With Payments a Big Part of Health-Care Costs, Automation Efforts Arise

Low-hanging fruit it's not, but health care still remains one of the biggest untapped markets for electronic payments. A new report from Celent LLC estimates that $11 billion could be saved by automating just part of the health-care payments process. And a new industry group is forming to marshal the growing interest in medical payments among banks, payments processors, and technology vendors into revenue-generating business. The report from Boston-based Celent, “Paper-to-Electronic Processing in Healthcare,” looks mainly at the complicated processes by which medical providers, insurers, and their vendors trade patient and payment information so that insurance claims may be paid and patient data linked to the correct remittance documents. While part of this process is electronic, much of it is still paper-based and highly inefficient. “In short, it's a mess,” says the report. In fact, the tasks of sorting, reconciling, verifying, posting, and otherwise handling such payments costs about $22 billion a year and is a major reason why U.S. health-care costs are rising, according to Celent. So-called “extended” lockbox functionality represents a partial solution. “It's an enhancement of existing lockbox services,” Celent analyst and report co-author Red Gillen tells Digital Transactions News. Extended lockboxes, which take their cues from the bill-payment processing facilities banks and processors set up for billers, can sort and image checks as well as explanation of benefits (EOBs) and other documents related to medical payments. Extended-lockbox technology also can lift data from EOBs and populate electronic remittance forms and other documents with that data in a medical provider's accounts-receivable system. Celent estimates that if the technology were fully applied across the medical industry, it could take as much as $11 billion out of health-care costs. Sensing opportunity, a number of banks, tech providers, and other specialists have jumped into this market. But many players are offering commoditized services, and the amount of paper to convert into electronics will decline because of advances the health-care industry makes on its own or because of government fiat, according to Gillen. “Over time, it's somewhat analogous to being a buggy-whip manufacturer?you're not going to have a market,” he says. But all that is going to take time, in part because of the complexity that insurance companies face in upgrading their processing systems and also because many smaller doctors' offices still rely on outmoded technology that will take years to replace. “They can't, overnight, learn a new system,” Gillen says. And possible government mandates for standardized, electronic medical data-reporting formats that are part of broader health-care reform proposals can change as bills work their way through Congress. In the Senate, for instance, a proposed mandate for standardized reporting by 2014 recently changed to 2016, and there's no way to predict what, if any, mandate will emerge if Congress actually passes a health-care reform bill, he says. Meanwhile, TAWPI, The Association for Work Process Improvement, last week announced the formation of a new group it dubs the Healthcare Payments Automation Council, or HPAC. The group is an outgrowth of Boston-based TAWPI's second-annual health-care payments conference. While still fairly small, with about 260 attendees, the September conference in Chicago nonetheless was a hit, notes Mark Brousseau, TAWPI's Council facilitator. “[HPAC] is really an outgrowth of that event,” Brousseau tells Digital Transactions News. “Attendance was up 22%, which is astounding in this environment.” TAWPI's health-care conference will continue, and HPAC will have one-day meetings twice a year and monthly Web-based panel discussions. First-half 2010 topics include health-care providers' payment practices, the future of patient collections, banks' future role in health-care payments, and privacy, security, and compliance practices. The group also will sponsor quarterly research studies on topics suggested by the membership and produce an annual “state of the industry” report and a buyer's guide.