Clinical Data Interoperability

What is Medical Billing?

If you’re building a digital healthcare company you’re likely (and rightly) focused on patient care. If you’re a behavioral health telemedicine platform, your goal is to connect patients with the best-fit mental health clinicians. If you’re an at-home opioid consultation service, you’re seeking ways to safely administer medication-assisted pain treatment. Seems we were raised us with the simple axiom: build an accessible, clinically-proven service that improves patient outcomes and our healthcare system will automatically compensate you for your efforts.

But we know better than that.

While “front-end” patient care is critical, it is not sufficient. The messy “back-end” of the healthcare value chain must be solved—and just as importantly, integrated—for any venture to succeed. And as with everything about our healthcare system, the financial side of things is always messier than first assumed.

Medical billing is one part of that back-end story critical to get right. Part of a broader “revenue lifecycle management” process, it sits as the juncture between claims coding and accounts receivable. Simply put, it’s the individual, team or software protocol that asks the insurance company for money… and receives their response.

The process generally falls into two parts: (1) the front-end patient / provider interaction, and (2) the back-end provider / payer interaction.

When it comes to the front-end, you’re probably already familiar as a current or former patient. It starts with the provider checking your insurance information, which is usually some sort of intake form on a scribbled-on clipboard. This is where the provider knows if you have active insurance or a copay/deductible. Then during the actual clinical interaction, the physician sees you (in-person or virtually) and generates clinical documentation around what happened during the visit.

Post-visit, that’s when the back-end machine kicks in. First, the visit documentation gets turned into standardized codes (ICD-10, CPT, and HCPCS) by medical coding professionals. These codes along with information about the physician are taken from medical coders by medical billers and go into an electronic form (called  837P or 837Is) to be submitted to clearinghouses. These entities essentially allow for electronic claims submissions to virtually all of the payers through standardization. They will also check the claim for basic errors and will reject it if there are corrections to be made.

Once with the payer, they check the claim against the patient’s plan and the associated rules (e.g., was prior authorization obtained?). This is called the “claims adjudication” process and their decision is returned in the form of an Electronic Remittance Advice (ERA). Fun fact: it’s said that somewhere between 85-90% of claims are auto-adjudicated without people actually looking at it. Then the provider investigates out whether the claim was adjudicated correctly or not, and if they think not, they can appeal. And FINALLY, the payer sends the provider reimbursement and the patient a separate explanation of benefits (EOB) for what was covered.

Because there’s a lot that can go wrong here (and a lot at stake), there is an entire cottage industry of 3rd party medical billers who specialize in doing this for you. It’s such a complicated process fraught with error and misjudgment that the AAPC (or the artist f/k/a the American Academy of Professional Coders) providers a Certified Professional Biller (CPB™) certification, complete with an exam. These experienced individuals are trained to read claims codes and translate them into claims forms—either the CMS-1500 claim form and the UB-04 claim form to be exact—to maximize reimbursement from payers. To get a sense of how big this business is, healthcare providers spend over $250B each year on administrative overhead just to get paid by insurance.

In many ways this traditional model has worked sufficiently well for “mom and pop” practices. But for digital health providers operating at a different scale, there are two primary barriers to use this increasingly antiquated model:

  1. Automation – in a digital health world, scaling happens 10x. So how do you quickly navigate reimbursement complexity across states and patient populations to enable this growth?
  2. Data – in increasingly costly and competitive healthcare environment, how can you capturing value by wielding data as a competitive advantage?

This is where new entrants have come in to fill the void. These “3rd party API billers” take the series of often manual tasks and automates as many steps as possible through a series of rules engines optimized on historical claims data and integrated to the clinical workflow through modular APIs.

What are my options?

Now that we’ve established the what and who of medical billing, as a digital health startup you might naturally next ask yourself: how? As with other parts of your business, you’re confronted with the age-old question of build v. buy. In this section we’ll establish a simple framework for thinking about that question and run through a few examples.

First, the options.

Build v. buy is actually an oversimplification because from our experience we’ve seen four paths that companies have successfully chosen:

  1. Build internal: includes both hiring and infrastructure. At an early stage, hiring will likely include a lean staff that is trained in both coding and billing, familiar with your payer network and rules associated with your clinical focus area. On the infrastructure side, this includes some product management function that builds connectivity between medical claims codes converted from EHRs, into standardized forms ready to be shared with billing clearinghouses. Finally, integration needs to occur through process decisions (e.g., nightly v. weekly batch CSV files), back-end data architecture like COBOL, X12, and the feedback loop between claims remit received and claims rules going forward.
  2. Outsource to traditional 3rd party biller: while not the focus of this article these players are still important to consider depending on your size and needs. These are turn-key solution providers that come (for a cost…) with an army of trained staff up-to-date with the latest standards and guidelines. Companies include CrystalVoxx, MDofficeManager, CNT Infotech, and the Valletta Group.
  3. Vend with digital API billers: depending on the vendor (discussed below), opportunity to integrate parts or the whole revenue cycle process into your workflows. The key differentiation with option 2 is these are SaaS solutions with some custom support v. the traditional biller which is a service solution with technology support.
  4. Hybrid model: If you have an existing internal billing team, they can be stood up to operate on top of the digital API biller’s software in order to increase automation, reporting, and efficiency.

Selecting the path to choose ultimately comes down to where your company is in its organizational maturity, financial position, and willingness to take on the work of building functions outside of its core. But three questions, ceteris paribus, can help you navigate that decision:

  1. How much variance in payment rules and prior authorization requirements can you expect through your care delivery model?
  2. How established is your clinical model, with clear expectations of payment from the payer?
  3. How much can your product or reimbursement strategy be accelerated by a robust data feedback loop?

3rd party digital billing APIs work well when the answer is “low” for the first question, and “high” or “moderately high” for the second two questions.

These companies work well when automating labor-intensive but ultimately repeatable tasks that don’t require complex patient experience use-cases. For example, Together Senior Health is a digital therapeutics and cognitive health company to drive better health outcomes for people living with memory loss. An established partnership with Medicare Advantage plans and clear requirements for prior authorization associated with an Alzheimer diagnosis means variance in outcomes should be relatively low, making Together is a prime target for 3rd party digital APIs. Outsourcing and process automation becomes a key source of comparative advantage versus a build option.

At the same time, if you are a digital technology startup with multiple paths to value with payers but without a single and scaled use-case, then either a traditional 3rd party biller or a more customizable internal billing solution might be the better approach. Kins, a digitally-enabled in-person physical therapy practice runs across many reimbursement use-cases, including traditional payer, employer and out-of-pocket. The nature of physical therapy and the wide segmentations of patient types, lends itself to requiring a more flexible reimbursement strategy that needs to adapt as the business grows.

Finally, a company whose product or reimbursement strategy is both nascent and can be optimized by data means a digital API beats out home-grown or traditional 3rd parties. How many of your patients are paying out put pocket for care? What clinical services administered prior to your intervention increases the likelihood and magnitude of reimbursement? Questions like these make a company like Springtide, an integrative, evidence-based autism center for children and their families a target customer. If, for example, a digital API biller is able to identify patterns in reimbursement effectiveness from analogous special needs or learning disability practice areas (e.g., ADHD, seizure disorders, sensory processing disorders, etc.), those insights can be integrated into Springtide’s reimbursement rules engine.

So now you’ve decided to go with a digital API biller, but which one?

Before proceeding with vendor selection, first know that this is a relatively nascent space. Most players are either recent entrants in the past ~3-4 years or legacy healthcare platforms who recently expended into this offering. Despite this, digital API billers have a lot going for them including seamless and open-code APIs, strong founding teams, and a vested interest in your success (since they’re primarily focused on the start-up space).

The starting lineup:

  • Candid Health -  API-first billing solution for digital health startups that handle claim submission, claim follow-up, payment integrity, denial management, and appeals.
  • Apero Health – Similar to Candid health and started around the same time, they can be considered the most analogous competitor but don’t offer medical coding services.
  • Eligible - started as an API to check members' enrollment with payers plus co-pay determination in 2011, they recently expanded to include billing features to submit and track claims. In addition to insurance billing, they also offer a pricing cost estimator tool for a little extra
  • Gentem - provides an all-in-one platform for independent provider groups, they offer both “tech-only” and “fully-managed” packages
  • Change healthcare - As you know, Change has been around for a while but through recent acquisitions they have built an API solution. It’s a legacy vendor that has adapted to a more digital approach, leveraging existing relationships and integrations with payers.

Other niche and/or industry-focused players:

  • Akasa – revenue cycle management platform that includes both front-end (e.g., authorization management) and back-end (e.g., claims submission) services
  • Nirvana – mental health billing focused on individual therapy practices
  • Trek health – mental health platform both front-end and back-end services
  • Tuuthfairy – dental platform API focused specifically for developers

Conclusion: so what do I do?

As a digital health-tech company, you’re likely needing to make major decisions every day. As with many of these decisions, there are no right answers, only optimal ones given the information at hand. That’s true here too. There’s a richness of choice among digital and non-digital billing services, but navigating the vendor selection process involves reflecting about a few guiding principles:

  • Optionality is critical – your vendor strategy will evolve as your company does; what you choose today does not have to be what you stick with tomorrow;
  • Industry Specialization – working with a billing vendor that has deep expertise in certain focus areas may be an advantage or a disadvantage, depending on the situation. It ultimately comes down to the how nascent your clinical offering is and how unique your needs are
  • Consider integration – As you’re simultaneously looking at vendors for other services, remember integration. What is the seamless patient and staff workflow that has a fool-proof customer experience
  • Platforms and bundles – as discussed above, many legacy players are entering the digital billing space with adjacent offerings like clinical coding or prior authorization verification; these can be a double edged sword as you build optionality for yourself over time

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