Knowledge Hub

EDI 837 Health Care Claim:

The EDI 837 transaction set is the format established to meet HIPAA requirements for the electronic submission of healthcare claim information. The claim information included amounts to the following, for a single care encounter between patient and provider:
  • A description of the patient
  • The patient’s condition for which treatment was provided
  • The services provided
  • The cost of the treatment
As of March 31, 2012, healthcare providers must be compliant with version 5010 of the HIPAA EDI standards. The 5010 standards divide the 837 transaction set into three groups, as follows: 837P for professionals, 837I for institutions and 837D for dental practices. The 837 is no longer used by retail pharmacies.
This transaction set is sent by the providers to payers, which include insurance companies, health maintenance organizations (HMOs), preferred provider organizations (PPOs), or government agencies such as Medicare, Medicaid, etc. These transactions may be sent either directly or indirectly via clearinghouses. Health insurers and other payers send their payments and coordination of benefits information back to providers via the EDI 835 transaction set.

EDI 837 Format:

ISA*00* *00* *ZZ*99999999999 *ZZ*888888888888 *111219*1340*^*00501*000001377*0*T*>
NM1*41*2*SAMPLE INC*****46*496103
NM1*40*2*PPO BLUE*****46*54771
NM1*85*2*EDI SPECIALTY SAMPLE*****XX*123456789
NM1*PR*2*PPO BLUE*****PI*54771
N3*PO BOX 12345

EDI 837 Specification:

This X12 Transaction Set contains the format and establishes the data contents of the Health Care Claim Transaction Set (837) for use within the context of an Electronic Data Interchange (EDI) environment. This transaction set can be used to submit health care claim billing information, encounter information, or both, from providers of health care services to payers, either directly or via intermediary billers and claims clearinghouses. It can also be used to transmit health care claims and billing payment information between payers with different payment responsibilities where coordination of benefits is required or between payers and regulatory agencies to monitor the rendering, billing, and/or payment of health care services within a specific health care/insurance industry segment. For purposes of this standard, providers of health care products or services may include entities such as physicians, hospitals and other medical facilities or suppliers, dentists, and pharmacies, and entities providing medical information to meet regulatory requirements. The payer refers to a third party entity that pays claims or administers the insurance product or benefit or both. For example, a payer may be an insurance company, health maintenance organization (HMO), preferred provider organization (PPO), government agency (Medicare, Medicaid, Civilian Health and Medical Program of the Uniformed Services (CHAMPUS), etc.) or an entity such as a third party administrator (TPA) or third party organization (TPO) that may be contracted by one of those groups. A regulatory agency is an entity responsible, by law or rule, for administering and monitoring a statutory benefits program or a specific health care/insurance industry segment.

According to the World Health Organization (WHO), the United States spent more on health care per capita $8,608), and more on health care as percentage of its GDP (17.2%), than any other nation in 2011. The Commonwealth Fund ranked the United States last in the quality of health care among similar countries, and notes U.S. care costs the most. In a 2014 Bloomberg ranking of nations with the most efficient health care systems, the United States ranks 46th among the 48 countries included in the study.
The U.S. Census Bureau reported that 49.9 million residents, 16.3% of the population, were uninsured in 2010 (up from 49.0 million residents, 16.1% of the population, in 2009). A 2004 Institute of Medicine (IOM) report said: “The United States is among the few industrialized nations in the world that does not guarantee access to health care for its population.” A 2004 OECD report said: “With the exception of Mexico, Turkey, and the United States, all OECD (organisation for Economic Co-operation and Development) countries had achieved universal or near-universal (at least 98.4% insured) coverage of their populations by 1990.” Recent evidence demonstrates that lack of health insurance causes some 45,000 to 48,000 unnecessary deaths every year in the United States. In 2007, 62.1% of filers for bankruptcies claimed high medical expenses. A 2013 study found that about 25% of all senior citizens declare bankruptcy due to medical expenses, and 43% are forced to mortgage or sell their primary residence.
On March 23, 2010, the Patient Protection and Affordable Care Act (PPACA) became law, providing for major changes in health insurance. The medical system will be forced to change normal procedures. They will be required to prepare for upcoming programs to meet federal regulations.

There has been a major shift in the financial aspect of patient care and it’s affecting patients and those who provide their care in major ways. Perhaps you’ve noticed certain patients not coming in as often or a rising accounts receivable (A/R) that’s increasing in age and amount. The shift by third-party payers and government entities to have patients shoulder more of the cost of healthcare is creating a huge need for hospitals, clinics and private practices to change how they communicate about and collect patient payments.
As healthcare costs continue to rise, frustrations are rising for both patients and practices. To fully understand and address this challenge, it’s important to put it all in perspective by understanding where we’ve come from and how we got where we are now.
Between 2003 and 2013, healthcare premiums in the United States rose 80 percent from an average of $9,068 for a single worker up to $16,351.1 The increase in premiums translated to an increase to the employee’s contribution toward their insurance of 89 percent — from an average of $2,412 per single worker in 2003 up to $4,565 in 2013 — as employers began shifting more of the cost of healthcare coverage to workers.
This means that before a patient has even seen a single doctor for a new year, their healthcare is now already costing them nearly double what it used to cost them only 10 years ago. These numbers are expected to rise with healthcare reform and the shared costs of covering the previously uninsured.

Burden on patients

On top of premiums nearly doubling for many of our patients, more employers are choosing to shift offerings to high deductible plans to keep their premiums more affordable. Payers are also pushing for these shifts in hopes that putting the onus on patients for a larger portion of their visits discourages frivolous use of healthcare coverage and will reduce costs.
One statistic that illustrates this particularly well is that in 2006 only 16 percent of small firms (companies with three to 199 workers) had their employees enrolled in high-deductible plans requiring employees to pay the first $1,000 or higher of their care, on top of premium charges.2 That number increased consistently over the next six years and by 2012 about 50 percent of small firms had their workers on these types of plans. It is expected that in 2013 and 2014 this number will increase significantly again.
What does this all mean to you and your patients? It means patients are finding themselves responsible to pay their entire bill until they’ve met their deductibles. Practices and patients are not accustomed to this radical change after many years of paying or collecting nominal co-pays of $10 to $25 per visit or billing the 20 percent due after the payer paid their 80 percent. This affects your A/R radically because traditionally, practices have written off an average of nearly half of patient portion when it goes unpaid and practices determine it’s too costly to chase after it.

Healthcare credentialing—the process by which providers are enrolled to participate with a particular insurer or healthcare organization—has always been a complicated one. This documentation-driven endeavor includes applications, screenings, primary source verification, and more. It’s something that must be done each time a new provider joins a practice or when providers change practices, merge their practices, join an Accountable Care Organization (ACO), or become acquired by a hospital system. It’s a tedious task that requires an impeccable attention to detail and deadlines.
Over time, the process of credentialing has become even more difficult to manage simply because of the oftentimes volatile nature of the healthcare marketplace. The Affordable Care Act and other quality-driven initiatives force providers to practice smart medicine and make business decisions with the best financial outcomes in mind. New providers enter the profession daily. Others switch practices frequently. Many physicians work with a nurse practitioner, physician assistant, or other non-physician practitioner, each of whom must be credentialed with various insurers.

What does all of this mean in terms of credentialing?

Credentialing is critical to overall financial viability because it ultimately enables reimbursement. If a provider is not credentialed correctly—or there has been a lapse in the credentialing process—he or she will not be paid. It’s important to think of credentialing as having no clear beginning and end—it is an ongoing task. As such, a dedicated credentialing team within the revenue cycle management department is required. Even after providers are approved, they must re-credential two years after the initial credentialing decision. The larger the organization, the more physicians and other providers there are to track, credential, and re-credential.
A dedicated credentialing team can address the following:

  • Adoption of credentialing standards to ensure compliance. – This includes establishing policies and procedures that address standards for payers published by the National Committee for Quality Assurance as well as standards for providers published by the Joint Commission. The team can also monitor for any updates or revisions to these standards and update processes accordingly.
  • Credentialing management. – This includes managing the entire credentialing process for credentials such as Controlled Dangerous Substance (CDS), Drug Enforcement Agency (DEA), Medical License, Council for Affordable Quality Healthcare (CAQH), Board Certification, Malpractice, and Hospital Privileges. In the event that a provider is not credentialed upon application, the team can appeal this decision, when appropriate.
  • Ongoing monitoring. – This includes ensuring that all requirements are met, particularly as new providers join the practice or organization.
  • Re-credentialing. – This includes developing processes to re-credential providers before their current credentialing expires.
  • Payer agreements. – These agreements should outline responsibilities, develop metrics to assess performance, and identify ongoing oversight processes.

Most importantly, a dedicated credentialing team ensures communication among primary stakeholders, including providers, practice administrators, coders, billers, and others. This team can—and should—provide regular status updates regarding the credentialing that is in process vs. what has been completed and approved.

Why it’s important to act now

By constantly monitoring the credentialing process and identifying new opportunities for credentialing, a dedicated credentialing team reduces the overall risk for the practice and ensures that there are no payment gaps. As the credentialing process becomes more complex to manage, it’s important for practices to ensure that a team of individuals oversees relevant deadlines and requirements. The ongoing process of credentialing requires strict oversight to ensure success. Practices that dedicate resources to this effort will reap the financial rewards and prevent revenue loss.