Computer Consult

Many health plans, one Web site

Think of conducting all kinds of insurance transactions with a single intermediary—and saving thousands, to boot.

Ken Terry

Current methods of transacting business with payers add up to a morass of inefficiency and wasted effort. Determining a patient's eligibility, obtaining referrals and test authorizations, submitting claims, checking claims status, reconciling payments—all of this paper, phone, and fax work eats up huge amounts of time and money.

Yet the efforts of individual plans to automate these chores by moving them online have not brought many hoorays from doctors. Only about 45 percent of physician claims are electronic, and most other transactions are still conducted in the traditional ways.

One reason for the reluctance of many doctors to use the electronic channels offered by individual plans—or the connectivity services of such vendors as WebMD, TriZetto, and NaviMedix—has been the lack of a single Web site that lets them conduct business with most of their payers in a standardized format. So doctors have had to settle for electronic data interchange (EDI) clearinghouses, which shoot their claims data to hundreds of plans.

However, these clearinghouses aren't primarily designed for funneling information to doctors on eligibility, claims status, referrals, and the like. And since they're set up to transmit claims in batches, they generally don't give doctors detailed, real-time feedback on individual claims. Both the plans and vendors like WebMD have tried to supplement EDI with Internet-based connectivity, but so far nobody has assembled a critical mass of payers.

Now one company claims to have what it takes to make full-fledged e-transactions with payers the norm in medicine. MedUnite, owned by seven major plans that collectively cover a quarter of the nation's insured population, launched a new Web-based connectivity service nationwide in September, and MedUnite CEO David A. Cox thinks this venture can achieve critical mass.

In the 12 states where the San Diego-based company has focused its initial marketing efforts, its founding plans and other participating insurers cover more than half of the patients in most practices, says Cox. These states are Arizona, California, Colorado, Connecticut, Florida, Georgia, Indiana, Kentucky, New Jersey, New York, Ohio, and Texas. Washington, DC, is in the mix, too.

Participating plans include MedUnite's founders—Aetna, Anthem, Cigna, Health Net, Oxford Health Plans, PacifiCare Health Systems, and WellPoint Health Networks—and other carriers such as Medical Mutual of Ohio, Nationwide Health Plans, Qualmed, Tricare Medical Resources, and UnitedHealthcare, according to MedUnite.

Neither Medicare, Medicaid, nor any Blues plan except Anthem and WellPoint has signed up with MedUnite. Nevertheless, Cox says MedUnite has a toehold with them. That's because the company recently acquired the physician clearinghouse operation of NDCHealth, which connects to all of the Blues and government carriers for EDI claims submission. Moreover, he says, about half of the Blues will furnish eligibility data to doctors via the MedUnite unit that formerly belonged to NDCHealth.

Automatic remittance advice will be available soon

After a six-month test involving about 500 physicians, MedUnite has just started offering a menu of services that include claims submission, claims status, and eligibility verification (both singly and in batches). In November, it will add referrals and other authorizations. Early next year, Cox promises, MedUnite will begin providing electronic remittance advice, which tells a doctor how much he'll receive for each claim, and why. This differs from conventional remittance advice in that it arrives online and can go into your billing system automatically.

For all this, MedUnite charges doctors $30 per month—about the same that WebMD charges for a similar group of services. Except for Medicare and Medicaid carriers, payers under MedUnite will pick up the transaction fees that doctors have typically paid to clearinghouses.

Anyone with a high-speed Internet connection can use the MedUnite service. You can also continue to submit claims through the clearinghouse that's connected with your billing system. But to get "real time" edits that will bounce back claims if they're improperly prepared, you must use a clearinghouse partnered with MedUnite. At present, the only one is NDCHealth, although MedUnite is talking with others.

MedUnite won't offer real-time claims processing in the near future. (Some Blues plans already do.) But it expects to speed up turnaround by increasing the percentage of clean or error-free claims submitted to payers from 50 to 85 percent.

Another temporary drawback is the lack of an interface between MedUnite's service and practice management systems. In other words, data you download from MedUnite's Web site won't automatically flow into the thousands of data fields in your patient billing records. So remittance advice from MedUnite's Web site must be manually entered into your accounts receivable. And because MedUnite and your practice management software aren't integrated, staffers will have to jump back and forth between the two when they check the eligibility of a patient they're scheduling for an appointment.

But direct connections are coming. In November, says Cox, MedUnite will complete its integration with the Lytec, MediSoft, and Concept practice management systems. Owned by NDCHealth, these software programs are licensed to about 100,000 physicians. By the first quarter of 2002, he predicts, MedUnite will embed its software in most other common practice management systems.

One giant system might be left out in the cold, however. That's Medical Manager, owned by MedUnite's archrival, WebMD. While the two companies have discussed a "cross-servicing" agreement, it's unclear whether WebMD will cooperate. Even if it does, observers think WebMD would still want Medical Manager's 200,000 physician users to submit claims through WebMD Transaction Services, the big clearinghouse formerly known as Envoy.

Savings and ease of use could spur doctor adoption

"A typical physician office of four people will save about $30,000 a year when all our services are employed," says MedUnite's David Cox. "That comes partly from labor savings, because you don't have to have somebody on the phone doing all the eligibility checks and approvals of referrals. But savings also come from faster payment of claims, because you're getting the information to the payer correctly the first time."

Independent sources corroborate Cox's analysis. Automated referrals alone can save a doctor $42.70 a day, or $6,832 a year, if he makes 10 referrals daily, according to a study published in the Medical Group Management Journal.

Michael Wiley, a practice management consultant in Jericho, NY, spots more savings via electronic remittance advice, which up to now has been available mainly from Medicare. The ability to automatically reconcile your claims with what the insurers will pay can save six to eight hours of staff time a week in the average practice, says Wiley.

"For small practices that are still submitting paper claims, the ability to do electronic claims inexpensively and get paid faster is a good reason to go with MedUnite," says Wiley. "Most large practices already submit electronic claims, but if MedUnite can improve eligibility verification and supply electronic remittance advice from commercial carriers, they have a reason to sign on, too."

If MedUnite can really deliver online transactions for the majority of a practice's patients, physicians will jump aboard, predicts Steve O'Dell, an executive vice president of Long Beach, CA-based First Consulting Group. But he cautions that the MedUnite system must be glitch-free and easy to use. Also, eligibility and claims data must be up to date: "If information that physicians get from MedUnite is older than what they can get from health plans directly, that will be ominous for MedUnite."

Why should health plans do anything for you?

The biggest barrier to physician adoption of MedUnite, say observers, is doctors' almost visceral mistrust of health plans. "They'll have to be sold on why the concept is good for them and not just good for insurers," says Jeff Denning of Practice Performance Group in Long Beach, CA.

Physicians have long believed that health plans deny claims and delay payments to increase their profits, partly by investing money that's owed to doctors. But health plans can earn much more by reducing transaction costs than they can by sitting on your money and enjoying the "float," says San Francisco-based health technology consultant Dennis Streveler, a former WebMD executive.

According to one estimate, health plans spend $5 to $15 to process a claim manually, but only $1 to do so electronically. Meanwhile, health plans are under intense pressure from states to pay clean claims within 15 to 30 days. In Georgia, where the law specifies a 15-day period, tardy insurers have been socked with stiff fines. So it's in a plan's self-interest to get online with you.

The mere fact that rival insurers have cooperated to build MedUnite amazes some observers. "It's a big deal that the plans have gotten together and made things work to this point," says O'Dell. "If they can pull this off, it'll be a watershed."

Dennis Streveler agrees. But he doubts that the coalition is broad enough to deliver what it promises. "It's hard to cobble together half of the covered lives anywhere in our fragmented marketplace. Even with the insurers in MedUnite, there's only a limited number of metropolitan areas where collectively they'd represent more than 30 percent of a physician's business." To constitute a majority, he says, they'd have to add Medicare, Medicaid, and more Blue plans.

O'Dell thinks some of the larger, multistate Blues will join the coalition. However, there will continue to be holdouts like Empire Blue Cross and Blue Shield, which is rolling out its new, real-time claims processing system to 70,000 physicians in New York State. Having spent $15 million on the provider portion of its Internet portal, says O'Dell, Empire is clearly going for competitive advantage.

Ultimately, says O'Dell, it shouldn't matter to physicians whether MedUnite can get every payer to join one giant ATM-like system. For doctors, a new electronic pipeline that streamlines transactions with a wide swath of payers can only make their practices more efficient.

"Right now, physicians have as many ways to submit claims as they have health plans. If they end up with just two ways—say, MedUnite and a big Blue like Empire—that's a tremendous improvement. Presuming good execution, MedUnite is going to benefit physicians and payers alike," O'Dell says.

The author is Managed Care Editor of Medical Economics. Computer Consult is edited by Midwest Editor Robert Lowes.

 

Ken Terry. Computer Consult: Many health plans, one Web site. Medical Economics 2001;19:18.