Going Direct

By Stacy Lawrence  |  Posted 2004-04-09 Print this article Print

Several major insurers are starting to incorporate direct electronic data interchange (EDI) or Web-based connections with health-care providers. One example is the New England health-insurance company Harvard Pilgrim Health Care Inc., which is aggressively encouraging providers to file claims directly. Three out of 10 of its claims go through WebMD. At a cost of 35 cents per transaction, these services are costing the company $3.5 million. Arkansas Blue Cross and Blue Shield is similarly attempting to push providers into filing directly, but the effort has hit obstacles, with 2,000 of 6,000 health-care providers dropping out of the plan.
Although the direct efforts may still be tentative, investment bank SunTrust Robinson Humphrey Capital Markets cites the hybrid-based e-business efforts of some of the markets major payers—including UnitedHealthcare, Anthem-WellPoint, Aetna Inc., Humana Inc. and many Blue Cross Blue Shield plans—as a threat to WebMDs ability to sustain a business model as the middleman between insurers and health-care providers.
WebMDs acquisition earlier this week of Dakota Imaging Inc., a privately held company with a Web-based claims processing technology that also facilitates data capture from paper sources, is an implicit acknowledgement of this shift in strategy by health insurers. Dakota Imaging provides software and services to 24 of 41 Blue Cross and/or Blue Shield plans in the United States, as well as Medicare claims processors in 21 states. Adequately and economically meeting the needs of health insurers, either through transaction services or software, will continue to pose a challenge for WebMD, as will becoming increasingly compliant with the Health Insurance Portability and Accountability Act (HIPAA). WebMD says 90 percent of the claims providers submit to it are not HIPAA compliant, but that only 28 percent of the claims it submitted to payers were not in compliance. If the company can become fully HIPAA-compliant, such a record could help fend off moves toward direct provider-payer transactions. Another ongoing hurdle for WebMD will be creating a unified company out of a series of mergers and acquisitions. In early March, the company received a huge vote of confidence from the California Public Employees Retirement System (CalPERS), the principal backer behind the private equity fund PCG Corporate Partners Fund, which accepted the private placement of a $100 million convertible bond issued by WebMD. CalPERS is the third-largest purchaser of health benefits in the United States. Check out eWEEK.coms Enterprise Applications Center at http://enterpriseapps.eweek.com for the latest news, reviews, analysis and opinion about productivity and business solutions. Be sure to add our eWEEK.com enterprise applications news feed to your RSS newsreader or My Yahoo page:  

Stacy Lawrence is co-editor of CIOInsight.com's Health Care Center. Lawrence has covered IT and the life sciences for various publications, including Business 2.0, Red Herring, The Industry Standard and Nature Biotechnology. Before becoming a journalist, Lawrence attended New York University and continued on in the sociology doctoral program at UC Berkeley.

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