San Jose Mercury News Jan. 15th 1993 OVERDOSING ON PAPERWORK Abundance of forms plagues health industry NEW YORK(AP)- For all its sophistication and ingenuity, the health care industry has a low-tech problem- paper. Sorting, shuffling and processing billions of pieces of paper costs at least $40 billion a year. Some say it's more like $90 billion- about double the annual U.S. trade deficit with Japan. Along with lofty doctors' fees, pricey medical technology and expensive drugs, paperwork is driving health costs higher. "It's a bad problem," said Richard Landen, spokesman for the Health Insurance Association of America, a trade group. "People- the payers, patients, doctors, hospitals- are drowning in paperwork." The 4 billion medical claims generated each year appear on more than 450 different forms. Hospitals have their own formats for documenting services, and doctors use a standard form only 40 percent of the time. The problem is aggravated by insurers who each require slightly different bits of information. "Medicare needs information Blue Cross doesn't need," Landen said. The first step in slashing processing costs- as well as eliminating inefficiencies like lost records- is developing standard electronic forms. A bigger challenge is getting them into widespread use. While that process is well under way, a paper-free medical system still seems elusive. "We hope to establish a single, voluntary national standard that makes enough sense for everyone to use without government regulation forcing it down our throats," Landen said. Several standards for electronic forms, including patient bills, have been approved by the American National Standards Institute, the federally sanctioned body that handles such matters. Electronic transfer of money- from an insurer to a hospital, for example- is another goal. The Workgroup for Electronic Data Interchange, a health industry coalition formed at government request, has called for major insurers and hospitals to have the ability to communicate electronically by the end of 1994. Some think that's optimistic. "Electronic submission has become popular, but the bulk of claims will continue being manually submitted for a long time," said Tom Farley, a management consultant at Foster Higgins, a health-benefits consulting firm. Farley said paper's inefficiency is "incredible. As much as 25 to 30 percent of the staff in claim shops is associated with nothing more than just moving paper. These people contribute nothing but the recording of paper." Major commercial insurers, which handle only a fraction of the nation's health claims, are receiving only 5 percent to 10 percent of claims electronically, although many are slowly increasing the percentage. Travelers Insurance Co., for example, which processes about 21.5 million claims or 10 percent of its total electronically each year, plans to process about half by 1994, said company president Joseph Brophy. "It's not an overnight thing," said Brophy, who heads the electronic data coalition. Others are faring better. Medicare handles nearly 90 percent of hospital bills electronically. Blue Cross-Blue Shield plans are processing an average 60 percent of all claims electronically, up from 41 percent two years ago. "It's not rocket science," Brophy said. "The technology is in place." In Detroit, hospitals, doctors and laboratories send by computer nearly 75 percent of the claims Blue Cross-Blue Shield of Michigan receives. Electronic submissing shaves three to five days off process time. "We've been working at this for the better part of 12 years," said spokesman Rude Difazio. But the nation's second-largest Blue Cross-Blue Shield plan still gets 20 million pieces of paper in the mail every year, requiring 25 clerks to open, organize and channel them to the appropriate department. The documents are microfilmed, then moved 40 miles to a warehouse, where they remain for at least five years. The Detroit plan recently launched advertising encouraging doctors to submit claims by computer. The plan is even offering low-cost technology. A related problem is documentation. Studies show patient records are lost or unavailable for nearly a third of all medical appointments each year, and up to 35 percent of prescription drug renewals are never recorded. Blue Cross-Blue Shield of Michigan says paper claims contain two to three times as many errors as those submitted electronically. "Enormous data bases are somewhat corrupted because of coding errors," Brophy said. Electronic filing should mean more accuracy and less fraud. Not everyone is happy about going electronic. "Some people like the idea of a paper document coming in so there's some auditable information, a way to demonstrate a claim was submitted," Farley said. Confidentiality concerns also have arisen about the possibility of unauthorized access to an expanding medical record system. DOCTORS DROWNING IN PAPERWORK High doctor fees and pricey technology and drugs aren't the only things putting medical care out of reach for many Americans. The health care industry is spending $40 billion to $90 billion a year processing paperwork. Still, some doctors resist computerization because they're more comfortable with paper. Here are some examples of paperwork problems and possible solutions: Problems: Solutions: 450 different claim forms delay Standardized forms allow processing. Paper claims have hospitals and doctors to two to three times more errors submit claims electronically than those submitted by computer. to insurers, improving speed and cutting errors. Bills can also be paid electronically. About 25 to 35 percent of people Electronic submission of forms working in many insurer claims cuts three to five days off departments do little more than processing, uses fewer people. handle paper. Patient records are lost in almost New programs allow doctors, sitting one-third of all medical at a computer, to review patient appointments; 35 percent of records, order medical tests and prescription refills are never medication, consult other doctors recorded. and review medical care guidelines.