RealMed Corp. executives credit hard times in the healthcare payer industry for giving them an easier time making their case for change.
Compared with the first go-around two years ago, a greatly streamlined claims-processing regimen is more cost-effective and much better grasped and desired by payers, says Larry Gigerich, who joined RealMed as senior vice president of public affairs and corporate relations last September.
"Companies today have a better understanding of what their costs are," Gigerich says.
But it also didn't hurt that healthcare insurers have been taken to court over their claims-adjudication judgments or that Congress has debated a patient's bill of rights growing out of perceptions that insurers, especially managed-care organizations, were the culprits in a pattern of claims denials, Gigerich says.
Along with the rising costs of administering claims, the pressure on insurers "created a crescendo" of motivation to deliver service faster and more economically, he says.
In 1997 it was difficult to raise that kind of consciousness. RealMed came equipped with studies demonstrating that the prevalent labor-intensive claims process cost an average of $19 per claim for insurer and physician office combined. But despite calculations that the RealMed alternative could cut that cost in half, "There was nothing pushing insurance companies to do this," Gigerich says.
With the emergence of proposed regulations to enforce the Health Insurance Portability and Accountability Act of 1996, insurers are focused on electronic data transfer and the crucial role of providers in overall cost savings on both ends of a transaction, says Robert Hicks, RealMed's chairman and chief executive officer.
That said, the hurdles of payer cost and caution are still great. Even with the offer to pay for the interfaces and other integration expenses upfront, "It's a significant challenge to get them to move first," he says.
To allay insurers' concerns about allying with a small start-up venture on such a big project, "We had to prove we weren't some fly-by-night company that came in and hadn't taken the time to understand their business," says Gigerich.
Once in, the challenges really begin. At a large payer organization, numerous departments are responsible for accepting and resolving claims. They include the departments of treasury, accounting, finance, claims, internal audit, provider relations and HIPAA compliance, Hicks says.
Cooperation among departments has to be ongoing, because the accuracy and timeliness of patient-specific information is only as good as the connections to a variety of so-called legacy systems, the often-venerable computers and databases that house the claims operations of insurers and managed-care plans.
The importance of that cooperation is outlined in RealMed's recent filing with the Securities and Exchange Commission in advance of an initial public offering of stock.
"Any error in the entry of a particular payer's rules in the software code, or data-entry errors, will result in delays and adjudication errors," the report says, "and could harm perceptions about the effectiveness of the RealMed network."