Insurers test direct-deposit pay for claims

Health plans hope that physicians warm more to electronic transfer now that it's being tied directly into claims adjudication.

By Cheryl Jackson, amednews staff. March 26, 2001.

Electronic transfer of payments from insurers straight into physicians' bank accounts is an idea whose time seems to be finally coming. The reason: Insurers see electronic payments and instant adjudication of claims as a way to cut their own spiraling costs.

Under pressure from Wall Street to cut costs, from employers to stop annual 10% to 15% premium increases, and from state legislatures to comply with laws requiring prompt payment of claims, insurers are signing up for systems that promise to cut the average of $12 insurers spend to process each claim and can pay doctors within five days of a claim's submission.

But just because the process may benefit insurers doesn't mean there's nothing in it for physicians.

For example, doctors in Indianapolis give positive reviews to a system that processes claims on the spot, then sends payments electronically in five days. They're testing a system created by RealMed of Carmel, Ind., which has recently signed contracts with such national Blue Cross Blue Shield operators as Anthem Inc., Indianapolis; Health Care Services Corp., Chicago; and others, representing 22 states and the District of Columbia.

The system, which tells an office when to expect payment in its account and lets it print an explanation of benefits for patients, including how much the patient is expected to pay, takes less time to process than it does to microwave a frozen burrito. Insurers say there's no threat of retroactive denials of payments or insurers taking money back out of physicians' checking accounts, because claims that aren't clean are rejected on the spot.

"Clearly, direct deposit is wonderful," said John Slack, MD, whose 130-physician The Care Group of Indianapolis, a statewide network of cardiologists and primary care doctors, is one of the test groups working with RealMed. "You have no precertification hassle, no difficulty with claims. You can shorten your days in accounts receivable. It's the greatest thing since sliced bread."

Instant adjudication

It's not that electronic payments are a new idea. Cigna HealthCare, Philadelphia, has had such a system available since 1990, yet by the company's own admission it's been slow to catch on. But Cigna's payment system was not tied to an electronic claims filing and adjudication system.

Now, through use of the Internet, plans want to link those systems. Hartford, Conn.-based Aetna and Norwalk, Conn.-based Oxford Health Plans, along with Cigna, are among the founders of MedUnite Inc., a firm developing real-time claims processing and eligibility verification.

Aetna plans to begin testing its own direct-deposit payment system with hospitals by May, while Oxford is testing a hospital payment system. Both said they are likely to expand tests to large physician practices, with wide market use in two years.

Meanwhile, Empire Blue Cross & Blue Shield in New York is piloting a system that allows for claims adjudication over its Web site. The process takes nine to 12 seconds. The insurer expects to launch the system in May, and eventually to work with other insurers to reroute claims.

WebMD Corp. offers an Internet-based system that allows doctors and hospitals to submit claims electronically as well as check patient eligibility and claims status.

Insurers say that, despite what doctors see as evidence to the contrary, it's to their advantage to process and pay claims quickly. "Every time we can get a bill paid appropriately and correctly the first time, it saves us a lot of money," said David Allen, MD, Aetna's Kentucky network medical director. "Reprocessing claims is one of the biggest headaches we face."

Dr. Allen estimates that Aetna spends up to five times more to process a paper claims submission than an electronic one. Reprocessing a bill costs an additional four to five times more, he said.

Of course, doctors also end up spending money for submitting and resubmitting claims. Larry Gigerich, spokesman for RealMed, said his system would cut those costs in half.

About 150 physician groups and hospitals, including 500 doctors, with Blues plans in Indiana and the District of Columbia are using RealMed's system to get the quicker payment. Doctors and hospitals in California, Kentucky and Ohio will be able to process claims with the system within six months, said Robert Hicks, RealMed's chief executive officer. The company has processed more than 15,000 claims since April 2000.

The average Blues plan payment time has been five days with RealMed, down from about six weeks without the system, Gigerich said.

RealMed has reason to hype its numbers. The company signs up physician groups and health plans separately, with three- to five-year deals for plans and contracts of one year or more for physicians, Gigerich said. Currently doctors aren't bound to accept electronic payment and adjudication just because their plan has bought such a system.

Doctors say that while they like the idea of being able to settle claims instantly and have money in their accounts quickly, they don't want to bother with extra training. And they say they don't have space for the hardware that might be required if insurers used a variety of programs.

"Our big concern is, 'Please. We're not going to put five different systems on our desks in our front offices,' " said Mary Valdez, director of operations for the Carmel, Ind.-based Women's Health Partnership, a 44-physician practice with eight locations in central and southern Indiana. The Blues plan represents about 21% of the practice's business.

The Women's Health Partnership was the first doctors' group to work with RealMed in developing its system three years ago. Valdez said switching to electronic payment and adjudication had cut claims payment time from 30 to 35 days to about six.

Anything done to speed up payment is welcome, physicians say.

"You don't go to your barber and he submits a bill and gets paid 30 days later," said Bernard Emkes, MD, medical director for St. Vincent's Hospital in Indianapolis. "Physicians are the only profession expected to grant both patients and insurance companies interest-free loans."

ADDITIONAL INFORMATION:

How electronic payment and adjudication works

At the beginning of a visit to a smaller practice, a patient gives office staff a health care card or Social Security number. The staff swipes the card or types in the information and submits it via the Internet. Within five seconds, the office gets notice of patient eligibility, deductible and co-pay information.

After the doctor sees the patient, the office types in claims information and submits it to the insurer. Problem claims get prompts for more or different information. Clean claims are resolved within 25 seconds. The staff gets a notice with an explanation of benefits, what the insurer will pay and the date a deposit will be made into the office's account. They also find out how much the patient owes.

At larger operations, where billing is done at a central office, claims are processed on the spot but patients receive bills later.