Minnesota First State to Require Electronic Submission of Health Transactions

"Health care claims are twice as expensive to process when they are not submitted electronically."

by / June 28, 2007

Minnesota is now the first state in the nation to require all health care payers and providers to submit claims and eligibility transactions electronically using a common format starting in 2009. The new requirements, signed into law by Governor Tim Pawlenty as part of the 2007 Omnibus Health and Human Services funding bill, apply to all health care providers and affects virtually anyone who bills for or buys health care services on behalf of a group of people. Electronic administrative health care transactions can reduce costs and improve the efficiency of health care.

"Because of its broad scope, we anticipate many positive results including more efficient care and lower costs," said Minnesota Commissioner of Health Dianne Mandernach. "The law applies not only to the conventional list of health plans and providers, but also to auto insurers, chiropractors, dentists, pharmacists, workers compensation insurers and others.

The legislation received strong bipartisan support and represents a continuation of efforts by providers and state officials to make Minnesota a leader in reducing administrative costs. At the national level, federal rules known as HIPAA, as well as other industry and state programs, have helped to encourage greater use of standard electronic transactions in health care. Despite these advances, health care still lags behind other industries in its use of information technology and common standards.

The new law is intended to accelerate the adoption of electronic health transactions and allow more of every health care dollar to be spent on direct patient care. A 2006 state report on administrative simplification estimates the annual costs for just the telephone follow-up related to eligibility and claims in Minnesota is between $15.5 and $21.8 million.

"Health care claims are twice as expensive to process when they are not submitted electronically, and even more costly if additional information or reviews are needed to process the claims," explained Mandernach. She said a national survey by America's Health Insurance Plans sets the average cost per claim at 85 cents if handled electronically compared to $1.58 if submitted on paper.

The rules governing electronic health care transactions will be developed by the Commissioner of Health, in consultation with the Minnesota Administrative Uniformity Committee (AUC), a voluntary group representing Minnesota health care public and private payers, hospitals, health care providers and state agencies.

The standards for the rules will be based on the Medicare program, with modifications the Commissioner finds appropriate after consulting with the AUC. The AUC has formed Technical Advisory Groups (TAGs) to reconcile diverse coding and conventions for health care transactions. Planning and initial work with the AUC and the appropriate TAGs is underway to develop the rules required by the new law by 2008, which become effective in 2009.

"This positive technology intervention will lower administrative costs, boost system efficiency and reduce the overall hassle-factor for consumers, providers and payers," stated MDH Health Policy Division Director Jim Golden.