On Finance: Medical payment consolidation a new trend in administrative efficiency

April 1, 2005

Save on costs with increased efficiency

Ironically, healthcare professionals can successfully remove a beating heart from the chest cavity and repair it without much fanfare. Yet, when it comes to leveraging technology to simplify the business of healthcare, the industry is notoriously slow-an ironic trend for a trillion-dollar industry.

 For example, many health administrators still rely on paper and pen to manage health insurance claims. And when it comes to reimbursing payers and providers, the process is just as antiquated. Today, most healthcare payers reimburse providers by issuing individual paper checks and explanation of benefits (EOBs) for every claim. Routinely, payers send hundreds, if not thousands, of checks via regular mail to providers at significant costs: postage, printing, and related banking fees.

 Without any alternative, the current medical claim payment process works, but is old, tired, and unnecessarily eats up healthcare dollars and labor.

 New systems are emerging in the healthcare industry, which will make the medical claims payment process as efficient as banking or retail. These new systems use existing banking technology to streamline and consolidate payments across all boundaries from multiple employers, bank accounts, and adjudication systems into one single provider payment and EOB. The result: a streamlined and efficient medical claims payment process.

  There are many benefits of these new systems. First, the potential to reduce costs is considerable. By consolidating payments and reducing postage costs, the process is believed to cut costs by at least 33%. Patients can receive one monthly family explanation of benefits instead of several, a savings of both postage and related supplies. Bank fees are also reduced as an electronic system eliminates checking clearing costs, stop payment, and positive-pay expenses.

Administration is easier in a consolidated process because claims are reported across employer groups and adjudication systems making information retrieval immediate. Simplifying related adjudication systems and ERISA regulations required through a consolidated payment process creates additional efficiencies. Now, administrators can securely and legally consolidate multiple plan asset accounts and/or adjudication systems into one financial document per individual instead of several. These systems also have the ability to eliminate employers‚ W9 provider maintenance and 1099 reporting responsibility, another reduction in both manpower and costs.

 Electronic systems enhance client support. Some systems also offer end-users the ability to track cleared disbursements through Web-based pages for customer service calls from providers or clients access. Images of cleared documents assist customer service in resolving payment disputes and on-line reporting and provide reconciliation reporting such as cleared, voided and outstanding claims by specific dates.

 Finally, electronic consolidation enables consolidated ANSI 835s containing remittance information for multiple claims reconciled to one electronic funds transfer. This allows providers the ability to post one payment (as opposed to multiple ACH transactions), which will significantly reduce the amount of time and resources required to post payments into practice management or patient accounting system.

 As the industry continues to learn about new medical claims consolidation systems, there is bound to be some confusion, as an integration of any new technology requires time. During this process, it is important for payers and providers to note that while many systems will claim to be able to consolidate multiple payments from one source into many, few today can. To effectively reduce costs and enhance efficiencies through a consolidated claims processing system, payers must have the ability to consolidate payments across all boundaries from multiple employers, bank accounts, and adjudication systems into one single provider payment.

 

ECHO Health Inc., headquartered in Cleveland, with offices in Atlanta and Boston, provides cutting-edge medical payment consolidation to reduce expenses and increase operational efficiency. To date, ECHO has paid more than $1 billion in consolidated payments to more than 82,000 healthcare providers. A privately held company, ECHO Health has an exclusive marketing relationship with Kessler Financial Services, LP, Boston, Mass.