1. How ACA Administrative Simplification Rules Can Improve Cash and Productivity Presented by: Ken Bradley Vice President, Strategic Planning Navicure

2.  PPACA Overview  Operating Rules  Timelines  Eligibility Rules  Remittance and EFT Rules  Practice Benefits 2 © 2013 Navicure, Inc.

3.  The Patient Protection and Affordable Care Act (aka ACA )  Most public discussion around expansion, individual mandate and exchanges, but there is more.  Besides its goals of improving quality and expanding access are ones of controlling costs and making healthcare affordable. 3 © 2013 Navicure, Inc.

4.  Creates the State Health Benefit Exchanges and defines benefit packages  Creates ACO demonstration projects  Expands fraud and abuse/compliance efforts  Potentially expands Medicaid (dramatically in some states)  Requires expansion of quality metrics and their use  Contains language attempting to further automate the business of healthcare 4 © 2013 Navicure, Inc.

5.  We’ll focus on just 9 pages of the ACA  Remember HIPAA? ACA dramatically extends and expands it.  These 9 pages contain two sections addressing “Administrative Simplification”  Section 1104  Creates “Operating Rules” framework  Section 10109  Worker’s Comp  Edits and payment rule transparency 5 © 2013 Navicure, Inc.

6.  Fragmented payers + complexity = high transaction costs and overhead costs ◦ McKinsey estimates adds $90 billion per year*  Insurance and providers ◦ Variation in benefits; lack of coherence in payment ◦ Time and people expense for doctors/hospitals * 2006 Source: 2009 OECD Health Data (June 2009). Spending on Health Insurance Administration per Capita, 2007 * McKinsey Global Institute, Accounting for the Costs of U.S. Health Care: A New Look at Why Americans Spend More (New York: McKinsey, Nov. 2008). 6 © 2013 Navicure, Inc.

7.  National Academy of Sciences/Institute of Medicine  $2.6 Trillion spent, about $260 Billion administrative  Excess is estimated to be $168-183 Billion / year  Wasted dollars by category:  Unnecessary services - $210 B  Inefficiently delivered services - $130B  Excess administrative costs - $190B  Prices too high - $105B  Missed prevention opportunities - $55B  Fraud and abuse - $75B 7 © 2013 Navicure, Inc.

8.  One estimate of the affect on practices  $247,500 / year on unnecessary / redundant admin tasks  $19,444 / year on phone calls with pharmacies  $38,761 / year on verifying patient coverage manually  $9,248 / year on resubmitted denied claims Source: National Academy of Sciences/MGMA  Physicians today spend about 43 minutes a day (3 weeks a year) interacting with health plans  Time not spent on patient care 8 © 2013 Navicure, Inc.

9.  What if:  You were able to receive detailed, consistent benefit info from payers; and  payers used remittance and remark codes consistently for common denial scenarios; and  EFT and ERA were available and enrollment was the same for all payers?  You could reduce costs!  The ACA provides a new framework to address many of the reasons for needing to do things manually as well as requirements for more detailed and accurate information. 9 © 2013 Navicure, Inc.

10.  New concept introduced with ACA’s Section 1104  Allows for the creation of additional business rules and guidelines for the electronic exchange of information  Wherever there is a reason for not 100% automation (no paper or manual processing), Operating Rules may be developed to address  What prevents 100% automation?  Letting various trading partners…  “interpretation” the standards where it lets them  define transmission methods, acknowledgment format  use defined standards in inconsistent ways from everyone else 10 © 2013 Navicure, Inc.

11. CORE/CAQH 11 © 2013 Navicure, Inc.

12.  ACA provides for the creation of Operating Rules to enhance existing or create new standards, but not replace existing ones  All existing HIPAA standards are the foundation:  837 Claim  835 Remittance  But, there are new ones:  275 Attachments  CCD+ NACHA transaction used by banks 12 © 2013 Navicure, Inc.

13.  Operating Rules go farther than typical standards:  Data content, definitions, how to use  Required information  Consistent use of codes in defined business scenarios  Transmission standards  Security requirements  Response timing  Exception reporting  Eliminating interpretation  … anything that prevents 100% automation 13 © 2013 Navicure, Inc.

14.  May address ANYTHING that inhibits automation, where data doesn’t flow consistently among various healthcare trading partners 14 © 2013 Navicure, Inc.

15.  The difference this time:  Single word: Certification  Health plans are required to attest they are following the rules, or they will face penalties.  First set of implemented rules began January 1, 2013.  Health plans should have submitted attestation document to CMS by December 31, 2013.  HHS will assess possible penalties by April 1, 2014.  Penalties:  $1 - $20 per day, per covered life with failure to be in compliance  Doubled if knowingly inaccurate, incomplete 15 © 2013 Navicure, Inc.

16. Jan 1, 2013 Eligibility Claim Status Jan 1, 2014 Remittance EFT Oct 1, 2014 ICD-10 Health Plan ID 2015 Jan 1, 2016 Claims Plan Enrollment / Disenrollment Referral Certification / Authorizations Attachments 16 © 2013 Navicure, Inc.

17.  January 1, 2013 brought several new eligibility requirements:  How to handle patient prefixes and suffixes like MRS, MR, MD, II, JR  Prefix/suffix should be removed before attempting lookup  Consistent and defined error reporting requirements  “AAA” 5010 specifications, e.g., “71” = Patient DOB doesn’t match  Response times for both batch and real-time inquiries  20 seconds real-time and next day for batch  System availability  e.g., minimum 86% availability per week 17 © 2013 Navicure, Inc.

18.  Payers are required to return details:  Much needed critical information was defined in 5010 as “highly recommended” where the Operating Rule now requires them  Health plan name required  Past (up to 12 months) and future eligibility dates  In and out-of network variances  Remaining patient deductible amounts  Static patient responsibility amounts: co-pay, co- insurance  Generic inquiries (type 30), must have plan name and patient financials for each required service type returned 18 © 2013 Navicure, Inc.

19.  Required implementation: January 1, 2014  Adds new transaction – the CCD+ to the HIPAA list of transactions to allow bank deposit reassociation with 835 remittance data  Bank deposit data will contain the 835 remittance advice tracking number  Requires defined claim adjustment reason and remark code combinations for common reasons services are not paid  EFT & standardized and electronic EFT enrollment  Rule # 380 19 © 2013 Navicure, Inc.

20.  Defined business scenarios 1.Additional information required 2.Missing/invalid/incomplete data from submitted claim 3.Billed service not covered by health plan 4.Benefit for billing service not separately payable 20 © 2013 Navicure, Inc.

21. Additional Information Required 21 © 2013 Navicure, Inc.

22. Missing/Invalid/Incomplete Data 22 © 2013 Navicure, Inc.

23. Billing Service Not Covered 23 © 2013 Navicure, Inc.

24. Not Separately Payable 24 © 2013 Navicure, Inc.

25.  Look for Operating Rules to:  Eliminate inconsistent data usage  Define missing or unclear usage instructions  Create transmission, format and system availability expectations  Resulting in less:  Variation in business operations from payer-to- payer  Manual processing  Guessing about what is needed and how processes should work  Money spent on administrative costs! 25 © 2013 Navicure, Inc.

26.  With these new rules, it’s time:  If you are not currently doing automated eligibility, now is the time to consider.  If you are not currently using remit and EFT, now is the time to consider doing both. 26 © 2013 Navicure, Inc.

27. Source: Milliman, 2006 27 © 2013 Navicure, Inc.

28.  Automated, Consistent and Accurate Transactions  Improve operational costs  Help reduce denials  Eligibility changes show a 10-12% reduction in denials  Faster secondary and patient billing cycle  Improve denial management  Standardized understanding of payment reductions  Improve analytics  Standardization allows apples-to-apples comparison  Permit accurate and point-of-service patient collections 28 © 2013 Navicure, Inc.

29.  Automate:  Eligibility  $3.70 manual v. $0.74 electronic  Remittance and EFT  $2.96 manual v. $1.48 electronic  Reduce denials:  Use eligibility data to file accurate claims and begin point-of-service patient collection  AMA: 21% of claims need follow-up  Costing $14-$25 for each follow-up 29 © 2013 Navicure, Inc.

30. Core Phase III Rules: EFT and ERA http://www.caqh.org/CORE_phase3.php ACA Timeline http://www.healthcare.gov/law/timeline/index.html Kaiser Foundation – state level activity (e.g. State Benefit Exchange status) http://www.statehealthfacts.org/index.jsp American Health Information Management Association (AHIMA) Operating Rule Overview http://library.ahima.org/xpedio/groups/public/documents/ahim a/bok1_049348.hcsp?dDocName=bok1_049348 The Daily Practice Blog – www.dailypracticeblog.comwww.dailypracticeblog.com 30 © 2013 Navicure, Inc.

31. Ken Bradley VP of Strategic Planning Navicure kbradley@navicure.com 770-342-0210 Twitter: @Ken_Bradley 31 © 2013 Navicure, Inc.