Staking a Claim
If patients and doctors are two legs of the health-care stool, insurance vendors are the third -- and the one that often makes the whole operation wobble. Insurance companies and managed-care groups frustrate doctors and patients with rejected claims, denied coverage, and general micromanagement. But insurance vendors also have their beefs -- with patients and doctors.
Both doctors and patients have been known to submit inaccurate or even fraudulent insurance information, and insurers have been slow to develop systems that can efficiently recognize bad claims. But technology is beginning to catch up with the overwhelming number of medical procedures, laws, and regulations that affect how even the simplest claims are paid.
"You need a little army to run a claims department," says Grace Mary Trocchio, cost-containment manager of Vytra Health Plans, a managed-care organization in Melville, N.Y. The 200,000-member health plan receives an average of 9,000 claims each day. Trocchio's aim is to make sure that Vytra isn't paying any more than it must to satisfy those claims. Despite using software that's designed to catch such billing errors as duplicate claims, Vytra was still seeing money slip through the cracks from overpayments. "We were missing claims-savings opportunities," says Trocchio, resorting to industry jargon.
In October 1999, Vytra started sending its claims for review to a Norwalk, Conn., company called IntelliClaim. Although a redundant system hardly sounds like a model of efficiency, running claims through IntelliClaim's "extra loop" not only catches errors but also alerts insurance companies to entire categories of mistakes in their claims, according to Kevin F. Hickey, IntelliClaim's CEO. The company places an extra layer of protection over a system that may not have the personnel or the money to routinely update information from doctors, hospitals, and government regulators.
Each business day, Vytra sends its thousands of claims to IntelliClaim in encrypted files over the Internet. IntelliClaim's computers analyze all the data, matching standards that Vytra has set against the submitted claims. IntelliClaim continually updates its software with changes in regulatory information, such as revisions from the Health Care Financing Administration -- a task that would be prohibitively expensive for Vytra to handle. IntelliClaim returns the verified batch of claims over the Internet by the next day.
Vytra found it was overpaying doctors for such things as sending out duplicate bills or charging double for supplies -- for example, charging for sutures when the cost of the material had already been included in the surgical bill, says Trocchio. So far the extra effort is paying off big time, she says. In 2000 alone, the system saved Vytra more than $1 million.
While insurance-company and health- plan executives are working to avoid paying out too much, hospital officials are striving to prevent insurance companies from paying them too little. Reimbursement headaches used to be a chronic problem for the Cape Fear Valley Health System, a North Carolina network of four hospitals and about 500 physicians. The hospital group has now linked up with HDX, a subsidiary of Siemens Medical Solutions Health Services, based in Malvern, Pa., to ease its insurance-reimbursement problems.
The system that Cape Fear has adopted is familiar to anyone who has ever used a credit card in a department store, but it's unusual in many health-care settings. The system checks all patients' insurance information at the time they enter the hospital. Within two to three seconds, a Cape Fear admitting clerk can find out whether a patient has private insurance coverage, Medicare, or Medicaid; whether the insurer requires a copayment and, if so, how much; and whether the patient will have any out-of-pocket expenses. Once the HDX system verifies the information, the insurance company's data automatically appear in the hospital's computer, eliminating the need to rekey any information. "It even tells us if the name is incorrect," says Keith E. Hullender, director of system support and development for Cape Fear. Prior to implementing the system, Hullender says, "we were getting a lot of denials in cases where the name didn't match -- say, if someone checked in as William rather than Bill. And the insurance company wouldn't pay."
Before it started using the HDX system in 1996, Cape Fear verified insurance coverage only for certain patients: those who were being admitted to the hospital, having day surgery, or receiving expensive outpatient services, like chemotherapy. Admitting clerks had to contact insurance companies directly for those verifications, which totaled about 2,500 a month. Today Cape Fear verifies as many as 20,000 accounts a month, without having added any additional staff.
Hullender estimates that Cape Fear is saving more than $100,000 a year by exposing such simple data-entry mistakes as transposed numbers and misspelled names. The hospital has realized additional savings by identifying patients who were covered by Medicaid but didn't know -- or couldn't tell hospital staff -- they were. "In the past we might have never found out they had any coverage," says Hullender. And consequently, the hospital wouldn't have collected a dime.
Hullender says that the hospital is passing on its efficiencies from the verification system to both doctors and patients. The hospital gives the insurance information to independent physicians, such as radiologists and pathologists who work at the hospital, thereby serving to boost their collections as well. And patients are seeing fewer denied claims and exorbitant hospital bills that their insurance companies should have paid. That helps keep the three legs of Cape Fear's health-care stool on even ground.
Michelle Bates Deakin is a freelance writer based in Arlington, Mass.
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