Claims in, approvals out—in seconds

Many health plans are gearing up to process physician claims online in real time. That means faster payments, less chasing after payers, and the ability to collect the patient's share before she leaves the office.

By Howard Larkin

How much more profitable would your practice be if you could eliminate the cost of mailing bills, paying staff to pursue claims, and waiting weeks or months for checks from insurers and deductibles and coinsurance from patients?

Gastroenterologist Michael F. Elmore is getting a glimpse of just how much those changes could be worth. His 10-physician gastroenterology and hepatology group is starting to enjoy the fruits of real-time, online claims adjudication by Anthem Blue Cross and Blue Shield of Indiana. This system enables the insurer to approve an electronic claim within a few seconds of submission—so the practice receives Anthem payments within three to seven days. And, instead of being billed later, many of Elmore's Anthem patients are handed an explanation of benefits before they leave his Indianapolis office. It tells exactly how much the insurer will pay and how much the patient owes.

Anthem uses software and a data exchange center developed by Indianapolis-based RealMed Corp., one of several vendors helping insurers accelerate claims payments. The nearly instant claims adjudication enables Elmore's practice to collect copayments or deductibles at the time of service, or to start the billing process immediately by handing the patient a bill. And if a claim contains an error, it's immediately returned to the office for correction and resubmission. Under the old system, it could take weeks and several phone calls to the plan before the practice could determine whether a claim had been rejected, and why.

"If all our payers were on this system, we could cut down the number of people we have working on unpaid accounts from six to one or two," Elmore says. Even without the potential savings on billing and postage and other costs of carrying and writing off aging accounts, real-time claims processing could be worth thousands of dollars annually to each physician in the practice.

At Carmel, IN-based Women's Health Partnership, real-time claims processing has brought faster payments and a 13 percent reduction in accounts receivable, says Mary C. Valdez, director of operations at the 44-physician ob/gyn practice. Anthem, the group's largest payer, covers about 20 percent of its patients. Real-time adjudication "sped up our average payment time from Anthem from about 45 days to six days," she says.

Valdez hasn't yet determined exactly how much the RealMed system saves the group on administrative tasks. But she believes the saving will be substantial because "it cuts a lot of steps out of the billing process."

Anthem began testing its new claims-processing system in April 2000 with about 150 doctors and is now offering the product throughout Indiana, says Larry E. Gigerich, senior vice president of marketing for RealMed. More than 500 doctors use the system in Indiana and North Carolina, and Anthem plans to offer it in Ohio and Kentucky this summer. Blue Cross and Blue Shield of Illinois is also using the RealMed service and has signed up two large Chicago-area medical groups representing more than 900 doctors. Health organizations in the District of Columbia, Maryland, North Carolina and Virginia are also launching RealMed systems, Gigerich says.

The TriZetto Group of Newport Beach, CA, is working with health plans on real-time claims adjudication, too. TriZetto has teamed up with BlueCross BlueShield of Tennessee and is negotiating with several other insurers and third-party administrators, says Tony Bellomo, president of the company's software unit. Among them are several Blues plans that use other TriZetto-owned programs in their back-office operations.

TriZetto will soon begin offering real-time claims processing to physician practices, says Bellomo, as part of its Web-based portal for administrative connectivity with payers.

Some health plans are striking out on their own, without help from outside vendors. BlueCross BlueShield of Florida has been testing a real-time claims-processing system for its HMO patients in Palm Beach County since September 2000, says Patrick J. Haley, vice president of the carrier's Virtual Office initiative. The plan expects to roll out the service statewide this summer.

"It's saving us a lot of money," says Jacqueline Reyes, billing manager for West Palm Beach pediatrician Miguel Simo and his partner. Noting that two-thirds of the practice's patients are in Blues HMOs, she says, "We don't have to print out bills and mail them. We can collect from patients while they're still in the office." The practice also receives insurance payments faster, she says, and spends less on chasing claims.

New York-based Empire Blue Cross and Blue Shield has also developed an instant claims-adjudication system. "Within nine seconds of a claim being filed, we'll tell offices what we're going to pay and what the patient owes," says David Snow, the insurer's executive vice president and chief operating officer. Physicians with electronic funds transfer capability will be paid within 48 hours, he adds.

The program, which includes online eligibility verification and preauthorization, has been tested in the field since last December. Empire will introduce it to the insurer's statewide network this month, says Snow.

"I hope it becomes the industry standard," says orthopedic surgeon Louis F. McIntyre, an associate at Westchester Orthopedic Associates, a seven-doctor practice in White Plains, NY, that has been using the Empire system since February. If all insurers adopted similar online systems, McIntyre estimates his practice could eliminate three to five office staff positions. "At $30,000 a year per employee, plus benefits, that adds up," he says.

Snow also believes instant claims adjudication could save doctors money in other ways. Based on a Visa study of how practices could cut costs by accepting credit cards, he figures physicians pay 12 to 14 percent of gross revenues to collect their money, including writeoffs of bad debt. Doing it online in real time could slash this figure to 4 percent, he estimates.

Besides saving doctors money, real-time claims adjudication can cut insurers' claims-handling costs by as much as 50 percent, says RealMed's Gigerich. Patients can benefit, too, through reduced hassles over billing—one of the top patient complaints at many practices.

Physicians who've tried real-time claims processing say they like it. But a number of technical and organizational obstacles need to be overcome before it becomes the norm. And while Blues plans have taken the lead in this area—probably because they process so many electronic claims for Medicare and Medicaid—it remains to be seen how quickly other carriers will catch on.

Standardized links to insurers are needed

One barrier to real-time claims processing is the incompatibility of the various systems under development. "My fear is that we'll have 10 different systems that the insurers will want to put on our desktops," says Mary Valdez of Women's Health Partnership. "We can't have that. I'm hoping we can standardize it."

More insurers also must get aboard for physician practices to reap the full benefits. Before a health plan can offer real-time claims adjudication, it must first reconfigure its information system so that data in disparate databases can be instantly called up. That usually requires help from an outside vendor and can take from three to six months.

Many payers aren't equipped to receive claims or perform transactions over the Internet. But nearly all can handle claims submitted via electronic data interchange clearinghouses. So vendors working with multiple plans on real-time claims processing must deal with the clearinghouses. TriZetto, for instance, has partnered with NDC Health, a leading clearinghouse, to do real-time claims processing through the EDI networks that many doctors' offices already use to file claims to multiple payers.

To prevent online transactions from generating extra work in the office, the systems used for connectivity with payers should mesh with commonly used billing programs. "One of our requirements for the RealMed system was that it integrate with our practice management software," says Valdez. "We don't want to add any steps to our process."

When staffers at Women's Health Partnership submit claims to RealMed, they automatically go into the group's Medic practice management system, as well. Currently, payment data must be posted manually to the system, but the practice is working with RealMed to post it automatically. Eventually, says Gigerich of RealMed, all practices using RealMed-compatible practice management software will have this capability. That will create substantial cost savings for physicians.

The TriZetto system is structured so that office staff can use a Web browser to send the claims to NDC and can interface with their own practice management software on the same computer. That eliminates the problem of double data entry. TriZetto has partnered with Millbrook Corp. to ensure that Millbrook's practice management software is compatible with the claims-processing software that TriZetto provides to payers. TriZetto plans to do the same with other practice management software vendors, including Medic Computer Systems, The Stolas Group, and Epic Systems.

BlueCross BlueShield of Florida, on the other hand, is leaving the task of interfacing its Virtual Office software with practice management systems largely to the software vendors, Haley says. Most current users of Virtual Office must re-enter the information they receive on claims and eligibility into their practice management systems.

That works fine for Simo's office in West Palm Beach, because so many of his patients participate in the Blues' HMOs, Reyes says: "It's worth it to re-key to get the savings on sending out bills." But at least one practice quit the Florida Blues test because it required the staff to use dual systems.

The majority of claims can be processed instantly

The percentage of clean claims that can be automatically adjudicated is another important factor in how useful this approach will be. RealMed's Gigerich says his system's auto-adjudication rate is currently about 65 percent. "We might be able to push that to 80 or 85 percent, but there are always going to be claims the insurer wants a human to look at," he says.

Generally, routine visit and service claims, such as ECGs for chest pains, go right through, while more complex or unusual services may be set aside for inspection. But at least the practice knows right away that the claim has been set aside and why.

Haley says that about 90 percent of the claims in the Florida Blues' Palm Beach test are being processed without human intervention. Reyes reports that about 70 percent of her general pediatric claims are adjudicated automatically by the system. "Most of the other 30 percent don't go through because the patients are not in the system," she says, meaning they're ineligible because the plan has no record of them.

In Empire's test of real-time adjudication, the insurer checks eligibility and electronically enters the patient's demographic information on the claim form. If any mistakes are made in entering procedure and diagnosis codes, the claims are bounced back to the office immediately for correction. After that, Snow says, Empire can auto-adjudicate about 87 percent of claims on the first pass. "We think we will be able to get that to 90 percent this summer," he says.

Services shouldn't strain practices' technical capacity

All real-time adjudication services require offices to have computers with Internet connections. They may also need high-speed connections to the Web. "When we first started out, we had problems with turnaround time, but that was because we had a dial-up connection to the Internet," Valdez says.

Those problems cleared up when the practice switched to a digital subscriber line (DSL). Cable modems and T-1 lines are other alternatives. "A few years ago, getting high-speed Internet access was a concern," she says. "Today, I don't think there are many practices that can't get a high-speed line."

Vendors offering online connections with multiple plans charge monthly subscription fees. The higher a practice's volume, the lower the per-claim cost. "Cost-wise, it's to everyone's advantage to get as much volume going through the system as possible," Gigerich says.

The Florida Blues plan provides its online transaction services free. "We are always looking to lower our costs, and this will save us a lot," Haley says. "We want all of our providers to use it."

For GI specialist Michael Elmore, online claims adjudication will help restore what should be the focus of every employee in every medical practice—patient care. "Just think of how many wasted man-hours could be saved," Elmore says. "We're supposed to be focusing on patient care, not on collecting bills. This system would make things better for everyone—patients, doctors, and insurers."

The author is a freelance writer specializing in health care financing and management.

 

Howard Larkin. Claims in, approvals out--in seconds. Medical Economics 2001;13:28.