Physicians who have been slow to jump on the Internet are getting an incentive: speedier reimbursements.
A new partnership between Atlanta-based Healtheon/WebMD and Louisville, Ky.-based Humana will give free Internet capabilities and Internet-based practice management tools to Humana's 330,000 participating providers.
Physicians are increasingly turning to the Internet for clinical information, but they have been slow to adopt Internet technology in their back offices. Now, Healtheon/ WebMD is hoping the promise of faster claims processing and speedy reimbursement--via technology--will motivate physicians to embrace Internet-based practice management tools.
"To influence physician behavior, you have to make them more productive," says Mike Long, Healtheon/WebMD Chairman and COO. "At the end of the day, that means they can see more patients and make more money. The carrot (to entice physicians to use Internet tools) is that they're going to get paid faster and more efficiently."
As part of the recently announced deal, Humana providers in three undisclosed trial markets will receive free subscriptions to WebMD Practice, the company's Internet-based practice management system. The plan is to include all Humana providers and enrollees next year. In the future, subscriptions to the system may be sold at a nominal cost.
"The main reason (this deal) is important is that previously we have not had an effective mechanism for electronically connecting to and communicating with our providers," says Richard Vance, M.D., Humana's vice president for population health improvement. "With Healtheon/WebMD the barriers are essentially eliminated, and it will facilitate connections and communications between us and the providers that we've never really been able to do before."
Providers will be able to check patient eligibility, authorization and claims status online, as all Humana claims will be processed through Healtheon/WebMD.
Humana will pay a transaction fee, which has not yet been established, for each claim processed. But the company hopes the expense will be offset by the cost savings achieved by bringing transactions online. Later this year, physicians will be able to receive claims reimbursement via electronic funds transfer, thereby eliminating all paper transactions.
"We're looking at claims processing time being reduced from what is now days, and sometimes months, down to our goal of minutes," says Humana spokesman Dick Brown. Humana hopes that this can be achieved by the end of the year.
Lori Price, a senior healthcare services analyst with CIBC World Markets in New York who follows Humana, believes faster claims processing will help physicians overcome their ambivalence towards the Internet.
"Physicians have historically had a little bit of a mental block against using any high-tech systems. There has got to be a compelling reason for them to want to use it," she says. "If this (new partnership) means they get paid faster, this may cause them to want to use it more."
Jeffrey Peters, an analyst with Minneapolis-based Dain Rauscher Wessels, agrees that physicians need a push into the online world and believes this deal could accomplish that.
"I think the most important part of this agreement is the incentives they're putting in for physicians," he says. "These are the kinds of incentives that will not only get physicians online and more excited, but will probably, and more important, get their staff going on using the services."
Vance says the deal also will help Humana pass on patient data to providers.
Large medical groups and independent practice associations have struggled to gather and disseminate utilization data. Many IPAs complain that managed-care organizations are slow to supply them with the data they need.
"This provides us a mechanism for providing aggregate data on Humana members to providers," he says. "Physicians have not had the ability on their own to gather aggregate data to understand if they're providing appropriate levels of screening and care for their patients."
For its part, Humana will develop original health and welfare informational content for a co-branded Humana/WebMD consumer site and promote the site to its providers and 6 million enrollees. Humana enrollees who log on to the site will have access to WebMD's general health information, as well as Humana-specific information, such as lists of participating providers. Patients will be able to order new membership cards, change primary-care physicians and create secure personal health records online.
Although the insurer will be paying transaction fees to Healtheon/WebMD, Humana's chief information officer believes that putting its enrollees and providers online will help control costs.
Analysts agree, noting there are potentially huge savings in bringing transactions online.
"One of the weaknesses of Humana is their ability to contain medical costs, and I think that this gives Humana an opportunity to leapfrog their competitors and move ahead," says Bill McKeever, senior vice president with PaineWebber in New York.
The announcement caused Humana's stock, which fell throughout 1999, to spike slightly, up to about $8. Healtheon/WebMD's stock, meanwhile, remained stuck in the $50 range, down from its high of about $100 in June 1999.
Santa Clara, Calif.-based Healtheon had been aggressively courting the physician community, beginning with its merger with Atlanta-based WebMD. That deal, announced in May and completed in November, is estimated to be worth $12 billion. As a result of the WebMD merger, Healtheon/WebMD now provides Internet services and online health information to 280,000 physicians and 510,000 consumers.
The Humana partnership will help Healtheon/WebMD build its name and national appeal, Peters says.
"It's another very important trading partner for them to sign on. For any company to be successful, they need to build a critical mass of partners," he says. "You can't have, say, only 10% of a physician's patients online, or be able to check eligibility for only 10%. That's not going to fly. So right now it's somewhat of a land grab to sign up strategic partners. It's going to be important for Healtheon to sign a whole bunch of relationships."
Healtheon/WebMD's main competitor is Elmwood, N.J.-based CareInsite. The company has focused primarily on the mid-Atlantic region, but plans a national launch this month. CareInsite recently announced several strategic partnerships of its own, including a consumer-oriented alliance with AOL and another with Medical Manager, an online practice management tool. Medical Manager's customer base includes 185,000 physicians.
PaineWebber's McKeever says that it's essential for both CareInsite and Healtheon/ WebMD to align with strategic partners, but the companies soon will have to prove their mettle.
"There's been a frenzy of strategic relationships announced in the last few months. At some point they're going to have to stop these relationships and go back and actually do the work that's involved in these relationships," he says.