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Minnesota providers and payers alike hope a new law requiring standardized electronic claims will cut costs--but could small organizations get left behind?

Beginning in 2009, Minnesota will become the first state to require healthcare providers and insurers to file their claims electronically in a standard format. The law, which will require all public and private group purchasers to exchange eligibility information, claims, payment and remittance advice electronically, is aimed at reducing healthcare costs and accelerating the adoption of electronic health records. But for some smaller organizations, cutting costs may not come cheap.

Since the so-called Administrative Simplification Initiative was signed into law by Gov. Tim Pawlenty as part of the 2007 Omnibus Health and Human Services funding bill, it has received strong support from hospitals and large payers, both of whom say it will go a long way toward diverting money back into direct patient care. "We know that the goal of making healthcare more affordable is going be best met by reducing administrative and overhead costs, not focusing the savings on the delivery of care," says Bruce Rueben, president of the Minnesota Hospital Association. "We've worked for four years to help make this happen because we see how much time, effort and resources go into managing all the different ways hospitals are required to bill for services. There is virtually a different way for every payer."

One concern, however, is that private practice physicians and small payers could be left behind when the law takes effect in January 2009 if they haven't received proper training on how to bill electronically--or can't afford the technology required for compliance with the law. Jana Johnson, senior vice president of operations at Medica, says that the cost of implementing the AS law probably will be felt the most by "ancillary" practices and smaller payers, but she adds that some organizations were working to become as automated as possible even before Pawlenty signed the legislation. "We've already been moving in this direction; for example, we no longer accept handwritten claims. Like any new technology it will initially cost money, but in the long run we think it may reduce or shift costs," says Johnson. Medica is one of the largest insurers in Minnesota, providing health coverage to 1.3 million members.

Minnesota's move to standardize claims filing is an indicator of a broader healthcare industry push toward automation, Rueben says, adding that eventually even single-doctor offices will have to jump on board. "We'll do what we need to do to get everybody ready. We're not going to purposely leave anybody out on a limb, but this kind of change is what is necessary to create more efficiency and effectiveness in healthcare. If you avoid change because the smallest providers are going to have discomfort, then you can never improve the system," he says.

The new healthcare transactions rules will be developed by the commissioner of health in consultation with the Minnesota Administrative Uniformity Committee, a group composed of public and private payers, hospitals, providers and state agencies. Rueben says the group is actively considering how the law will affect smaller providers and payers. "Physicians are well-represented on the AUC, and everyone's concerns are being heard, but I think the overall consensus is that this is the direction we need to be moving in."

-Kathryn Mackenzie

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