Company issues a demo project report

Report on eligibility

COB Clearinghouse — a company that promises to eventually provide one-stop shopping for eligibility data on every patient admitted to a hospital — has released a preliminary report on its National COB Demonstration Project.

The Cleveland-based company aims to achieve its goal through the automation of "coordination of benefits," the process of determining which insurance policy is primary for a particular patient. The purpose of the national project, company officials say, is to bring the national eligibility record together for the first time.

The preliminary report is on 4 million eligibility records contributed by health care providers, payers, and insurance plan sponsors, says company president Patrick Lawlor, who adds that project participants are being added on virtually a daily basis. By the end of October, the ongoing project had 30 million records, he says.

Payers must go electronic by October 2002

Participants provided the company with insurance eligibility data they received for three days in March, June, and September of 2000, using the systems the participants currently have in place.

Under requirements of the Health Insurance Portability and Accountability Act (HIPAA) of 1996, payers must make data available electronically by October 2002, so at that point their records will become part of the project whether they agree or not, Lawlor notes. "My expectation is most will be [involved in the process] well before that."

Using its proprietary software program, COB Clearinghouse examined the identities of the individuals in the combined data provided by all the demonstration participants.

Lawlor points out that the preliminary results arise from a sampling of only 4 million insured lives, and constitute testing against less than 5% of the total record possible. Findings were as follows:

  • 4.47% of the insured population submitted for the National Demonstration Project was primary elsewhere in March 2000.
  • 4.68% of the insured population submitted for the project was primary elsewhere in June.
  • 4.29% of the insured population submitted was primary elsewhere in September.

Return on investment is 8.9 to 1

The preliminary results, Lawlor says, indicate an avoidable expense of $111 per insured person per year, or roughly $230 per insured employee per year, based on national average claims. The return on investment in automating coordination of benefits, he says, is about 8.9 to 1, meaning that the avoidable expense is 8.9 times the cost of automation to a large plan sponsor. The 4.47% extrapolates to 16% in a complete data collection, Lawlor adds.

That’s because, he explains, the preliminary run was on only 4 million records, mostly from Ohio and Pennsylvania, while each state has between 12 million and 15 million covered lives. "If we found 4% of [the amount tested], then the statisticians tell me we should come out at around 16% when we’re finished."

"Nobody really knows" the number of eligibility records in the United States, Lawlor says. "I think it’s 300 million."

Since the country has a population of approximately 270 million, and 40 million of those people don’t have insurance coverage, there is obviously a large incidence of "double coverage," he adds.

"What happens," Lawlor says, "is that a patient comes in to admitting and says he’s covered by Aetna. He doesn’t say that he’s also covered by Cigna and that it’s primary."

Through the government’s Medicare Secondary Payer (MSP) effort — by which it determines instances when a payer other than Medicare should be responsible for a patient’s bill — the agency recovers about $750 million a year, he notes. "That wouldn’t happen if there were not double coverage."

COB Clearinghouse has met with officials of the Centers for Medicare and Medicaid Services (CMS) to discuss the potential for a more efficient way of determining the primary payer, Lawlor says. "We’ve told them that if a hospital put its claims through our filter, it would find all the accounts that are primary to Medicare."

If that were done, he adds, access personnel wouldn’t need to ask Medicare patients the MSP questions, thus eliminating a tedious and time-consuming task.

The question COB Clearinghouse posed to CMS officials, Lawlor says, is, "How about if we certify that providers have adequate interfaces [to determine the primary payer] and then give them exemption from audits and penalties [associated with the MSP process]? It’s not complicated."

With the electronic requirements associated with HIPAA, he points out, time lags between when a person changes coverage and when that information is available to a provider will be virtually eliminated.

[For more information on COB Clearinghouse, call (216) 861-2300 or visit the company’s web site at www.cobclearinghouse.com.]