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Strategic planning for managed care information systems.

Today, more than ever, it is critical that healthcare organizations prepare for the new challenges of managed competition through astute information systems strategic planning.

An entity can differentiate itself from its competitors and gain an advantage in the delivery, administration and marketing of healthcare services by scrutinizing the means by which it collects, processes and reports information.

It is important for organizations to address issues such as the different types of managed care systems functionality; typical interfaces to existing HIS applications; and the planning process necessary to integrate managed care with an information systems strategic plan.

Because of rapid changes in the healthcare marketplace, we are seeing a consolidation -- and in some cases, closing -- of institutions that cannot compete. New relationships are being formed among entities which, in the past, were fierce competitors and now realize they need to cooperate to survive. In addition, hospital administrators, physicians, and ancillary service providers are working together as never before to provide integrated healthcare delivery. Many of these changes are occurring as a result of managed care reimbursement contracts.

It is of critical importance that CIOs plan for the selection and implementation of managed care systems as a component of the information systems (IS) strategic planning process. Many IS strategic plans were created several years ago, when the concepts of managed care were not well understood. These plans need to be reviewed and updated from the perspective of current and future managed care requirements of the health system. Integration of managed care requirements with healthcare information systems requirements is essential to ensure that the institution will possess the information processing capabilities to manage both clinical and financial information in the future managed competition environment.

The IS Strategic Plan and the subsequent implementation of computer systems to support managed care should be based on a comprehensive business plan produced by the health system. Each CIO should encourage their upper management counterparts to develop a comprehensive business plan which includes the necessary managed care components. Each institution planning for managed care also should include education on managed care concepts.

Managed care components and the business plan

If a business plan has been recently created, it may have specific managed care objectives stated. However, if a business plan is several years old, it may not have a fully developed managed care strategy. It is important that the business plan be reviewed and updated as necessary to include managed care components.

Typically, managed care components will exist in three distinct functional areas of a health system. These are:

* Contract management and billing for the hospital(s);

* Contract management and billing to support physician practices, and;

* Managed care administration and management of contractual risk.

Each of these areas has specific requirements which should be addressed in the health system business plan, the IS strategic plan, and the subsequent implementation of IS solutions. (See box on page 30.)

Ancillary products and services related to managed care

In addition to functional necessities, other functions and systems related to managed care may be required in the health system.

Sales/Marketing and contact management systems are required as health systems increase their business development activities. These systems are used to track prospects, record contact information, keep records of healthcare contract renewal dates, and record contract profitability.

Provider credentialing is becoming an enterprise-wide function more frequently as managed care contracts proliferate. The credentialing systems chosen for implementation must be capable of credentialing not only physicians, but hospitals and ambulatory providers as well.

The enterprise-wide healthcare information network (HIN) is becoming a necessity as various components of the health system find a need to share information. The types of information that typically would be shared over the network include: registration information, eligibility and benefits, results reporting, authorization and referral data, scheduling, orders, encounters and claim information.

These networks can be linked to other local institutions' networks to form a community health information network (CHIN) for sharing information over a geographic area such as a city county or state. Some institutions also are investigating the use of the Internet to share information.

Medical Case Management is becoming an increasingly important part of any managed care risk-based strategy. Rigorous case management can be the differentiating factor between an institution making money or losing money on a managed care contract. Case management systems need to be able to incorporate medical treatment protocols while interfacing with practice management and claims processing systems to achieve the maximum effect in a managed care environment.

The Master Person Index (MPI) is another element of a health system that should be in place to support managed care. The MPI will contain demographic and registration information on any patient in the health system, whether the patient is already covered under a managed care plan, or whether the patient's initial encounter occurred as an ambulatory patient or inpatient.

Information systems solutions

Fortunately, IS solutions are currently available for each of the three major functional areas and the ancillary services. Since these areas historically were separate and distinct, no one IS product adequately addresses all these areas, but vendors are working toward that goal.

Contract management for hospitals can be fulfilled by hospital contract management products for hospitals, for physician practices, practice management, risk management PHO functions, and traditional HMO products. Ancillary systems are served by several smaller vendors.

Each of these types of products needs to be considered as part of the overall IS strategic plan. In addition, since these products represent separate solutions, they will have to be interfaced with each other and with the traditional HIS components such as admitting, billing, medical records and clinical functions. The design and implementation of these interfaces also needs to become an integral part of the IS strategic plan, to be budgeted and scheduled accordingly.

Interface requirements

The most common method of interfacing data from disparate systems is through the use of a combination of hardware and software known as an interface engine, which collects and transmits data between systems and stores it in appropriately configured databases.

Data should be collected in one place, usually referred to as a data repository, and stored in a format that can be accessed by a decision support system or executive information system (DSS/EIS). The data should be accessible to all management areas within the health system. Types of data which need to be interfaced among the managed care systems and the traditional HIS include:

* Registration/Admitting

* Scheduling

* Clinical Results/Medical Records

* Insurance Coverage/Benefits

* Common Person Index (CPI)

* Provider Demographics/Contracts/ Fee Schedules

* Medical Case Management

Conclusion - examine, modify, educate, implement

Each institution should examine its strategic business and IS plans, paying special attention to the current and projected managed care requirements, and modify the plans according to anticipated needs. Many IS personnel lack a complete understanding of managed care systems and how they need to interface with traditional HIS or practice management systems. Only if these IS personnel understand the principles of managed care and its relationship to traditional hospital applications, will they be able to successfully implement the managed care component of any IS Strategic Plan

John Ribka is a Senior Management Consultant with Superior Consultant Company, Inc., where he specializes in planning and operating managed care systems and in the creation and operation of PHOs and MSOs. He holds a BS in Engineering Science from Notre Dame and an MSA in Systems Management from George Washington University.

Managed care functionality: Contract management and billing for the hospital(s)

1. The health system needs to be able to negotiate and enforce contracts for its hospital(s). Requirements for this area consist of several major components, as follow:

* One component concerns the operational aspects of patient management, e.g., the registration and treatment procedures to ensure that the proper data on eligibility and benefits are captured and the patient is treated according to the provisions of his/her insurance contract.

* Another component encompasses the billing process. Proper contractual information must be captured and introduced into the billing system to ensure that the patient or insurer is properly billed and that the system is recording a true receivable amount, not just an educated estimate.

* The remaining component typically is a decision support function, which works as follows: Contractual information is entered into a database along with charge information, and manipulated to determine current and future profitability for the managed care contract. This will aid in the future contract negotiations of the health system with insurers or employer groups.

2) Contract management and billing to support physician practices

Many health systems have purchased physician practices, or have formed MSOs that supply practice management services to affiliated physicians. The principal requirements here are for accurate registration of patients;

* determination of benefits, coverages and co-payments;

* accurate billing according to managed care contract;

* accurate accounts receivable and collections.

3) Managed care administration and management of contractual risk for the PHO

If the health system has formed a PHO or an HMO, and is entering into risk contracts with insurance companies, employer groups or government agencies such as Medicare or Medicaid, there are many additional requirements which must be supported. These include:

* Membership/Enrollment

* Benefit & Plan Management

* Authorizations & Referrals

* Provider Management & Provider Relations

* Capitation Management

* Claims Processing

* Utilization Review & Provider Profiling
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Copyright 1996 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Technology Information; includes related article on managed care functionality
Author:Ribka, John P.
Publication:Health Management Technology
Date:Nov 1, 1996
Previous Article:Client/server allows faster addition of new members and benefits.
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