HCFA’s black box’: Secret new audit software new claims audit software

After a long and futile attempt to develop its own claims auditing software, HCFA has finally bitten the bullet and opened negotiations to purchase privately developed software from Atlanta-based HBO & Company. But don’t expect the federal regulators or HBOC to divulge much about how it works.

The secrecy surrounding the auditing software, called ClaimCheck, has already stirred up controversy and is likely to become even more of an issue as health care institutions begin questioning exactly why specific Medicare claims are rejected.

"We call this black box’ technology because the information goes in one end and a result comes out the other, but no one knows what happened in between," says American Medical Association assistant director Jack Emery. "This means doctors end up in the dark as to why a claim happened to be denied."

The AMA has been leery of ClaimCheck for some time. At its 1997 annual meeting, for example, the organization passed resolution 827 (I-97) which maintained that the software system "differ[s] substantially from CPT standards by failing to recognize some CPT modifiers, by its rejection of payment for both a procedure and an established patient office visit on the same day ... and by the inappropriate bundling of multiple procedures into a single code."

The resolution went on to state that HBOC has refused to meet with representatives of state medical societies to explain the logic on which the software is based and has failed "to make a good faith effort to resolve differences."

ClaimCheck already is used by more than 400 payers nationwide, including several Blues, according to HBOC. In an interesting twist, the company has announced the July launch of a new product called Pathways Compliance Advisor, targeted at health care providers. According to a company press release, the product "provides more than 145 million medical edits for a comprehensive compliance solution covering all provider claims submissions."

The "solution," HBOC says, "was derived from the ClaimCheck claims auditing and coding product suite." No one at HBOC has been willing to comment on the possibility that selling compliance software to providers and auditing software to payers — all based on the same system — represents a serious conflict of interest.

In fact, because of issues surrounding the contract negotiations with HCFA, HBOC representatives won’t say anything about ClaimCheck, least of all how the system works.

However, at a recent House of Representatives hearing, HCFA administrator Nancy-Ann Min DeParle admitted, "We may not be able to release ClaimCheck edits because we do not own them outright. However, I believe we should provide enough information to physicians so that they are able to understand what our payment policy is."

That explanation doesn’t satisfy the AMA, which, along with other provider groups, is lobbying HCFA to find ways to tell physicians why their claims have been denied — and what they can do to in the future to correct the problem — while still protecting HBOC’s interests.

One compromise floated by HCFA would be to permit a preselected group of representative physicians to review a "paraphrased" set of edits while still keeping the document’s particulars confidential. This would allow physicians to give the provider community an idea of how the software's general decision-making logic works without revealing too many specifics, says HCFA.

But the AMA says it wants all providers to know specifically why the ClaimCheck program turned down any claim.

HCFA says the system could save Medicare some $465 million annually by spotting overpayments that presently slip through the system.