IT Cure for Posting Headaches

Feature Article | February 6, 2006 by admin

Change is the order of the day in the healthcare sector. The statutory requirements concerning the flow of invoices between clinics and health funds are constantly expanding, which in turn is increasing the volume of data contained in the bank statements that need to be processed each day. Nowadays, 500 to 800 items are not uncommon, and large clinics in particular may handle statements listing over 1000 items. This requires a state-of-the-art management system for receivables and payments as a key component of efficient accounts management.

Billing with no side effects

Validation rules in EKA Classic

Validation rules in EKA Classic

The Clinic of the University of Munich currently operates and manages 44 clinics, institutes, and departments from all medical specialties with around 2,400 beds. Since 1996 the Clinic has deployed the SAP industry solution for the healthcare sector to handle its business processes. The electronic bank statement of SAP R/3, which enables payment data to be automatically imported, is an absolute must, especially for accounting purposes. After reconciliation with existing invoice data, the software directly generates postings for financial accounting.
However, it was not possible to cover all processes using standardized procedures. For example, many health funds send their remittance notices as 10 to 15-page paper documents and a single incoming payment may conceal a large number of individual postings. “Our employees used to spend a lot of time copy typing from account statements and remittance notices. However, this manual input was the only way we could subsequently process the enormous quantities of data electronically,” explains Wolfgang Steinbeis, head of the department of finance and patient affairs.
In order to record all payment transactions seamlessly and without errors, the Clinic will in future deploy two separate add-on solutions that are fully integrated into SAP. The Leipzig-based IT service provider perdata developed the EKA Classic and EKA Med add-ons, which are specifically tailored for handling payment transactions between clinics and health funds. “EKA Classic provides advanced processing of the SAP electronic bank statement, and EKA Med categorizes and posts the remittance notices electronically,” explains Steinbeis.

Managing order in the chaos

EKA Classic is subdivided into the three stages of pre-processing, posting, and post-processing plus a follow-up program. Unlike the electronic bank statement, the pre-processing program does not generate any postings. However, it does enable the employee in the commercial department to view and edit potential postings in the electronic SAP R/3 bank statement at any time and as often as required. A variety of customer-specific rules have been laid down in EKA Classic for posting purposes. This enables tracking of invoices that, for example, the health funds reduce by a specific percentage in accordance with Section 140d of the German Social Code Book V (SGB V). Not all health funds are authorized to make such reductions and, even if they are, they are not necessarily exploited, and not always to their full extent. Additionally, the percentage of reductions varies from health fund to health fund and they change at irregular intervals. The pre-processing stage registers which account assignment rule was used to assign each statement item to the respective account, thus creating order among the chaos of customer-specific accounting. This is not actually posted until the follow-up program runs.
“If the employees dealing with the receivables notice during the pre-processing stage that one of the posting rules may cause misassignment to an account, they can get the IT department to customize this rule or deliberately tolerate the misassignment and manually correct it during follow-up. This can considerably reduce the additional overhead required for locating errors,” says Steinbeis, explaining the significance of the function. Each potential posting is assigned a document number during the pre-processing stage. Furthermore, the program creates an overview of the proposed account assignments identified and the assigned data records.

Categorizing the remittance notice from exchange files

The add-on is responsible for electronically categorizing and posting remittance notices. Like EKA Classic, EKA Med also has three functional levels: data verification, posting, and post-processing. EKA Med accesses the data sent by the health funds during the data transfer process in accordance with Section 301 of the German Social Code Book V. This contains records from which the corresponding posting records for incoming payments and reductions can be automatically generated – also taking credit notes into account. The exact structure of the posting records depends on the individual requirements. Internal logs track all steps. The files are imported, verified, and written into posting tables. Payments are posted from these tables on receipt, as are the reductions. The logs generate difference postings if the payment received for the remittance notice does not match the data supplied for the remittance notice. For instance, if a cost center is missing, the postings are written to a batch-input folder and the relevant member of staff is notified via SAP express mail.
The entire processing sequence, that is, categorizing and posting of remittance notices, is managed via three internal hospital tables that the IT departments of the clinics maintain independently. The processing itself can be planned in advance in this manner, this saving manual input. Only after data processing does the receivables department receive the corresponding result lists or control lists. These lists are used to check that processing has been done correctly. Furthermore, they serve to clarify any irregularities that may occur. These include cancellations that need to be posted retrospectively using manual procedures, since as a rule they are not transferred via data transfer.

Two cost-effective solutions

The Munich Clinic has been using the EKA Classic add-on since July 2005 and over this period has increased the automatic assignment of all bank transactions in the bank statement to regularly in excess of 80 percent – an enormous increase over the initial rate, which was predominantly below 50 percent. EKA Med has been in use since October 2005, currently with one health fund. In the first four months alone, the clinic smoothly handled over 11,000 incoming payments using automatic remittance notice categorization. Further, the some 3,500 reduction postings no longer had to be recorded manually.
With its increased transparency and process efficiency, IT has made a considerable contribution to the future-proofing of the Clinic. “Just one month after its introduction we achieved an automatic hit rate of just under 90% with EKA Classic. The need for manual follow-up has been substantially reduced. The reductions in working time achieved mean that our staff now have more time to work with the health funds or private patients in clarifying deviations between our receivables and the partial payments received. Our users too are impressed by the benefits and have made these IT tools an integral part of their daily work,” Steinbeis sums up.

Wolfgang Rasthofer

Wolfgang Rasthofer

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