Faster payments promised with new system

Aetna U.S. Healthcare plans on-line claims

Feeling both market and political pressures, Aetna U.S. Healthcare in Blue Bell, PA, has begun building its own in-house on-line electronic claims payment system, which it hopes will be up and running by the end of 1999. Once completed, company officials say, the system will mean faster, paper-free claim transactions and payments for providers.

Aetna is not the first carrier to create its own on-line billing service, but it promises to be the most prompt when it comes to making payment. The insurer estimates some 38% of physicians currently submit bills electronically.

Called "E-Pay," the system’s goal is to pay physicians within 15 days on average for clean, problem-free claims submitted electronically. The carrier has also built in a fudge factor, saying reimbursement for any unusual claims requiring some kind of intervention could take longer.

According to Aetna, the national average is 40 to 45 days from initial billing to when a provider gets paid by a commercial plan. Meanwhile, Aetna says it averages 30 to 32 days to pay its participating doctors. Many physicians, however, say it takes them much longer to get paid. In fact, focus groups of physicians organized by Aetna often complained of bills running 90 to 120 days past due.

While doctors stand to benefit greatly from E-Pay, Aetna and other carriers completing similar systems are merely responding to competitive pressures while trying to curtail lobbying efforts by provider groups to have state and national lawmakers enact even stricter prompt payment rules.

After all, most plans feel "having a private business tailor its approach [to paying claims] is certainly preferable to having the legislature craft its own approach," says former New Jersey Insurance and Banking Commissioner Elizabeth Randall.

Slashing administrative costs is another potential payoff from installing such systems.

"I like to spend 95% of my time taking care of patients," says Bernard Schayes, MD, a New York City-based primary care physician. "Anything that gets in the way, like filing claims, takes away from that time. "

Neil E. de Crescenzo, IBM’s director of global marketing and business development, estimates that the U.S. health care system spends $200 billion per year in administrative costs.

"We’ve seen the tremendous benefits derived by the banking industry in cost reductions on electronic transactions on an ATM vs. going to a teller," de Crescenzo says. "Those same efficiencies are sorely needed in health care. In some ways, this is simply about bringing to health care many of the tools that have been used in the banking and retail sectors for some time."

The basic design of the system calls for it to:

— match claims with referrals, which will require both sides of the paperwork to be in the system;

— screen for duplicate payments or fraud;

— watch for mistakes and keying errors. Aetna officials estimate that in about two-fifths of enrollment forms, either a mistake is made or an error is keyed in. However, a directly submitted electronic product can reduce errors to 1% of forms.

Physicians can choose from among three options for entering the system: via their office computer, through a card-based machine that is similar to a credit-card reader, or by phoning their claims into voice-response units.

Once participating doctors submit their electronic bill, they will be "flagged" by the system as it searches for a corresponding electronic referral. If found, it matches the two and routes the claim for processing.