Collecting patients' share up-front getting easier

With Humana starting a real-time claims adjudication system, other big plans may follow. Knowing the patients' share is key to the success of HSAs.

By Jonathan G. Bethely — Posted Feb. 27, 2006

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MacGregor Medical Center in San Antonio is a big believer in the process known as real-time claims adjudication. That's because in a business where collecting 80% of outstanding patient bills is the norm, its collection rate from patients under this system has gone up to 93%.

This is why: Under a real-time claims adjudication system it tested for Humana -- a system the insurer is rolling out nationwide -- MacGregor could find out the breakdown of the patient's and insurer's share of the cost of care. That let MacGregor collect from patients before they left the office, rather than mail a bill. Not only do patient payments come in faster and more frequently, but the 10-physician, primary care practice also saves the estimated $6.50-per-bill for handling collection by mail.

"It's been a blessing," said Brian Senger, MD, a MacGregor internist. "Time is money. This is faster, and it works. Our collections alone just over the past month have increased dramatically. I think this is the wave of the future."

Many are beginning to agree with Dr. Senger. Humana's entry into the nascent world of real-time claims is the first big push by a national insurer, and analysts expect that other major insurers will follow suit.

Real-time claims adjudication is a process in which a practice electronically files a claim with an insurer, which then quickly sends a message back to the practice breaking down what the practice will be paid. For example, Humana says its system will send back an answer in 30 seconds.

Being given the patient's share of the bill, the practice can seek payment from the patient right away. The insurer wouldn't pay the physician right away but would process and issue payments in its usual manner.

For many plans and physicians, real-time claims adjudication is seen as a way to cut down on the cost of paperwork and claims administration. Health savings accounts advocates see real-time claims adjudication, along with transparency in pricing, as a key to the success of such plans. They see HSAs working at their simplest when physician and patient find out the charge, and the patient can opt to use an HSA-linked debit card to pay the bill. Humana, for example, has its own HSA debit card.

"It's something that is absolutely necessary to effectively support consumer-driven health plans," said Pat Kennedy, a managed care consultant in Rockville, Md. "There's no question this is the direction the industry is going. Maybe two years from now, this will be more commonplace."

The technology behind real-time claims adjudication has been around for more than 10 years. But only in the last few years has the technology begun to take root in insurer-physician relations. Blue Cross Blue Shield plans in South Carolina and Florida were among the early movers, beginning their real-time claims adjudication processes in the last few years.

The South Carolina Blues has been using real-time claims adjudication since 2001. David Boucher, assistant vice president for health care services, said the plan receives about 75,000 claims per month. About 2,600 out of 5,500 physicians are using the real-time claims process.

Practice manager Samantha Watkins of Colonial Family Practice in Sumter, S.C., said real-time claims adjudication had helped the practice maintain a steady cash flow. With a staff of 62, including three physicians who handle procedures such as colonoscopies and MRIs, Watkins said it was important for them to know how much they are going to be paid from the insurer and the patient without having to wait weeks.

"I don't care how good a physician you are," she said. "Cash flow makes the biggest difference in the world."

The South Carolina Blues uses a system that works online. Humana's system works through software compatible only with certain practice management systems. So the cost of entering the world of real-time claims adjudication wouldn't be too high, unless you're starting from scratch with a computer system. Or, in the case of Humana, you need to buy a practice management system that works with its program. (Most major practice-management systems are compatible.)

Following the lead of other plans, Humana would not charge physicians for using its service, Senior Vice President Bruce Perkins said.

Before other insurers bring this technology to the market, consultant Kennedy said, they must ensure that they can adjudicate up to 90% of claims; otherwise, physicians will be frustrated. Generally, a claim is not adjudicated if the automatic review flags it as not having been submitted correctly, or in need of further review.

Also, if the physicians believe that the insurer's adjudication is not correct, they can appeal the claim.

Cash-flow benefits

MacGregor, one of a few practices in Texas and Kentucky to test Humana's system, found that of the 7% of claims not immediately adjudicated, and thus not resulting in either immediate patient payment or a payment plan, most were resolved in a few days. About 20% of MacGregor's patient base is covered by Humana.

The only downside, said MacGregor Chief Financial Officer Terri Foose, is a 300% increase in credit-card processing charges. MacGregor must pay a 2.2% fee on each credit-card transaction.

But on the flip side, Foose said, the practice has seen immediate cash-flow benefits from decreased administrative time spent on claims and savings from not mailing bills to patients.

Foose said patients had adjusted to paying for services at the medical center. When Humana issued medical debit cards to members with high-deductible plans, employers explained the new process to them, she added. Also, as experts recommend, the practice informs patients of the intention to collect their share right away.

But some patients don't pay the entire bill then. Foose said the medical center also lets patients make payment plans. That is consistent with AMA ethical guidelines, which state that patients have a financial responsibility to meet their costs or discuss financial hardships with physicians, while also discouraging practices from "harsh" collection methods.

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Instant answers

How Humana's real-time claims adjudication system works:

  • A practice using a compatible practice management system enters the claim.
  • The claim is submitted electronically to Availity LLC, Humana's primary gateway for the submission of claims.
  • Availity immediately sends the claim to Humana for adjudication.
  • Humana's system returns the adjudicated claim to the practice, detailing the insurer's and the patient's share of charges, within 30 seconds.
  • The practice now can charge the patient before he or she leaves, set up a payment plan or issue a bill. Humana's portion of the claim is paid in the normal weekly cycle for electronic claims submission. If a practice disputes the adjudication, that is handled through Humana's normal appeal channels.

Source: Humana

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