The software automates verification of eligibility for specialist treatment, transmits the referral request to a utilization review manager if necessary, and automatically updates St. Joseph's practice management software, says Larry Stofko, vice president of strategy and innovation at the Orange, Calif.-based delivery system. The software then links-via URL Web site addresses-transcribed reports, laboratory reports and other inpatient clinical data to the referral before transmitting it to the specialist.
Like St. Joseph Health, many other provider organizations are using EDI for far more than claims submission. For example, they're using EDI to check patient's insurance eligibility, to inquire about the status of a pending claim, and to receive and post electronic remittance advice to patient accounts.
One catalyst for the growth in these and other claims-related electronic transactions is the HIPAA transactions and code sets rule. But the promised cost-saving benefits of the HIPAA rule's so-called "standards" have not yet fully materialized-nor will they until the transactions are truly standardized, many experts say.
"I'm in meetings where someone asks, `Aren't these already standardized, since we did all that work?'" laments Stofko. "And the answer is `No'".
The HIPAA rule actually permits payers to add optional data elements to standard electronic claim forms, resulting in hundreds of versions of a "standard" format and hampering the industry's ability to improve efficiency through standardized claims. Consequently, some observers fear that the proposed national health information network would not yield anticipated efficiencies unless its voluntary standard clinical data elements become mandatory.
Competitive landscape
In recent years, there's been a slow, steady shift toward providers submitting claims to payers directly over the Internet, bypassing claims clearinghouses. But still, the vast majority of claims travel from a hospital or a clinic to a clearinghouse, which typically edits claims and then routes them to appropriate payers. And many clearinghouses are handling a growing list of claims-related transactions and offering other new services in hopes of convincing providers not to file claims directly via the Internet.
One change last year in the claims clearinghouse competitive landscape could have major consequences.
Elmwood Park, N.J.-based WebMD Corp., which operates the nation's largest claims clearinghouse, is changing its business relationships with other clearinghouses.
For many years, these other clearinghouses have routinely routed claims destined for certain payers through the WebMD clearinghouse, which has served as an extra middleman. That's because the WebMD clearinghouse (formerly known as Envoy and NEIC) has well-established links to these insurers, some of which date back to the 1980s.
In the past, the other clearinghouses shared in the transactions fees that WebMD received from payers. But last year, WebMD signed "exclusive" or "near-exclusive" contracts with at least 10 payers. These include Aetna Inc., Cigna Healthcare, Horizon Blue Cross and Blue Shield, John Deere Health and Medical Mutual of Ohio.
An exclusive contract means a payer will accept electronic claims-excluding those directly submitted by providers-only through WebMD. Some payers signed near-exclusive contracts to send most of their claims through WebMD, but they maintained connections with a small number of other clearinghouses.
In the late `90s, WebMD started signing payers to exclusive contracts but continued to share the revenue from these payers with other clearinghouses. What's different now, payers, industry observers and other clearinghouses say, is that WebMD has negotiated substantially reduced transactions fees with its exclusive and near-exclusive payers. To make up the funds, it has reduced the revenue sharing with other clearinghouses to a fraction of what it was, or has eliminated it altogether.
As a result, a clearinghouse that, for many years, may have gotten 15 cents for sending a claim to a payer with WebMD as an extra middleman now may be getting only five cents, if anything, some observers say.
For its part, WebMD acknowledges that it lowered its fees to payers in a number of its new contracts in 2004. But the company has not lowered fees across the board, says Kevin Cameron, CEO.
If WebMD now gets less revenue from a particular payer, "we're taking that hit, and so are the other folks in the process," he says, referring to other clearinghouses that funnel claims through WebMD and now get lower fees.
Misys Healthcare Systems, Raleigh, N.C., operates a clearinghouse that has seen a significant decline in its revenue as a direct result of WebMD's new contracts, says Ray Eearmitt, vice president of sales and marketing for the transactions services unit.
The Misys clearinghouse serves physicians using its practice management software. Misys is one of WebMD's largest submitters of claims.
Now, Misys has sent a letter to WebMD terminating its contract with the company. Misys expects to connect directly to many payers; it recently linked with Minneapolis-based United Healthcare Group. It also will use the payer connections of other clearinghouses. Misys hopes to ink a new contract with WebMD, under which it would submit far fewer claims to the WebMD clearinghouse.
Forced fees
One potential impact of WebMD's new payer contracts, observers say, is that other clearinghouses will be forced to raise their fees to make up for the lost revenue.
"Although we would hope to see the health plans pass on their savings to providers and/or consumers, this is unlikely," says Robert Tennant, senior policy advisor at the Medical Group Management Association, Englewood, Colo., a trade organization for group practices. "Clearinghouses are going to have to increase their fees levied on providers to make up the loss in revenue."
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