A Startup Does Medical Payments on an Online Bill-Pay Model

A new approach to facilitating electronic payments with health-care service providers is being developed by Redwood City, Calif.-based Health Team Inc. Founded earlier this year by executives with backgrounds in online banking and bill-payment services, Health Team developed the HealthRails.com network on concepts similar to online bill pay. Currently in beta test with a group of consumers and insurance companies, HealthRails allows patients to log on to a secure Web site to view their doctors' bills, see how much of each bill their insurance has paid, view the unpaid balances, and initiate payment with a credit or signature debit card. HealthRails then deposits the funds immediately into the provider's account. HealthRails' merchant processor is PayPal Inc., which can enable merchants to offer acceptance of the major card brands. In the test, HealthRails uses information from the explanation-of-benefits form provided by the insurers to determine how much patients owe. HealthRails hopes to move from the beta test to a rollout with an undisclosed number of medical providers within the next 30 days. Initially, HealthRails expects the providers to promote the service with patients. Later, HealthRails will develop online promotions and work on marketing programs with administrators of health savings account (HSA) plans. HealthRails will generate its revenues from fees paid by the health-care providers after they receive payments, explains Michael Klieman, chief executive and a former executive with Intuit Inc.'s online-banking and health-care units. The fee is 2.5% plus 65 cents per transaction, with no setup or monthly fees. “An average size health-care company consisting of four providers should have about 7,000 patients. They can provide promotion materials to get their patients to sign up for the service,” says Klieman. Under this model, patients would receive an e-mail from HealthRails that a bill has been posted at the site. They could then go to the HealthRails' Web site to log on, view the bill, and make payment. HealthRails expects its process to expedite the time in which medical providers receive payment. “Today, it often takes months for the health-care provider to receive payment,” says Klieman. “Additionally, patients are often confused because they get bills from the provider and statements from the insurance companies that are often confusing. Patients are forced to reconcile the paperwork and usually it doesn't match up.” Using HealthRails, most providers should be able to receive funds within days, he says. Once HealthRails has found out how much of a medical bill the insurer has paid, it can send an e-mail to the patient directing her to the HealthRails site where she can see the balance from the bill and pay it immediately. “When the provider signs up, there are no technical integration, training, or upfront costs. All they have to do is register with us and promote this to their patients. HealthRails sends out messages to their patients when the bills are ready,” Klieman says.