AUTHOR: GREG BORCA, CO-FOUNDER
A couple of weeks ago I decided it was time for my annual flu shot. I ran out to my local pharmacy, told them what I wanted and in about 15 minutes I was (hopefully) protected against whatever nasty strains are making the rounds this year.
The entire process was a marvel of efficiency. Especially when it came time to pay. The pharmacy already had my health insurance information in their system, so when they rang the transaction the insurance claim was already adjudicated and paid, and my portion determined. I knew exactly what it would cost me, and I paid it before the shot was administered.
Why all of healthcare reimbursement isn’t like that pharmacy visit is a mystery to me. After all, the technology to enable an explanation of benefits (EOB) to be generated instantly, showing exactly what the member and the health payer owe for that visit while the member is still in the office, already exists. So does the ability for payers to reimburse providers immediately. It’s simply a matter of having the will to change the way things work today.
Traditional barriers to speed
One of the biggest speed bumps in improving the reimbursement process is the back-end technologies used by most health payers today.
These green screen-based systems date back to the 1980s, when phones were all on landlines and fax machines were considered the cutting edge of communications technologies. Those payer systems were not designed for the world of ubiquitous broadband Internet access, computers, smartphones, etc. we have today.
The result is they aren’t capable of delivering the instantaneous adjudication and payment required to deliver benefits the way those pharmacy systems can. New technologies designed for 21st century payers, however, such as the Wonderbox Technologies Enterprise System, have these capabilities already baked in.
Another barrier is a financial thought process that places high value on holding onto money as long as possible rather than paying quickly. That made sense in the 1980s, when banks were paying record high interest rates.
Today, however, when the annual percentage yields paid by banks are at historic lows - in the neighborhood of 1% (often far less for short-term investments) – there is far less value in holding money. Payers would be better served by looking at ways to eliminate inefficiencies in their processes that will yield more reliable long-term returns.
Finally, members and providers have always accepted the current, paper-driven process as being the way things are. The ongoing consumerization of healthcare may change those expectations, however. Experiences in other industries, or like the one I had with my flu shot, may quickly find members and providers demanding similar capabilities throughout the healthcare system.
Benefits for all
The previous discussion explains why an instant payment system hasn’t been created so far, and the technical reasons why this could be. But payers may still wonder why they should go that route. It’s simple: everyone in the healthcare chain – payers, providers and members – wins.
Payers benefit directly by significantly lowering their administrative costs. The total expenditure to manually receive and handle a claim internally, adjudicate it, prepare the EOB and the rest of the usual blizzard of paperwork, run a check for providers, stuff it all in the appropriate envelope, and pay for postage to mail it is substantial on a per-claim basis.
Multiply that cost by millions of claims processed each month and the total can be staggering. Especially when you consider it adds no real value to any of the parties involved.
Now compare that cost to automatic, continuous processing of clean, electronic claims. A 21st century technology system can process tens of thousands of claims at once. If everything is correct, it can have the claim ready to pay almost as soon as it comes in. No need for people, paper, postage or any of the other typical costs of processing a claim.
Taken across millions of claims per month, the administrative savings alone is enormous. Certainly more than any money lost by not collecting a few extra days of bank interest at 1%.
Providers benefit because rather than having to wait up to 30 days to receive reimbursement from payers, the money can be sent to their accounts before they even see the member – assuming they have enrolled for electronic fund transfers.
They also have the opportunity to collect any fees due from members while the members are still in the office which is far easier (and less costly) than mailing invoices and attempting to collect weeks after the office visit. Or the financial and “good will” losses they suffer by turning delinquent accounts over to a collection agency.
Members benefit because for once in healthcare, they know what their care will cost before they agree to it. Just as they do with any other purchase in their lives – including a flu shot. When the EOB comes back while they’re in the office they can make better decisions about their care and avoid the shock that typically accompanies after-the-fact billing. In these days of high-deductible plans, the value of knowing exactly what their care will cost them cannot be underestimated.
Many of the processes around healthcare billing and reimbursement are needlessly complicated. As my recent experience at the retail pharmacy proves, the knowledge and technology to inoculate the industry against inefficiency and waste already exist. It’s time to take that next step forward and improve it for everyone.