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.