Medical Economics Feature - November 2006
High-deductible insurance plans, health savings accounts (HSAs), and other consumer-directed health plans have created new administrative burdens for physicians and made some almost look at HMOs with affection. Under managed care, patients became accustomed to paying only their $10 or $20 copay. Now physicians have to worry about collecting copays, deductibles, coinsurance, or other payments that are the patients' responsibility. That can take time.
But Humana Inc. says its new real-time claims-adjudication program will simplify claims processing and help doctors get paid faster.
And, practice managers at a San Antonio clinic where the system was tested say that despite initial problems, the program has significantly improved their ability to collect the patients' portion of the amount owed.
Texas Medical Association Council on Socioeconomics Chair Susan Strate, MD, says the concept is good and could be a boon for physicians. "If the system works, it will save administrative expenses for the physician's office, speed up cash flow, and provide some transparency at the time of service so they can collect the patient copay."
Humana is slowly rolling the program out to other physician practices across the country, and company officials are encouraging practice management software vendors and other carriers to adopt real-time claims-adjudication technology.
"Proof of Concept"
Humana approached McGregor Medical Center in San Antonio to test its new system in 2005. McGregor, a 10-physician primary care practice, was chosen because of its high volume of patients covered by Humana's high-deductible health plan.
Janna Meek, director of integrated provider solutions for Humana, says Humana considered the McGregor test as a "proof of concept" to determine if real-time claims adjudication was viable. The company chose to test the system using high-deductible health plans because they present some of the greatest challenges for physician offices in determining patients' financial responsibility for the care they receive.
It works great now, but the new system got off to a bumpy start when McGregor tried it in the spring of 2005.
McGregor Chief Financial Officer Esther T. Foose, CPA, says it didn't work because the clinic's practice management software couldn't communicate online with Humana's real-time adjudication network. That forced McGregor's claims-processing staff to enter the data twice - once to submit it to Humana and once into its own practice management system so it could track payments, accounts receivable, and other data.
"That was such a big hurdle we just had to stop," Ms. Foose said.
Ms. Meek says Humana quickly realized practice management software vendors would need to modify their software if the new technology would be widely adopted.
"Currently, practice management systems typically can only submit claims in batch," she said, adding that the systems have to be changed "to submit a claim in real time and then receive the response back in real time, as well."
Officials at Humana and Availity LLC, an online claims clearinghouse that Humana and other carriers use to transmit online claims transactions, worked with McGregor's software vendor, DataTel Solutions Inc. of San Antonio, to modify its software so that McGregor could submit claims individually in real time. McGregor then began using the system again in December, and Ms. Foose says it now works like a charm.
After a patient sees a doctor, the superbill is coded for the visit, she says. "Our person at the checkout window enters that information into our practice management system, pushes a button, and the claim is sent directly to Humana's portal."
Claims from McGregor are routed through Availity to Humana's real-time claims-processing system, which Ms. Meek says immediately adjudicates the claim and calculates what the patient owes. The whole process is automated and Ms. Meek says the entire transaction takes only about 19 seconds. Humana's portion of the claim is processed through its normal weekly cycle for electronic claims submissions.
Ms. Foose says the new Humana system has significantly improved McGregor's collections. Credit card transactions have risen by 300 percent. Patients with HSAs or flexible spending accounts (FSAs) can process their HumanaAccess card just like a credit card to deduct funds from their account.
McGregor now collects payment from its high-deductible health plan patients at the time of service 93 percent of the time. The old collection rate was 80 percent within 60 days. Being able to tell patients upfront what their responsibility is and collecting payment at the time of service make it much simpler for the physicians, she says.
While real-time claims adjudication can simplify some of the administrative hassles for physician offices, it also requires some work flow adjustment, Ms. Foose says.
"We had to reallocate resources," she said. "Our front desk people were receptionists, check-in people. They didn't have the expertise to do the billing. That required training and retraining and reinforcement."
But work flow adjustment expenses can be outweighed by improved collections and reduced billing expenses, says Ms. Meek. That, she says, will be a major consideration for physician practices as high-deductible health plan products continue to grow.
Will Others Follow?
How quickly real-time adjudication technology catches on across the health insurance industry will be determined by how fast HSAs, FSAs, and high-deductible health plans proliferate, Ms Meek says.
"That impacts cash flow, and anything that impacts cash flow is going to be a driver," she said. "Physicians, if they are getting hit in the pocketbook with their collections, are going to demand change from their practice management vendors and from payers. We believe we have the solution, and we are willing to share what we know."
As of October, eight other practices around the country had joined Humana's real-time claims-adjudication network.
At least one other carrier - UnitedHealthcare - offers real-time claims adjudication, but Dr. Strate says United's system requires physician offices to submit another claim for payment of the carrier's part of the bill. With Humana's system, no additional claims are needed.
Physicians interested in Humana's new system should call (210) 617-1973. Information also is on the company's Web site at www.humana.com\providers\claims_real-time.asp.
Ken Ortolon can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by email at Ken Ortolon.
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