South Carolina Blues plan moves toward direct deposit of claim payments

The plan wants to wire funds directly into the bank accounts of doctors who submit 90% of their claims electronically.

By Tyler Chin, amednews staff. Sept. 9, 2002.

Instead of hearing that the check is in the mail, physicians in South Carolina soon may hear, "It's been wired."

In August, BlueCross BlueShield of South Carolina launched an electronic funds transfer service under which physicians and hospitals can get their payment wired directly into their bank accounts if they submit 90% of their claims electronically to the insurer, either through the Internet, third parties or other electronic means.

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Physicians who qualify and sign up to receive electronic funds transfers will get their money more quickly than anyone else because they won't have to wait for checks to go through the postal service, said David Boucher, assistant vice president for health care services at the South Carolina Blues. "Instead of us cutting a check, we wire the money right to their account the same day that the check would have been cut," he said. "They end up getting their cash three or four days earlier than they would normally."

The South Carolina Medical Assn. praised the development.

"It's a step in the right direction," said association CEO William Mahon. "Anything that speeds up claims processing and cash flow has to be good from the physicians' point of view."

The Blues plan is offering the electronic payment service as an incentive to encourage physicians and others to submit claims electronically, which in turn would lower the plan's administrative costs, Boucher said. It also hopes that the service will give it a competitive edge over other insurers and improve its relationship with physicians, he added.

Direct deposit requires that a doctor submits 90% of claims electronically.

Electronic funds transfer is the latest step the plan has taken to boost the percentage of claims it receives electronically from 76% to 90%. Earlier this year, the Blues plan began offering real-time claims adjudication over the Internet, letting physicians know whether their claims have been approved and giving them the opportunity to correct any deficiencies at the time of submission.

Although fund transfers offer the promise of faster payment, some observers are skeptical that many doctors in South Carolina will sign up.

Many insurance companies, including Humana Inc., already offer the service around the country. But they offer it primarily to large hospitals and some large clinics because those organizations' systems can accept an electronic remittance advice, which gives them a breakdown of the electronic payment and lets them electronically reconcile or post it to patients' accounts, said Patrick Kennedy, president of PJ Consulting, Rockville, Md.

Many physicians, however, aren't ready to do electronic funds transfers because their practice management software systems can't handle electronic remittances, Kennedy said. It wouldn't make economic sense for insurers to wire money to physicians while still having to print and mail paper-based explanations of what the electronic payment covered, he argued. That also would not make sense for physicians because it would create more work and hassle for their employees, he said.

Boucher, however, disagreed. The Blues plan already mails an explanation of what its payment covers, so paying doctors electronically and mailing the explanation wouldn't be "any more or less work" for the insurer as well as physicians, he said.

Also, while Boucher agreed that most physician practice management software systems can't handle electronic remittances now, several of the major companies selling those systems are working to add that functionality, he said.