Insurer consortium MedUnite, San Diego, last week purchased the country's second-largest medical electronic claims system from NDCHealth in what some view as a major step toward developing a new system for processing healthcare claims.
In exchange, NDCHealth will receive a 17.9% stake in MedUnite, as well as a portion of the revenue generated by the system. The companies will co-market the product. Further financial terms weren't disclosed.
This was MedUnite's first notable announcement since seven of the nation's largest health insurers joined forces early last year in an effort to streamline the claims process by creating an Internet-based system that all health plans and doctors could use. The transaction is scheduled to close by Aug. 31.
NDCHealth, a unit of National Data Corp., provides electronic transaction systems and services to 90% of pharmacies, 24% of hospitals and 100,000 doctors nationwide. In addition, the Atlanta-based company has relationships with many of the country's Blue Cross and Blue Shield plans as well as Medicare and Medicaid-all potential clients for MedUnite's system.
MedUnite's founders-Aetna, Anthem, Cigna Corp., Health Net, Oxford Health Plans, PacifiCare Health Systems and WellPoint Health Networks-cover 65 million Americans, or about one-third of those with private insurance. Analysts estimate that the seven insurers each have kicked in about $4.2 million to cover start-up costs since the consortium's founding in March 2000. About 30 billion healthcare business transactions are conducted in the U.S. each year, roughly 60% of which are still handled by phone, fax or paper. Although several companies are trying to automate the process, few have garnered significant market share. The claims-processing service, being tested by 500 doctors, is expected to be formally rolled out this summer. The system will allow doctors to file claims electronically over the Internet. It also will let them check which treatments, drugs, hospitals and specialists are covered under a patient's plan and will even find errors before a claim is filed.
Many industry observers believe MedUnite intended to challenge WebMD's status as the largest Internet healthcare company. However, even though WebMD's online claims system has attracted more users than NDCHealth, doctors and insurers have been slow to adopt the technology.
Physicians have been especially resistant to computerized billing because most belong to small group practices that have neither the money to buy new computer systems nor the time to learn how to operate them.
One purported benefit of an Internet-based solution is that it doesn't require a huge capital investment. MedUnite plans to make money by charging a transaction fee, which has yet to be determined.
-With the Associated Press