EDI-based claims processing systems reduce costs, improve efficiency

March 1, 2009
The days of paper-based claims processing and practice management systems are coming to an end ...

by Scott Wellwood

For more on this topic, go to www.dentaleconomics.com and search using the following key words: EDI, electronic data interchange, claims processing, collections, Scott Wellwood.

The days of paper-based claims processing and practice management systems are coming to an end as an increasing number of practices turn to EDI- (electronic data interchange) based systems to cut costs, improve operating efficiencies, and cut claims processing times. Whereas the thought of transitioning your practice from a paper-based system to a cutting-edge EDI solution can be intimidating and overwhelming, the benefits gained can be well worth the time and costs involved.

Paper-based processes increase claims processing times

Paper-based claims processing is both time- and labor-intensive, requiring dedicated personnel to manually complete, submit, follow up, and file documents. On top of added overhead costs for the extra labor and physical storage requirements, human error and processing delays are inherent to paper-based systems.

EDI solutions decrease claims processing times, reduce errors, and provide real-time status

While EDI solutions, which enable the electronic transmission of data between organizations, benefit all players in the industry (including payers, providers, and patients), this technology can have a particularly significant impact on the operations of a dental practice by minimizing or even eliminating the need for paper-based systems. EDI-based solutions can deliver full revenue cycle management for dental payers, providers, and patients.

When integrated into a dental office's practice management system, an EDI solution can reduce overhead costs by reducing manual intervention and paper documents, and vastly improve the revenue cycle time by minimizing errors, eliminating the physical time required to transport data between parties, and providing real-time status on patient benefits and submitted claims.

EDI-based processes can reduce operational costs and increase cash flow for the practice, which enables them to provide and maintain adequate, affordable health care for consumers. The time and cost of pursuing collections activities is reduced greatly through the ability to verify benefits eligibility in real time — any time of the day, any day of the week. The cost savings from eliminating the need for large amounts of physical space and equipment to store massive amounts of paper documentation can be significant.

In addition to the savings in operational and overhead costs, EDI claims processing can eliminate tracking issues and process delays by reducing the number of lost claims. This happens by leveraging the capability of EDI to provide real-time status on outstanding claims and confirm delivery of claims to protect against timely filing denials.

Claims process efficiency is also increased by reducing the need for manual intervention for adjudication by the payer. Dental groups using EDI have reported reductions of more than 50% in claim payout time, and payers estimate that the additional time required to process paper claims can exceed two to three weeks.

The cost efficiencies delivered by EDI systems not only benefit dental practices, but have been identified by insurers as a key technology that helps them operate more efficiently, reducing costs and keeping premiums at a reasonable level.

Transitioning to an EDI-based solution

Most dental offices already have an existing practice management system and are reluctant to undergo the time-intensive training and data transition issues involved with introducing a new system. To enable dental practices to transition to EDI with as little disruption to existing systems and personnel as possible, many practice management application developers work closely with services like DentalXChange to fully integrate these transactions into their software.

You'll also want to fully test your potential EDI solution to ensure that it is easy to use. The best application in the industry will fail to improve your operations if it is too difficult to navigate. Ease-of-use will not only minimize the amount of training required, but will contribute greatly to the level of comfort and use by you and your team.

Scott Wellwood is the president and cofounder of EDI Health Group, Inc. During the past 20 years, Wellwood has helped bring to market innovative solutions that serve the claim processing needs of the dental market. He currently serves as a member of the board of trustees for the National Dental EDI Council (NDEDIC). You may contact him by e-mail at [email protected].

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