Medicare computers ripe for upgrade

New technology could speed claims processing and provide real-time access to data.

By Markian Hawryluk, AMNews staff. March 10, 2003.

Washington -- Physicians running old software on their computers might understand a bit of what Medicare is experiencing. It hasn't upgraded its computer technology in 18 years.

But with retirement of the baby boomers looming, the Centers for Medicare & Medicaid Services has contracted for a complete review of its systems with an eye toward streamlining its accounting process and possibly saving taxpayers billions.

CMS has turned to IBM and Lexington, Mass.-based software developer deNovis Inc. to help analyze the agency's technology needs and install a new claims-processing system. CMS officials hope that an innovative system developed by deNovis will prove to be a perfect fit.

The technology company set out three years ago to make health care transactions as easy as using an ATM. Banks pay only a penny or two in administrative costs for each cash machine transaction. Health care insurers, however, spend an average of 15 cents of each premium dollar on administrative costs and profit margins.

That is mainly due to the inefficiency in their claims processing, said deNovis President and CEO Bradford Burkett. He said insurers manually examine between 30% and 60% of claims, and only 20% of the claims are paid properly the first time. Paperwork and electronic claims data often trickle in six to nine months after the services are provided.

Taking its cue from the banking industry, deNovis hired linguistic experts to develop Health Insurance Contract Language, a language that computers can read and process as easy as dollar amounts and decimal points. Now complex health contract language can be translated into HICL, and claims transactions can be processed in real time with minimal intervention. According to deNovis, 99% of claims can be paid automatically, with the data stored in a data warehouse where it can immediately be retrieved.