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VeriType – Company Description
In 1992,theUS General Accounting Office reported to Congress that 10%of the nation’s total annual health care expenditure, or as much as $84 billion in 1992 alone, was paid inappropriately due to fraud, abuse or lack of medical documentation to support claims. Of the $1 trillion Americans spent on healthcare in 1996, $350 billion was spent on Medicare and Medicaid. The Department of Health and Human Services estimated that approximately 14% of those claims, or $28 billion, were also paid improperly.
Consequently, the U.S. government empowered the Health Care Financing Administration (HCFA) to audit medical institutions for health care fraud. HCFA can now impose fines of up to $10,000 per item or service found in non-compliance with government regulations, plus triple the fee for the claim. HCFA began investigating every academic medical institution in the U.S. for fraudulent billing in 1996. These institutions are in the highest risk category for an audit by HCFA because of their reliance on the federal government for Medicare and Medicaid reimbursement. Thomas Jefferson hospital in Philadelphia, PA, the first institution audited, received a $40 million penalty for what appeared to be both intentional and unintentional discrepancies.
VeriType is an Arizona-based company that will provide software solutions for medical specialists. A clinician will interact with the software to generate reports to help ensure that medical records comply with government guidelines.
VeriType’s mission is to create software to address a clinician’s need to meet the documentation guidelines imposed by HCFA while not sacrificing patient care. Our goal is to make VeriType analysis the industry standard for HCFA compliance software. VeriType will create user friendly software, update it frequently with the latest changes in HCFA regulations, and use the latest processing technology. VeriType will serve physician specialists in a variety of practice settings and will offer ongoing education, training and product support.
PRODUCTS AND SERVICES
Typically after a patient visit, a clinician documents the visit in the medical record. Each component of the medical record must contain certain elements to meet HCFA guidelines. The total number and complexity of these elements together determine what is referred to as the “level of service” provided by the clinician. This level of service determines the amount of reimbursement a clinician receives for the visit. The clinician must then submit these charges for services rendered. Typically, a billing specialist compares the medical record to the charges to verify that they meet HCFA guidelines. VeriType analysis will perform the function of a documentation specialist in determining the level of service provided by the clinician.
HCFA guidelines include specifications for keywords and phrases that must appear in a logical progression, similar to a flow chart. If a medical record does not contain the details to support the charges submitted by the clinician, the charges are changed or “downgraded” even if the service was rendered. This results in underbilling and lost revenue. Because of the time consumed by this process, the physician is almost never advised of the documentation omissions and the resulting downgrading of charges. To speed up the review process, clinicians have begun to use many forms of technology to digitize medical records for same-day analysis, including voice recognition software and digital tape recorders. While this improves turnaround time for documentation and billing, it does not address the need for documentation accuracy.
VeriType software will analyze the contents of a medical record that has already been digitized. It will search for the details used to determine the level of service using natural language processing. The software will compare the record’s contents to HCFA’s keyword and flow-chart guidelines. It will then generate a report that indicates a “level of service rendered” according to the keywords and phrases found in the record. A clinician can then compare the level of service actually rendered to the level of service indicated by the analysis. The clinician can then improve the documentation so that the two are in agreement before it is signed and sent to billing where it becomes part of the patient’s permanent record. Clinicians can use VeriType at the point of service (the physician’s office, for example). The software is a small, efficient, stand-alone product that can be used on any desktop PC. Clinician interaction with VeriType analysis software will:
- Enhance reimbursement for services rendered.
- Promote adherence to HCFA guidelines for medical documentation.
- Protect against undue HCFA penalties for improper documentation.
- Educate in appropriate documentation to meet HFCA guidelines.
- Decrease costs by reducing documentation review personnel.
- Allow physicians to focus on patient encounters rather than billing problems.
The growth of VeriType’s product line will be on a specialty-by-specialty basis. Each medical specialty dictates a unique set of HCFA guidelines, and unique vocabulary for the VeriType software to work correctly. The first year, the company will invest in software development and testing; it will be operating at a net loss. However, once the software’s logic and natural language processing algorithm have been implemented for the first specialty, Cardiology, product launch in hospitals and physician practices will begin. The company will start to recoup its investment and turn a profit.
DEVELOPMENT TO DATE
Scott Klewer, M.D., Jennifer Brunner and Wayne Gyllenhaal founded the company in 1998. Initial requirements analysis for the software’s logic and algorithms is underway. VeriType has also conducted primary research with physicians in three hospitals. ivSupport for further development and testing has been secured from the University of Arizona’s department of Pediatric Cardiology. Capital will be sought for development of the HCFA logic algorithms and software, and initial launch of the company.
iv Cardiology Dept. of the University of Arizona, Cardiology Department of NE Heart Institute, Allergy Clinic of Phelps Memorial Hospital.
|Table of Contents||Appendices|
|1. Executive Summary
2. Company Description
3. Industry Analysis
4. Target Market
6. Marketing and Sales Strategy
9. Exit Strategy
10. Financial Projections
Summary of Cash Flow
Sales Forecast & Revenues
Marketing Support Costs
Cost of Goods Sold
Property & Depreciation
Capital & Debt
|All information herein is confidential and belongs to VeriType|