By STEVE MARLIN, who writes about technology issues.
It's no secret that the U.S. health care system is snarled in red tape, with an estimated 25 percent of expenditures going to administrative overhead and its attendant problems of fraud and abuse, causing uncertainty on the part of providers over whether, when and how much they'll get paid on a claim.
When a patient presents a health ID card bearing multiple PPO logos, the provider can't be sure which one will be handling the claim, and therefore how steep a discount they'll have to take off their bill. Insurers, for their part, are being pressured into joining national PPOs, which offer broader geographic converge but only small discounts, thereby putting a squeeze on profits.
The situation cries out for a solution. VIIAD Systems LLC, a Langhorne, Pa.,-based software company, thinks it has one in the form of an electronic health ticket. In replacing physical ID cards, the health ticket bears all pertinent information needed by providers, including the patient's employer, PPO, copay and deductibles, precertification requirements, and instructions for submitting a claim. The health ticket takes the guesswork out of the claims process so that all parties to the transaction know up front who's going to pay.
The system allows for greater cost containment by making the process more transparent. "We're providing a mechanism for all stakeholders in a health care transaction to communicate more effectively," says VIIAD CEO John Zubak.
With the electronic health ticket, insurers have the option of plugging in to VIIAD's vNetwork (or virtual network) of about a hundred PPOs, which lets them create customized networks of local and regional PPOs offering provider discounts from 15 percent to 60 percent better than discounts from national PPOs. Thus, insurers can comply with regulations mandating national coverage without incurring a steep price premium; clients have reported an average savings of 15 percent or more on their medical claims, with some saving up to 60 percent, the company says.
VIIAD helps small local and regional PPOs become part of a much larger network to take advantage of operational efficiencies, and compete in smaller or newer markets. This fosters greater competition and reduced overhead among plans, eventually leading to more attractive premiums. vNetwork "forms a mosaic of PPOs providing steeper discounts and better coverage [than national PPOs]," says VIIAD president Harvey Mitgang.
VIIAD's customers run the gamut of payors including traditional health insurers, third-party administrators, universities, municipalities, and government agencies. "We will exceed ten million people covered by the end of 2008," says Zubak.
POINT OF INTEGRATION
For Integrity Health LLC, a Princeton, N.J.,-based health benefits management company specializing in public sector employers, VIIAD is the backbone of its service offerings. "By providing a point of integration with regional providers, VIIAD allows us to offer greater coverage than would otherwise be feasible," says Doug Forrester, Integrity Health's president. "VIIAD is integral to our ability to offer broad network access vital for public sector plans."
The electronic health ticket strengthens Integrity Health's Web-based services, he says. "Many (payors) have Web-based interfaces that accomplish similar things as VIIAD, but the big difference is the electronic health ticket's ability to convey all relevant information concerning the employer's health plan."
In addition to slashing administrative costs, VIIAD eliminates the need for static insurance cards. The health ticket provides patients with the most up-to-date plan information, printed from their computer or at the provider's office.
Each year, insurance companies spend enormous sums of money printing and mailing new static ID cards every time a plan is updated or personal information changes. It costs payors anywhere from $2 to $10 to print and mail an updated card to a member.
Based on $5 being the average, if insurance cards were eliminated for the approximately 200 million insured persons in the United States, payors would immediately save $1 billion just from the card issue alone. Since most payors issue two or three replacement cards per year to members, the savings are actually much larger.
VIIAD isn't the only company offering solutions for health care information exchange. Initiate Systems, for example, provides insurers and other payors with enterprise master person index (EMPI) software that enables easy access and information sharing among hospitals, physicians, and other care providers; it does this by acquiring data from source systems and resolving patient identities in real time. "Anything in health information exchange has this concept of EMPI built into it," says John Lovelock, research vice president at Gartner Inc.
Where VIIAD breaks new ground is in its use of the electronic health ticket to tie together all the parties to a health care transaction. "While the health ticket concept isn't new, this (VIIAD's) implementation seems to be," Lovelock says. "The idea of using the health ticket as the primary key among all providers is useful."
Still, VIIAD has steep hurdles to overcome, especially in attracting a critical mass of providers. "It needs to build a massive database of providers before it can have a valid offering," Lovelock says.
SOUND OF SILENCE
Yet another benefit is the elimination of scams such as silent PPOs (in which providers submit out-of- network claims to an insurer only to get the claim repriced at a steep in-network discount), and cherry picking (which occurs when a provider belongs to more than one PPO and a claim is shopped around for the lowest reimbursement rate accepted by a provider, regardless of the PPO identified on the patient's ID card). The electronic health ticket stops silent PPOs and cherry picking dead in their tracks, VIIAD says.
That's welcome news for providers who've gotten bilked. In one California case involving a workers' compensation claim, Good Samaritan Hospital in Los Angeles billed the State Compensation Insurance Fund $69,624.04 for covered services that it rendered to a worker who was injured on the job. Yet the fund only paid $9,307.76, asserting that it was entitled to a PPO discount because it had arranged with Blue Cross of California to purchase a discounted rate for Blue Cross patients.
The problem was that the injured worker had gone to the hospital not as a Blue Cross patient but as a workers' comp patient. Blue Cross had created a silent PPO by selling its reduced provider rate to the workers' compensation fund, without the hospital's knowledge or consent.
When the dispute went to trial, the judge found in favor of Good Samaritan, awarding payment in accordance with the Official Medical Fee Schedule, which is the standard of compensation for medical providers in workers' comp cases. The judge found that "there is no evidence of an express agreement between the rendering institution, Good Samaritan and the insurer State Compensation Insurance Fund. The only express agreements in evidence are between Good Samaritan and Blue Cross, and a separate agreement between Blue Cross and SCIF."
Even where there's no collusion, workers' comp companies face a barrage of lawsuits over PPO noncompliance. Under many PPO contracts in the workers' comp market, when an injured employee without an ID card visits the doctor, the PPO discounts taken for that visit are illegal and subject to reversal. By most estimates, nearly 60 percent to 70 percent of all workers' comp bills processed over the last six years in the United States (amounting to billions of dollars in annual charges) are noncompliant by this standard.
November 1, 2008
Copyright 2008© LRP Publications