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Claims Data Warehouses

September 1, 2005
by Frank Marshall
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Electronic data interchange allows even small practices to collect and analyze claims data.

About 85 percent of physicians now file most or all claims through electronic data interchange (EDI), surveys show. The increased use of EDI has produced logistical efficiencies for both providers and payers, but payers have benefited most from the analytical capabilities enabled by EDI.

Payers, particularly large insurers, collect and analyze huge amounts of electronic claims data, such as scrutinizing the amount and type of claims submitted by an individual physician or hospital. Until recently, it was difficult for physicians--particularly those in small groups--to take advantage of EDI analysis.

Now some medical groups are creating data warehouses of their own to collect and analyze claims information. They use sophisticated analytical software to generate claim-denial trend reports and charts that compare specific payer performance.

For physician claims analysis, a data warehouse needs to include an adequate database and software tools that can collect, analyze and present data.

Database creation
The 2003 Health Insurance Portability and Accountability Act requirements created standard electronic formats for filing medical claims, but the new rules also allowed insurers to require specific data fields. More than 1,200 different payers operate in the United States, many of them asking for different data. Some insurers require a patient's date of birth, while others want a hospital admission date.

As a result, many physician offices can originate an electronic claim and transmit it to a payer, but they do not take the next step: collecting and analyzing the data for their practice.

Capturing claims data and storing it in a retrievable format is the key first step. Many relatively inexpensive, off-the-shelf database products are available for sorting marketing or financial data, but not for healthcare claims data analysis. Managing the details of the healthcare payment system mandates a high degree of customization. In addition to the various payer formats, hundreds of new Current Procedural Terminology codes and modifiers are created each year. A recent federal study showed that more than 80,000 new coding combinations were created in just one year.

To handle the numerous formats and codes, an effective health claims data warehouse needs a customized program built around a structured query language (SQL) system. Until recently, most practice management systems in smaller offices used a simple, single-dimension or "flat-file" database. In contrast, an SQL program uses multiple tables to store information; each table may have a different record format. These tables allow creation of timely reports on the basis of multiple factors (e.g., location, procedure, plan, payment history).

Report preparation
An advanced software program uses different tools to extract, transform and analyze data in the warehouse. Most medical groups focus on optimizing revenues and maximizing clinical staff time. The software can prepare many reports, including denied claims, coding practices, referral sources and accounts receivable. Advanced programs can produce easy-to-read reports in formats that are easy to understand and are familiar to administrators and staff.

Physician practices can gain value by capturing and analyzing data at two key points in the claims payment cycle. The first is when the claim has been recorded but not yet transmitted to the payer. At that time, the practice can run the claim through a scrubber or edit engine, which allows it to be reviewed for accuracy before it is sent to the payer.

The second opportunity is at receipt of payment, when the practice can analyze denials and allowables. A sophisticated business logic application identifies and prioritizes denied claims, enabling managers to solve the most financially significant problems first. The software can also sort claims by payer and procedure. Managers can view reports that identify payers that consistently deny or edit specific types of claims. Such information can be helpful in negotiating future contracts with payers.

Because of the complexity of designing and maintaining advanced claim management software, smaller medical groups may want to use an outside company. Most vendors in this sector operate on an application service provider or subscription basis. For a fee, they provide all the hardware and software, and some may even include collection services.

It may be advantageous to work with a vendor that has experience in the physician group's specialty or region. Both Medicare and private payers have a wide range of regional payment rates. Vendors with extensive experience in a particular region or specialty will have a larger bank of claims information for comparison and analysis.

Frank Marshall is executive vice president of MedSynergies, Dallas.