Electronic Billing Suggestions
for Mental Health Professionals

By Joshua Rosenthal, M.S.

The e-health movement is making paper-based patient records and practice-management solutions extinct and third-party billing is no different. Electronic claim submission is too much of a money saver for insurance companies and the government (e.g., reducing processing fees from $6 to 50 cents per claim on average).

The problem is that the entire system of electronic data interchange (EDI) as it applies to mental health is still in its infancy. Though Medicare is leading the movement, commercial insurance carriers vary dramatically in their bill processing technology. Many smaller carriers still don’t use electronic bill submission for behavioral health claims and the larger carriers don’t offer high connectivity with providers and clearinghouses.

Nevertheless, if you accept or plan to accept third-party payments, electronic billing is the way to go for reduced paperwork, increased cash flow and reduced claim rejections. Therefore, having a clear understanding of who the key players are (e.g., commercial and government insurance carriers, clearinghouses and software vendors) and how they work together will help you select the most effective billing solution for your practice needs and budget.

Here is some background information about the key players:

1. Payers are still in control. Like paper claim submission, insurance carriers or payers (e.g., Oxford, Cigna, United Behavioral Health, Aetna, BCBS, Medicare, and Champus/Tricare) still retain the most control since they control the cash flow. In addition, payers also control the flow of patient information, such as eligibility (i.e. 270’s), authorizations, electronic explanation of benefits or remittance advice (i.e. 835’s) and claim status (i.e., 276’s). Since payers dictate both the flow of money and information, clearinghouses and software vendors compete for direct links into their data processing centers.

2. Connectivity is king. In exchange for millions in savings on administrative duties and postage, payers are slowly opening their patient data centers to allow in clearinghouses and software vendors. Whoever has the highest connectivity or direct connection with the payers will ultimately attract the most providers. Moreover, since payers don’t charge for electronic billing, there is a strong demand by software vendors to bypass clearinghouses by creating direct connections between their customers (i.e., providers) and payers.

One such vendor, Post-n-Track, boasts a free “secure web tunnel” with big payers such as Cigna, Oxford and United Healthcare. However, you still need software to complete your HCFA 1500 claim forms. Naturally, clearinghouses make their money by middling providers and payers and are willing to pay top dollar for the highest payer connectivity. For example, Emdeon (formerly WebMD or Envoy) is the largest clearinghouse in the United States simply because of their connectivity and exclusive partnerships with the largest payers.

Two new features that are slowly making noise are electronic EOB’s (i.e., 835’s) and direct-connect claim submission (e.g., ANSI X12 837’s). Instead of receiving paper EOB’s by mail and then having to enter in the payment information manually, 835’s can be auto-posted into each patient’s account. Direct-connect claim submission is a new way for providers to communicate with payers without paying to use a clearinghouse. The problem is that many clearinghouses and software vendors advertise 835’s and direct connections but very few payers actually support them. However, it is only a matter of time before the technology catches up.

3. Not all clearinghouses are created equal. Though you will rarely deal with them directly since their services are typically resold via software vendors, it is important to know what they do and cost. Like automated electronic post offices, the main functions of a clearinghouse are to format, check and transmit your claims to and from many payers at a time.

More specifically, they encrypt and decrypt your HCFA 1500 claim forms to ensure patient information is protected according to HIPAA. Only two clearinghouses (e.g., OfficeAlley and ENS) allow you to submit claims online without billing software. They provide an online HCFA submission tool with dropdowns that store patient information for future use.

OfficeAlley is actually a free service to providers because they make their money by charging payers (roughly 5 cents to 20 cents per claim). Sounds great but many payers won’t play ball with OfficeAlly because they can generate more business and profit from other clearinghouses that charge software vendors and providers to submit claims electronically. Again, it all boils down to cash flow.

As for the rest of the big clearinghouses (e.g., Emdeon, Proxymed, THIN, GatewayEDI, Ettch, Iplexus, Claimsnet), they each offer different pricing structures and payers lists. The real worth of any clearinghouse, however, depends not on the size of their payer list, but on the connectivity they share with your payers.

Since electronic billing involves more than just submitting claims, one should consider not only pricing but connectivity when choosing a clearinghouse; paying more per claim or monthly can be justified if the clearinghouse allows you to avoid countless hours on the phone verifying benefits, getting authorizations, checking claim statuses and reviewing and inputting EOB’s.

Furthermore, connectivity can be further broken down into real-time and batch. Real-time connectivity means there is a 1-to-1 ratio between your requests for information and the payers’ response. Eligibility, precertifications, referrals and claim status requests are offered in real-time since they are requested on an individual basis. In contrast, billing software, clearinghouses and payers submit and accept claims and 835’s in batches (i.e., many at one time) so there is a delay between submitting and posting patient information.

Moreover, some payers only accept claims on certain days per week. Of course, it takes three to tango: your payers, clearinghouse and software must all support this level of technology and connectivity for it to work properly.

4. Not all billing software packages are created equal. Since mental health doesn’t do the same volume as medicine, there are fewer companies investing time and money developing software packages and thus fewer billing options to choose from.

Besides allowing you to complete a digital HCFA, billing packages often offer integrated claim submission, note-taking, scheduling and accounting features. Additional bells and whistles might include auto-posting of credit card payments and 835’s, PDA datasyncing, remote access and ANSI X12 direct submission.

There are generally two types of self-service billing solutions, web-based and computer-based. Web-based programs operate through your Internet browser so there is no software to purchase or download. These are good if you work from more than one office or want to hire an administrative assistant to work remotely, since all your patient information can be shared online via any computer with Internet access (broadband is recommended). And because they operate from a remote server, all patient files and claims are automatically backed up. Some programs (e.g., CarePaths and MyClientsPlus) charge a monthly fee, while others (e.g., PsyQuel) charge per claim.

Computer-based practice-management programs specific to mental health (e.g., Delphi/PBS, Helper, ShrinkRapt, SumTime, The Therapist, and TheraManager) are typically sold as a base package starting at around $500 with different add-on modules (e.g., note-taking, scheduling, case-management, electronic billing etc.) for an extra charge. Stand-alone electronic billing programs (e.g., EZClaim) are another option if you don’t need a complete practice-management solution.

Whether your billing software is web- or computer-based, make sure the support package matches your needs. Some offer free support and software upgrades while others charge as much as $300 per year. Again, choose based on your needs; if you do better with a live person, paying less for only e-mail support might cost you more (i.e., in billable hours) in the end.

Conclusion: If you plan to work with third-party payers, you will eventually need to familiarize yourself with electronic billing. Though it can seem daunting at first, the advantages dramatically outweigh the hassles of choosing a billing system.

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Joshua Rosenthal, M.S., is the president of TherapyMatch.com, a practice-building company that provides custom web and print design, practice management solutions and online networking services for mental health professionals. His e-mail address is:
jrosenthal@therapymatch.com

This article originally ran in The National Psychologist, January/February 2007, (Vol. 16, No. 1), Pages 18-19. Subscriptions are available for $35 for one-year or $60 for two-years at: www.nationalpsychologist.com It is reprinted with permission from the publisher.

The National Register does not endorse or recommend any products or websites listed in this article.

Updated: 8/15/2007