Texas Medical Association: Testimony House Insurance Committee
House Bill 1342 by Rep. Jose Menendez
March 31, 2009
By: Keith Cantrell, Vice President of Operations,
Pinnacle Partners in Medicine, Dallas
Good afternoon. My name is Keith Cantrell, and I am vice president of operations for Pinnacle Partners in Medicine of Dallas. Thank you, Chairman Smithee and committee members, for the opportunity to testify in support of House Bill 1342, which relates to the adoption of certain information technology. We want to thank Representative Menendez for recognizing the importance of simplifying administrative activities for both the front and back office for physicians and their patients.
Background
HB 1342 will go a long way toward addressing the confusion patients have about their out-of-pocket responsibilities and assisting physician offices in understanding how much they need to collect at the time of service.
Most physicians file health insurance claims electronically after the patient receives treatment. Texas' prompt pay law requires health plans to pay an electronic clean claim correctly within 30 days and a paper clean claim within 45 days. However, with the new insurance industry trend of selling patients health plans with high deductibles, physicians are finding it more difficult to collect patients' out-of-pocket costs. Not only is the cost of collecting payment higher, due to postage, statement processing, and follow-up correspondence after the patient has left the office, but also the average payment rate is significantly lower because of nonpayment or slow payment of patient balances. Those slow payments and nonpayments cause a cash flow problem that real-time claims adjudication (RTCA) could solve.
Many of the high-deductible plans prevalent in today's market cause both physicians and patients to worry about bad debt. So real-time claims strategies are directly related to the execution of consumer-driven, direct-business models. Unfortunately, health plan technology has lagged behind the product designs health plans promote and sell in the market today.
Physician Office Challenges
Physicians now have to manage more patient payment collections under the new high-deductible plans and health savings accounts (HSAs) as well as file insurance claims. The various payers in the market have not universally implemented the systems and technology to bill directly at the point of care. Many physicians use third-party billing companies who execute claims to insurance companies in batches, not in real time. Because each physician usually deals with multiple insurance companies, the challenge of determining what each plan pays is daunting. There isn't a universal way to exchange electronic financial data in health care the way there is in retail or in the banking industry.
About 13 percent of physician revenue comes from patients themselves, not insurers. This is likely to rise as more consumers opt for lower-premium, higher-deductible insurance plans - requiring consumers to pay out hundreds to thousands of dollars before insurance kicks in.
Under the more common practice of contacting insurers first and then billing patients, physicians typically don't send out bills for the patients' share until days after the visit -and about 30 percent of those bills go unpaid. The labor cost for sending out a single bill is $8 to $15, which makes it understandable that a doctor might opt for a more efficient system.
Real-Time Claims Adjudication (RTCA) - What Is It?
Humana's Web site defines RTCA as follows:
"RTCA enables a physician to bill for service before the patient leaves the office and to receive a fully adjudicated response back - at the time of service. With this technology, a physician can print out the response, displaying total, and allowable charges, as well as the patient's responsibility (coinsurance, deductible, and copayment). Physicians can be certain of the amount the patient should pay at the time of service."
Unfortunately, many health plans use multiple legacy applications not suited for handling real-time processing. It's difficult, when multiple claim payment and information platforms need to "talk" to each other, as it were, to get a real-time response. It's not that they can't. Auto-adjudication rates [adjudication without human intervention] have been increasing to where 68 to 70 percent of claims are automatically adjudicated now, but still that doesn't mean they're done in real time.
To the physician office it means "no longer sitting there, typing out a bill, putting a stamp on it, hoping it gets to the payer, and then after all that, having it rejected for whatever reason. If a claim was denied, you then have to go through the process of resubmitting it only to find out it's not a covered benefit, and then it takes time to reach the patient, identify any new insurance information, and finally get your money."
With real-time adjudication, the way a physician office sees it:
"It means getting paid right away. It's like the Jetsons do health care."
What's the Hold Up?
One would think that with all the benefits of a true, real-time adjudication approach, the use of it would be more widespread by physician offices. But for it to work, payers need to support it in the context of what the physician office expects from it: not just a "guesstimate," but what the patient actually is expected to pay. This hasn't happened on a major scale. In fact, most payers are still not offering the option. And many that do are actually giving a real-time claim estimate but not adjudicating that claim.
Last week, there was quite a bit of comparing the purchase of groceries with the purchase of health care services. For variety, let's look at going to Macy's. Right now, the use of most of the so-called RTCA systems marketed by health plans are just that: "guesstimates." It would be similar to going to Macy's and having the salesperson tell you she's pretty sure you owe $130, but it could be $170. An estimate leaves patients and physicians unsure about what's owed and hardly speeds up the process. Often the practice still must bill the patient if the real-time estimate was incorrect.
A lot of payers are trying to do something like this, but it's not what physicians call a real-time adjudicated claim. The health plan is providing an estimate based on historical data. For instance, when Patient X came in last year, it cost Y amount, so Patient X is charged that rate again. But it doesn't take into account that the practice's rate may have changed or the patient's benefits may have changed.
In other words, for a claim to be adjudicated, not estimated, it requires that payers fully support real-time adjudication. They need to implement software that:
- Will show a patient's benefit details,
- Includes the physician's contracted rates, and
- Can accurately process submitted claims in a matter of seconds.
Health Plans Need to Get There
Today's health plan software is advanced, but the issue is that consistent and standard implementation across the major payers has been a hold up. Each uses different vendors and each returns different amounts of information during an eligibility inquiry, making it undesirable for physicians to invest in any one product or software, especially if the health plan has very few of their patients.
Another downside is the duplicate data entry involved with the current vendor systems, which is often time-consuming and can lead to errors in data entry.
A physician practice has to enter the patient's information into the portal Web site and into the practice management software. Sometimes the Web sites might be down, or they'll get a pending claim instead of an instant adjudication. Besides workflow changes, the biggest downside is their perception of that duplicate data entry.
If a health plan's "real time" process requires the physician practice to re-enter patient demographic data, it's not truly a real-time process. While a separate Web portal was the early approach to real-time claim solutions, there are payers today with direct connections to physicians to do true, real-time claim adjudication as the physician enters charges into the physician's billing system.
Having the ability to connect directly also makes it more cost-effective to submit small bills for payment. That is what real-time claim adjudication in the 21st century is all about.
United said this in its press release late last year:
Real-Time Claims Adjudication Offered through Navicure Starting January 2009
UnitedHealthcare will begin offering real-time claims adjudication (RTA) to physicians and their office staff through a new clearinghouse vendor, Navicure, starting in January 1, 2009. Navicure joins UnitedHealthcareOnline.com along with clearinghouse vendors including Athena, Availity, Payerpath, Instamed and Medical Transcription Billing Company (MTBC) in offering RTA to its clients. With Navicure, physician offices can determine a UnitedHealthcare member's actual financial responsibility, as well as their expected reimbursement, at the point of care. In a matter of seconds, physicians can request and receive an approved, fully adjudicated claim response from UnitedHealthcare (professional claims only). This gives medical groups new options for collecting or billing at the time of service.
Closing
Health plans have all the information - only health plans know a patient's health insurance coverage. Most patients don't understand or can't easily access the information that describes what medical services their health plan covers. Nor do they understand the payment terms. It's just as difficult for physicians to access accurate patient insurance information.
Although their computers contain complete patient information, most health plans don't have a process in place to easily share that data. Lack of real-time information creates confusion and frustration for both patients and physicians. It makes it nearly impossible for physicians to counsel patients on affordable and efficient treatment plans. Health plans need to be prompted to move to this next step. Again, thank you for the opportunity to testify. I will be happy to answer any questions.