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HEALTHCARE FINANCIAL MANAGEMENT ASSOCIATION SAYS ADMINISTRATIVE SIMPLIFICATION IS FIRST STEP IN REFORM PROCESS

 -- Could Result In Annual Gross Savings Of $3.4 To $6 Billion --
 WASHINGTON, May 25 /PRNewswire/ -- A congressional subcommittee studying healthcare issues was told Tuesday that the adoption of a mandated uniform system for reporting healthcare financial data could produce annual gross savings of between $3.4 billion to $6 billion and should be the first step in any healthcare reform program.
 Richard L. Clarke, president of the Healthcare Financial Management Association (HFMA), urged the House Ways and Means Committee subcommittee on health to support "administrative simplification" legislation which would eliminate the flow of crushing paperwork and mandate the use of standardized electronic processes for all healthcare providers and third-party payers, including Medicare and Medicaid.
 Clarke said healthcare providers and third-party payers have been working toward developing administrative uniformity for several years, but these efforts have been inconsistent because the use of uniform formats has been voluntary.
 He noted that there currently are more than 400 different electronic formats in use. These formats are used to record and transmit information concerning both the delivery and financing of healthcare, including eligibility, benefit coverage, claims and payment, as well as the medical records themselves.
 "Uniform forms have not been used uniformly and, despite the voluntary efforts, without mandates there will be no uniformity," Clarke said.
 Clarke said that earlier this year, HFMA contracted with a Lewin- VHI, national recognized independent consulting firm, to research the potential cost savings from implementing HFMA's approach to administrative simplification.
 According to Clarke, the study found that administrative costs totaled approximately $126 billion, or 17 percent of total health expenditures. According to the study, HFMA's administrative simplification legislative proposal would save $3.4 billion to $6 billion annually at a cost of approximately $800 million per year.
 "These savings are significant and could begin now if administrative simplification is achieved," Clarke said.
 Clarke said that the HFMA proposal can be enacted with or without overall healthcare reform and that administrative simplification will result in substantial savings which can be used in other areas of the healthcare delivery system.
 "While HFMA supports comprehensive healthcare reform, we recognize that it make take some time before reform is enacted and implemented," Clarke said. "Our proposal can be enacted independently of overall healthcare reform. In fact, development of standardized and uniform electronic processes is an essential first step toward any reform effort."
 Under the administrative simplification system proposed by HFMA, an independent healthcare commission would be established to develop uniform definitions and standards for the creation of a universal claims process system. All healthcare providers and third-party billers would use universal electronic processes for healthcare enrollment, eligibility, coordination of benefits, billing, remittance and payment. Alternative mechanisms would be developed for smaller providers and employers.
 Legislation would require the development of clearinghouses for data transmission by parties that do not initially have the necessary electronic transmission capabilities, or, due to size, may not find electronic transmission financially feasible.
 The Healthcare Financial Management Association is the leading professional membership organization for more than 31,000 individuals involved with the financial management of healthcare services. Members are employed by hospitals, long-term carefacilities, public accounting and consulting firms, insurance companies and government agencies.
 -0- 5/25/93
 /CONTACT: Roy Wiley of HFMA News Bureau, 312-565-1200, or Wendy Herr, vice president of HFMA Policy Services Group, 202-296-2920/


CO: Healthcare Financial Management Association ST: Illinois IN: HEA SU:

LD -- NY093 -- 2324 05/25/93 16:47 EDT
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Date:May 25, 1993
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