Hospitals Can Save $800 Million in Claims Operating Costs and Quicken Revenue Cycles by Working with Health Plans, According to

Blue Shield of California and Hospital Association of Southern California to Present Best Practices for Reducing Claims Denials Today at Congress of Healthcare Leadership in Chicago

SAN FRANCISCO and LOS ANGELES, March 20, 2012 /PRNewswire-USNewswire/ -- Hospitals across the country can reduce their administrative costs for claims processing by at least $800 million – and possibly much more – if they adopt an open, transparent adjudication process in collaboration with health plans, according to Blue Shield of California and the Hospital Association of Southern California (HASC).

Blue Shield of California and HASC, which represents 175 acute care hospitals in Southern California, have worked together since 2010 to reduce claims operating costs through process analysis and workflow improvements that have helped accelerate claims payments to network hospitals. Their collaboration has shown that hospitals and health plans can significantly reduce their claims operating costs by jointly identifying and eliminating inefficiency and waste in the claims payment process, and using new data analytics tools that allow for open, real-time sharing of claims data. They will provide a rare behind-the-scenes look at their collaboration and their best practices for reducing claims denials today at the Congress of Healthcare Leadership in Chicago (sessions 48A, 10:45 a.m. CT and 48B, 2:15 p.m. CT: Blue Ocean Thinking through Performance Improvement in the Collaborative Process.)

"For decades, hospitals and health plans have faced off with distrust and frustration on both sides over these daily business transactions – amounting to millions of claims every day – and that has hindered progress toward a standardized, predictable and methodologically accurate claim adjudication process," said George Mack, vice president for payer/provider and member relations at HASC. "Hospitals have consistently felt that health plans withhold claims data from them. The current realities in health care tell us that a more collaborative discourse, with complete data transparency, is required. The willingness of a progressive health plan partner like Blue Shield of California to commit to sharing claims data openly and its commitment to collaborative innovation offers a new model for payer/provider relations."

Blue Shield's collaboration with HASC stems from the company's innovative Partnership in Operational Excellence and Transparency (POET) program, an initiative to improve relationships with hospitals by proactively sharing claims performance data and using that data to jointly develop process changes, system enhancements and other administrative improvements. More than 180 hospitals in Blue Shield's network participate in the program, which is free and voluntary. Between 2008 and 2011, Blue Shield contracted hospitals have seen their claim denials decrease from 22.8 percent to 17.4 percent, their EDI submission rate increase from 85.2 percent to 90.3 percent, and the claim cycle time decrease from 31.9 days to 28.1 days.

"The POET program allows Blue Shield of California to create transparency and an environment of collaboration internally and externally to bring about administrative cost savings with our providers," said Kenny Deng, senior director for provider relations and operations at Blue Shield. "By working with HASC and the participating hospitals, POET is gaining scale and traction statewide as a framework for health plans and providers to collaborate on industry solutions as true partners. We hope other plans across the country adopt this model."

Mission Hospital Medical Center, one of the early adopters of the POET program, realized significant benefits from the collaboration. Despite a sizable increase in Blue Shield volume in FY2009-FY2010, denied accounts at Mission decreased by 40 percent and denied charges were reduced by 52 percent, or almost $5 million. The trend in denied accounts was sustained in FY2011, and denied charges were reduced by approximately $100,000 more from FY2010 to FY2011.

"The results at Mission Hospital Medical Center have been outstanding and have led to management support for adopting the POET process throughout the entire St. Joseph system," said Dan Martinez, director of patient financial services at Mission. "In addition to welcoming the new transparency in claims data that POET provides, creating a high-performance revenue cycle team has also helped us identify and improve inefficiencies in our internal claims processing systems. Getting together and talking issues through is very powerful and our numbers show what that process can do. This is just one hospital – imagine what could be achieved if this process was replicated nationwide." 

Mack, Deng and Martinez will present the results from their collaboration today at the College of Healthcare Leadership in Chicago.

About the Hospital Association of Southern California

The Hospital Association of Southern California (HASC), founded in 1923, is a not-for-profit 501(c)(6) regional trade association. The mission of HASC is to serve the political, economic, informational and educational needs of hospitals and to help improve the quality and accessibility of health services.

About Blue Shield of California

Blue Shield of California, an independent member of the Blue Cross Blue Shield Association, is a not-for-profit health plan with 3.3 million members, 4,800 employees, and one of the largest provider networks in California. Founded in 1939 and headquartered in San Francisco, Blue Shield of California offers a wide range of commercial and government products throughout the state. The company was named one of the 2012 World's Most Ethical Companies by the Ethisphere Institute, and has contributed more than $125 million over the past four years to the Blue Shield of California Foundation - which was named one of BusinessWeek's top 20 most generous corporate foundations. Contact your local agent or broker for more information about Blue Shield products and services, or visit the Blue Shield web site at




SOURCE Hospital Association of Southern California