $16 to process a denied physician claim, according to the Mid-America Coalition.

Big numbers

Similarly, physician offices will benefit greatly from improved ID cards. The Medical Group Management Association estimates ID card-related issues rack up nearly $3 billion in administrative costs each year for physicians. That number includes eligibility and coverage verification costs, ringing in at more than $3,800 per physician for a nationwide total of $2.3 billion, and the cost of resubmitting denied claims, which tops $900 per physician for a total exceeding $500 million.

Choosing the data elements on the card will be the easy part of the task. The state of Kansas has endorsed patient ID card data guidelines developed in the Kansas City market in 2004, when the Mid-America Coalition helped all health plans serving the market to reach a consensus.

MGMA President and CEO William Jessee, MD, has studied that effort. "They started with some really low-tech stuff — 'Don't put pale pink numbers on a dark pink background because . . . if the numbers don't copy clearly, then the number is not going to be entered correctly on the claim,'" he says. "But the fact that they actually got agreement on some guidelines for cards was some sort of breakthrough." In that one market, both local and national health plans agreed to change their ID cards voluntarily. The changes were incorporated in the normal course of business when replacement cards were issued at contract renewal time.

Based on her experience with that project, Titus-Howard believes that health plans in Kansas will readily accept data guidelines for patient ID cards. But agreeing on a single technology for reading ID cards will be more difficult.

"They don't want regional standards. They don't want state of Kansas standards. They want national standards," she says. "That's where WEDI comes in."

WEDI — the Workgroup on Electronic Data Interchange — is a national organization working to settle on a technology standard for reading patient ID cards. It developed recommended data standards for patient ID cards way back in 1993, but neither the federal government nor the health insurance industry pushed for implementation.

Bill Wallace, vice president for information services and claim administration for Blue Cross & Blue Shield of Kansas, is a champion of ID card standards, but he understands why the health insurance industry has not embraced them to date.

"With respect to the actual data elements on the ID card, I think most plans would agree. But as a practical matter, not all plans find it easy to incorporate those data elements on cards," he says. For one reason, a health plan's printing capability — either in-house or outsourced — may have trouble meeting standardized requirements. For another, a plan's administrative system may not be adapted easily to handle new standards.

"Everybody agrees that there ought to be standardization, but 'I don't want to have to change what I'm doing,'" Jessee says. "How can you achieve consensus and agreement that we're all going to have to give a little if we ever want to accomplish that objective?"

Employers are key

Jessee believes employers are the key to standardizing patient ID cards and MGMA is supporting WEDI's attempt to win industry-wide agreement on card-reading technology.

One of HASC's initiatives is a campaign to teach employers how to influence health plans to adopt patient ID card standards — and to help reduce the cost of health care in doing so.

"I think that if the customers require it, you're much more likely to see change take place," Jessee says.

Kansas will include the Mid-America Coalition's ID card guidelines when soliciting proposals for the state health plan.

Lola Butcher, a health care business writer, lives in Springfield, Mo.