The big payers: They want you online now

They figure Web-based transactions will save them elephant bucks. It will cut your costs, too, if the plans can learn to cooperate.

Spurred by the potential for huge administrative savings, many managed care companies are finally ramping up to perform online transactions with physician practices. And some of the biggest are working together to ensure that doctors with multiple managed care contracts will be able to reach their main payers through a single portal.

Within two or three years, consultants say, most practices should be able to perform online functions such as checking patient eligibility and benefits, making referrals, submitting claims, and following claims status through desktop computers equipped with Web browsers (see "New software weds browsers to billing systems"). Eventually, health plans will be able to adjudicate most claims and authorize payment online while the patient is still in your office.

Even before that, online connectivity with payers should give you big savings in several areas. First, you won't need as many office staffers to fill out paperwork, hang on the phone waiting for authorizations, and chase unpaid claims. Second, eligibility and benefits information will be instantly available, reducing the number of services you provide for free to patients who are ineligible or aren't covered for those services and won't pay for them. And third, filing claims electronically—with more errors spotted earlier in the process—will speed up and increase your cash flow.

Part of what's driving all of this is the evolution of connectivity vendors such as NaviMedix, Passport, Pointshare, TriZetto, and WebMD. But while these investor-fueled dot-com companies have attracted a lot of attention, health plans and providers are the key parties. So the plans' recent awakening guarantees that, whatever happens to the leading vendors, connectivity will keep on growing.

The most obvious example of the insurers' new stance is the impending launch of MedUnite, a coalition of Aetna US Healthcare, Anthem, Cigna, Foundation, Oxford, PacifiCare, and WellPoint. To provide medical offices a single point of connectivity for administrative transactions, MedUnite will sign up other plans as customers, and it will allow other connectivity vendors to use its network for a fee, according to David Cox, the consortium's president. MedUnite plans to start testing its connectivity system in California and the New York-New Jersey-Connecticut area soon, says Cox..

Meanwhile, other payers are also moving rapidly to build connectivity with providers. In Washington, for instance, four plans that cover most of the state's commercially insured patients have formed a coalition, the Washington Health Care Forum, with the state hospital association and medical society. By the end of the year, doctors who contract with these four carriers will be able to access an online eligibility confirmation system. Referrals, benefits, and claims status tracking will follow. While Pointshare is the only vendor now providing access to the system, it is open to other connectivity companies.

Blue Cross Blue Shield of South Carolina, the biggest commercial payer in that state, has created its own online connections with physicians. Offices can use the insurer's Web site to check eligibility and claims status, determine benefits, and see whether coverage of a service has been authorized. About 1,500 physician offices have registered with the site so far.

Blue Cross Blue Shield has now automated about 40 percent of its nonclaims transactions with physician offices by combining the Web traffic with the use of telephone voice-response units and a proprietary electronic data interchange (EDI) link. That degree of automation is already saving big bucks—for the company and for doctors, says Thomas G. Faulds, the insurer's president. "Every time a query is switched from a phone call to an electronic transaction, the cost drops by a factor of three or four, both on the doctor's end and on my end," he says. "And it's more accurate, because we don't have to rely on clerks who can make a mistake in conversation."

Connectivity commitment remains uneven among plans

A survey by the First Consulting Group found that while 70 percent of responding health plans said they had a formal Internet strategy, only a third had devoted any staff to Web-related initiatives. And only 30 percent allowed providers to submit authorization requests over the Internet.

That survey was published last January, but the picture hasn't changed a great deal since then, says Steve O'Dell, executive vice president of FCG Doghouse, the consulting firm's electronic health care division. "It's not clear that the leaders of many health plans have really embraced the Web as a method of doing business—either to improve their revenues, improve relationships with customers, or lower costs," he states. As a result, he says, many plans aren't investing in the technical infrastructure needed for Web-based transactions.

Anil Sitole, a former Cigna operations executive, takes a more optimistic view. Now chief operating officer of athenahealth.com, a Waltham, MA-based firm that provides Web-based workflow automation services for physician offices, Sitole says he has seen a month-to-month acceleration in the connectivity efforts of Cigna and other plans this year. "There's a tremendous amount of focus on this in the health care industry—especially among big payers who realize they're behind. Lots of time and money and talent are being spent on putting this connectivity together very quickly."

What will really make this useful to doctors is having a critical mass of their payers online. For that to happen, the major plans must work together in each market. And here, there's reason for optimism. The MedUnite carriers and regional insurer coalitions know they can't get the bulk of doctors aboard unless they collaborate with each other. Moreover, their cooperation has been accelerated by recently enacted government regulations. These rules, mandated by the Health Insurance Portability and Accountability Act of 1996 (HIPAA), require them to implement uniform electronic transaction standards by October 2002.

The HIPAA standards, fear of being left behind, and the drive for cost savings account for the new alacrity with which plans are pursuing connectivity, says Arthur Spiegel III, president of CSC's Healthcare Group, based in New York. He sees the larger plans, at least, moving to build infrastructures capable of handling Web-based transactions. More and more of them are making the required investment, he says, because they can justify it with immediate savings on call centers and other labor-intensive operations.

While Spiegel thinks MedUnite will be a strong contender, he believes that third-party vendors, including WebMD and regional companies, will continue to be a factor in the marketplace. "Whatever connectivity method you use, it has to provide the ability to hook up with everybody. None of the health plans will have exclusive deals with any vendor. So, though the MedUnite players will back their own solution, each plan must still have the ability to receive transactions from any other source of data in the market."

Humana takes the ball and runs with it

Of the leading managed care companies, Humana has taken the most ambitious approach to connecting with physician offices. Humana physicians who sign up with WebMD, the connectivity-and-content vendor, will have their first-year subscriptions paid for by Microsoft or Dupont. In Atlanta and Dallas, Humana is helping WebMD market its services door-to-door to physician offices; according to Bruce Goodman, senior vice president and chief information officer of Humana, about half of those approached have signed up.

Humana is also helping TriZetto get into doctor's offices in certain markets, and it's in discussions with several other vendors, says Goodman. Humana hasn't joined MedUnite, he explains, because the consortium's member plans are concentrated on the coasts, while Humana does business primarily in the Midwest and South. But he doesn't rule out participating in MedUnite. In Cincinnati, meanwhile, Humana is conducting its own connectivity experiment, which involves all of the local health care stakeholders.

Goodman views collaboration between Humana and physician practices as a "win-win" scenario. On the doctor side, he estimates that in the average office, checking just eligibility and claims status by phone requires about 1.2 full-time-equivalent staffers per physician. Performing these tasks online would slash the number of people required. If all transactions between practices and the plan were done online, he adds, Humana could reduce its administrative costs from about 15 percent of premiums to 12 or 13 percent.

From his perspective, wiring practices to the plan is only the beginning. If physicians could be connected electronically with pharmacies, labs, and other providers, Goodman speculates, Humana could knock down its administrative costs by several more percentage points. For example, if doctors had handheld computers, he says, they could look up Humana's formulary at the point of care, along with the copayments for drugs in each formulary tier. That would let physicians help patients choose the best drug at the copay level they felt comfortable with—which could increase compliance with doctors' orders and save Humana significant dollars.

Consequently, Humana is gung-ho on connectivity. Not only is the plan paying fees for administration transactions, but it's also willing to bear some of the cost of clinical connectivity. If pharmaceutical companies and hospitals pitched in, says Goodman, the plan would even subsidize the cost of handhelds.

Plans want connectivity, but they don't want to pay

Unlike Humana, South Carolina Blue Cross Blue Shield isn't willing to pay vendors for providing connectivity. Instead, it's building connectivity through other means, including its own Web site. "I'm not interested in making a bunch of entrepreneurs at WebMD into billionaires," Faulds declares.

He also suggests that his plan can get away with not paying fees for Internet-based transactions, just as it has for claims submitted through EDI clearinghouses—because it's the dominant insurer in South Carolina. What this means, of course, is that physicians or third parties will have to bear the cost.

Down the road, Faulds foresees one or more vendors directing Internet-based queries from physician offices to the Blues and other regional plans. "The office staffer would sign on to the vendor's Web site, and if a patient has a Blue Cross ID number, the query would jump over to our Web site. If the physician's password were prestored, they could pick up the data there."

That's more or less what the four plans in the Washington Health Care Forum are doing. Taking the same position as South Carolina Blue Cross Blue Shield, however, they aren't paying transaction fees to Pointshare, the connectivity company that set up the system. So the vendor still depends mainly on physician subscriptions and hospital payments for revenue—although it hopes the payers will eventually contribute.

Doctors have been slow to go online

Thousands of physicians in Washington and Oregon subscribe to Pointshare, which gives them Web-based eligibility and referrals from some plans and also lab results for $25 to $48 a month. But it's unclear whether physicians elsewhere are willing to pay for connectivity. Even if it's free, many offices won't take advantage of it—as shown by WebMD's experience in Atlanta, Dallas, and San Francisco, where it's taken two years to sign up most of the Brown & Toland Medical Group's nonacademic physicians.

This pattern mirrors the history of claims submission through EDI networks, which have been widely available for 15 years. Today, most physician offices can send claims online through either practice management systems or billing services. According to various estimates, this can save practices from $1.50 to $7.50 per claim and dramatically increase cash flow. Yet nationwide, only 43 percent of claims from physicians and other health care professionals come in electronically.

That kind of minority participation in South Carolina baffles Faulds. "Physicians complain about cash flow and ask, 'Why don't I get paid?' " he says. "Our average cycle time is about nine days for paper claims. If offices submit electronically, it's four days for all claims. A clean claim might get turned around in 24 hours." Practices that use the Blues' own practice management software, he adds, can also submit eligibility, benefits, and claims status queries through EDI, but very few do.

In any case, EDI's nonclaims capabilities are limited. It's a system designed to handle high-volume, batched transactions, not individual queries on eligibility, benefits, or claims status. Aetna US Healthcare has tried to fill this gap by encouraging physicians to use telephone voice-response units, which automate answers to simple queries, and swipe-card terminals, which allow offices to check eligibility through the Envoy EDI clearinghouse. But growth in the use of these methods has leveled off, says David Kirshenbaum, manager of e-health for Aetna US Healthcare.

One reason for this, he says, is that physicians want more details about benefits than voice-response units or swipe boxes can give them. "If I'm an orthopedic surgeon, for example, I want to know how many physical therapy visits are covered. The only technology that really provides that efficiently is the Internet."

By automatically editing claims on the Web before they go through an EDI clearinghouse to a payer, notes Kirshenbaum, the plan or an outside vendor could reduce turnaround time on many claims. Under the current EDI system, he points out, "a practice may not know until a day or two later that the claim was rejected because it was missing a basic piece of information. Hopefully, in a more Internet-enabled world, the office manager will get that feedback instantaneously."

As online connectivity is refined, adds Kirshenbaum, real-time adjudication of claims will become possible. "Right now, we're paying practices in two to three days on many electronic claims. By next year, you'll see real-time adjudication on simple claims, such as basic office visits or injections. If I get a clean claim out of the doctor's office, I can turn it around and either put the electronic fund transfer in the physician's bank account or send out the check the next day."

New software weds browsers to billing systems

Up to now, most Internet-based transactions between a physician office and health plans have gone through a Web-browser-equipped PC that's unconnected to the office's practice management software. This approach has benefited many practices, but there are problems with it. First, you have to buy at least one new computer. Your staff must duplicate data entry into your practice management system. And using a separate PC changes the office work flow, yet it can be used for transactions with only some payers.

WebMD and the major health plans that have formed MedUnite believe that a better solution is to connect with the Internet through practice management systems. The latest releases of some programs, such as those of IDX and Medical Manager, already have that capability, notes David Cox, president of MedUnite. But the majority of current practice management systems can exchange data only with particular computers, such as those at electronic data interchange (EDI) clearinghouses.

If you've made a substantial investment in a practice management system, and it works well, you're probably not going to buy new software just to do nonclaims transactions with health plans. "Bridge" software, however, is being developed to connect conventional practice management programs—which usually work in UNIX or other non-Windows operating systems—with a Windows-based browser installed on the same computer.

David Kirshenbaum, manager of e-health for Aetna US Healthcare, has seen one version of this bridge software in action, and he thinks it might suffice as an interim approach. "Let's say you do an eligibility inquiry, and it comes back with information about a patient," he says. "Through software on the PC, you can write that information into the practice management system. And at the end of the day, when your office has completed its claims, you can extract those claims from the billing system and submit them over the Web."

Pointshare, a connectivity vendor in the Northwest, offers physicians eligibility, referrals, and lab results through PCs equipped with Web browsers. Since offices can obtain this information over the Internet much more easily than before, they're not especially concerned that the administrative data has to be entered manually into their practice management system, says Rick Rubin, the company's senior vice president of product management.

"Most of the practices we deal with are trying to solve today's business problems with what they've got, and they're not interested in spending huge amounts of money. If we don't go through the practice management system, but we're offering information that's valuable to people, that's okay with them."


Ken Terry. The big payers: They want you online now. Medical Economics 2000;22.