The nation's largest processor of electronic healthcare claims for commercial insurers is crossing over to the Medicare and Medicaid data-interchange business through a recent acquisition.
National Electronic Information Corp. earlier this month snapped up Oklahoma City-based Synaptek, a claims business with federal inroads. The move continues a consolidation trend in the electronic data interchange industry as volume becomes a driving force for a service that's becoming a commodity.
The two privately held companies swapped an undisclosed amount of stock in the non-cash acquisition.
For physician offices and healthcare institutions-the beginning and end of the line for most transactions-the consolidations are meant to make the process easier, cheaper and thus more attractive in a market that now submits only about one in four claims electronically.
To lure more business, electronic claims clearinghouses and routers such as NEIC are working to expand the number of their payer partners while simplifying customer involvement with those payers to a single "all-payer" computer connection, said Del Richmond, practice leader in EDI and healthcare information systems for Charles J. Singer & Co.
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NEIC, which is primarily owned by five large insurance companies, has developed a high-volume trade in commercial transactions but is a latecomer to the all-payer service concept, said Richard Caliri, its president and chief executive officer.
Its commercial transaction volume has been increasing by more than 50% a year and is expected to top 100 million transactions this year, he said. That means the company processes a million every three days, he said. By comparison, it took until August to reach a million transactions in 1988, Caliri's first year on the NEIC board of directors.
But it never tapped into the Medicare and Medicaid electronic claims network, served primarily by Blue Cross and Blue Shield fiscal intermediaries.
That side of healthcare is getting more pressure, however, since HCFA notified caregivers that it wasn't going to pay claims on paper as quickly as those submitted electronically, Richmond said.
As a result, hospitals and physician practices are gearing up for EDI at a faster rate on the Medicare and Medicaid side than on the commercial insurer side of their businesses, he said.
And practice management system vendors, which are trying to streamline the billing process for their clients as part of proving their worth, are looking for EDI partners that will offer simple links to all outside payers.
The acquisition of Synaptek, which already has forged links with the Medicare payers, gives NEIC about 100 new payer connections to go with its existing 200, and it positions the company for the physician practice management information systems business, Caliri said.
There's tremendous business potential in tapping into the information systems vendor base, according to NEIC. More than 330,000 physicians are served by those vendors, but a majority of claims are still not sent electronically.
Integration of physicians into larger healthcare delivery systems may gradually change the point of entry to electronic networks, said Richmond, but for now the physician office creates the biggest obstacle to business.
"Where Napoleon goes to Moscow is in hooking up the doctors," he said. "Getting them hooked up, getting them on line and getting them to use the system is the key to the volume."
The basic business of electronic claims-accepting them, putting them into the parochial formats used by different insurance companies and getting the claims paid-has become a commodity, Richmond said, so an EDI company has to build volume to reduce the per-unit transaction cost and compete profitably.
The healthcare EDI industry is gradually trying to interest providers in using electronic networks for transmission of administrative messages such as enrollee eligibility for services, referrals to specialists and authorizations for care.
Even under capitated reimbursement, in which traditional claims processing is rendered unnecessary by the switch to predetermined flat rates of payment, electronic networks will be needed to provide data on medical encounters and outcomes of care, Caliri said.
"The world of the future does not diminish the need for transactions of care, it just changes the type of transaction," he said.
For example, once health networks begin to be judged more closely on such performance evaluations as the Health Plan Employer Data and Information Set, or HEDIS, "a lot of providers would be totally bogged down in paperwork" without an electronic two-way connection, said Susan Rheaume, an NEIC spokeswoman.
Healthcare EDI companies are working their way into regional efforts to build electronic networks linking payers and providers for transmission of administrative and clinical data.
NEIC recently became a partner with Pacific Bell in a California initiative called the Healthcare Data Information Corp., and it's also one of eight original partners-including Synaptek-in the ChinAlliance, the vendor coalition assigned to build the Metropolitan Chicago Community Health Information Network.
Ironically, as the EDI industry works ahead on enabling transactions that promote efficiency, it also has to work backward to serve payers that still process claims on paper.
Among the services acquired in the Synaptek deal was a system to print claims and mail them to insurance companies without an EDI capability, Caliri said. Up to now, NEIC didn't have a capability to process paper claims-part of being an "all-payer" transaction company these days.