Insurance Records, Risk and Reimbursement

Electronic Data Interchange, or EDI, refers to the electronic environment of electronic claims-processing, as well as other aspects of the computerized-information world. For dentists, it currently means using the computer for processing and sending insurance claims. To use EDI processing, the office must have the appropriate software and an arrangement with a processing clearinghouse.

Dec 1st, 1996

Carol Tekavec

Electronic Data Interchange, or EDI, refers to the electronic environment of electronic claims-processing, as well as other aspects of the computerized-information world. For dentists, it currently means using the computer for processing and sending insurance claims. To use EDI processing, the office must have the appropriate software and an arrangement with a processing clearinghouse.

Three entities are involved with the mechanism in EDI processing: the dentist, the clearinghouse and the insurance carrier. Standard processing involves only two-the dentist and the insurance carrier. The electronic-claims clearinghouse is a new-growth industry. The nation`s largest clearinghouse processed 13 million claims in 1995. It expects to have processed 21 million during 1996. At 50-75 cents a claim, this adds up to over $10 million dollars.

The ADA, through the establishment of a subsidiary company, recently set up an endorsement agreement with two outside vendors for an electronic-claims system. One vendor, Trojan Professional Services, Inc., will provide software and the other, Envoy-NEIC, will serve as the only ADA-endorsed, claims-processing clearinghouse. The ADA will receive a monetary return on all claims processed. In addition to EDI claims, the ADA plans to use the clearinghouse to gather data on outcomes of therapy, disease patterns, manpower issues and other dental information of use to dentists when dealing with outside professional groups.

What does all of this mean to the average dentist? First, that even for the most vigorous technophobe, electronic claims-processing soon will be a part of the daily routine. Quick payment and reduced staff costs can make learning the new technology less painful. Claims usually are returned in two weeks, as opposed to four weeks for paper claims, and an automatic deposit can be arranged. Staff overhead may be decreased, as one knowledgeable auxiliary often can handle all claims-processing. Secondly, claim disputes can be prevented because the insurance carrier receives a "clean" claim, as opposed to one that may have correctable errors. The clearinghouse does not change treatment recommendations or requests for payment, but can ensure that all sections of the form are completed properly and that no information is left out. Finally, because the ADA will be using its clearinghouse as a data-collection service, a dentist eventually will be able to receive information concerning many aspects of practice. Data concerning procedure frequency, treatment outcomes, disease patterns and other items will enable a dentist to make educated decisions regarding techniques, costs and fees.

Despite the positives, there are several drawbacks to EDI processing as it stands today. As of this printing, no insurance carrier in the nation has the capability of receiving a digital radiograph. When a patient`s carrier demands radiographs to accompany preauthorizations, a paper claim still is required. Complicated treatment plans needing a narrative explanation often are better processed with a paper claim. Lastly, typical computer problems, such as power interruptions, improper data back-up and software glitches can delay claims and payment.

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