A start-up information company has unveiled a data network it says can determine a patient's coverage, field a bill and settle the claim on the spot.
The computerized "claims resolution system," in development for four years, aims to obliterate the average six-week process of posting claims, weighing limits of coverage and payment, adjusting for deductibles and copayments, and mailing the checks.
Instead, the system built by Indianapolis-based RealMed Corp. relies on high-powered data centers loaded with payer-supplied details needed to accept requests from computers in physician offices and dispatch a claim decision within five minutes.
To make that happen, RealMed must first tame a tangled morass of databases within each payer operation that hold information in a variety of places and formats. That's been the key hurdle in harnessing data for eligibility and claims decisions, said Garren Hagemeier, executive director of the Healthcare EDI Coalition.
Based on his familiarity with the issue, Hagemeier said payers are at least a year away from rounding their systems into shape for the two-way exchanges envisioned. "Most payers . . .don't have consolidated in one place a database to support this interaction," said Hagemeier, whose Little Rock, Ark.-based group tries to identify and advocate solutions to electronic data interchange barriers.
Beyond the barrier of payer capabilities, the RealMed network faces a substantial front-end recruitment of customers to prove itself. The system will depend on:
Signing payers to buy the service and keep it well-fed with data.
Establishing network-linked computers in hundreds of physician offices at a fee of $250 a month.
Getting thousands of "smart cards" distributed to patients. The cards must be loaded with current and accurate information upon which the electronic query system depends.
Though RealMed said negotiations are going on with a number of interested payers and provider organizations, not one has signed a contract. But the company said it's on target to launch the network in at least one healthcare market in spring.
Hospitals will not be among the targets at the outset. The sophisticated software initially was written to computerize transactions for physicians and ambulatory-care clinics. "There the claims are a little less complicated and the price tag is a little lower than in some complicated claims that you might find in hospitals," said Todd Morris, vice president of marketing.
Last year multispecialty group practices suffered through an average wait of 127.5 days to get paid, according to the Medical Group Management Association (See chart, p. 23).
Under the scenario described by RealMed officials, a computer installed in a physician office would be used twice during a patient encounter: upon arrival to provide eligibility and billing information, and just after the treatment to receive and process a request for payment of a claim submitted.
The transactions deploy demographic and insurance data on the smart cards.
Morris said the first query responds to what providers have been asking of payers in the managed-care era: verification of coverage, information on what treatments are covered and status of deductibles met and copayments activated by treatment choices.
A major cause of claims denials and delays involves treatment that either isn't covered or is subject to volume or other limitations determinable only by keeping a record.
The second query transmits diagnosis and treatment billing codes along with requests for a certain amount of payment. A RealMed payment center authenticates the transmission and taps into information from the payer's database to adjudicate the claim, including any repricing of the physician payment demand to account for lower negotiated terms, Morris said.
The return transmission summarizes the amount to be paid, the explanation of benefits covered, and the amount to be charged to a patient's deductible or due as a copayment. The patient has the option of accepting the result, by punching in a personal identification number, or appealing it through traditional claims processing channels, Morris said.
If accepted, the physician staff can ask for the patient share right then, and the payment center authorizes an electronic fund transfer within 48 hours to the physician's account.
The company's collection of information systems include a high-performance hardware and software package that ties into payer databases as well as a link to PCs in physician offices that enables lightning-quick electronic exchanges.
Those two systems provide incentives for electronic claims resolutions that have been lacking in healthcare, said Daniel Perrin, RealMed's vice president for public affairs.
Physicians and clinics will be charged $250 a month per computer, but they will receive a 50-cent credit for every claim transmitted. A physician who posts 500 claims a month would pay off the charge, and if the computer is used by several physicians, they could post significantly more, Morris said. The extra credits could be claimed in cash, he said.
A study done for RealMed by the Milwaukee office of actuarial firm Milliman & Robertson reported the RealMed system would cost insurers $3.13 to process a claim compared with the average $11 cost of current methods. That doesn't include the average $8 cost per claim for physician offices, according to EnterMedica Resources, an Irving, Texas-based physician practice consulting firm.
RealMed's research and development costs have run into "tens of millions of dollars" so far, said Morris. That includes a minority equity stake by Gemplus, a producer of plastic and chip-based smart cards and readers.
The network is being built through a joint effort with Digital Equipment Corp. and MCI Telecommunications.