Leaders from Georgia hospitals and managed-care companies have found something to agree on for a change.

They're developing a broad, new paperless system designed to speed up insurance claims processing, reduce medical errors and save money for the entire health-care community.

Less than a year ago, Georgia Insurance Commissioner John Oxendine, urged on by local hospitals and doctors, slapped several health insurers with millions of dollars in fines for violating the state's strict prompt payment laws for health insurance claims.

Now opposing sides are working together to develop the Georgia Statewide Administrative Health Data System, an electronic system that could streamline data collection and day-to-day health-care operations such as verifying a patient's eligibility for insurance coverage and payment of insurance claims.

So far such a system is mostly talk. But with new regulations looming under the federal Health Insurance Portability and Accountability (HIPAA) act, which will require health systems to do many functions electronically, plans are moving forward.

The earliest the group could have a pilot project up and running would be next spring, said Glenn Pearson, executive vice president of the Georgia Hospital Association (GHA).

By this time next year hospitals will be expected, under HIPAA, to have some standard transaction systems in place. More comprehensive, and more expensive, systems for handling sensitive patient data will become mandatory by February 2003.

The GHA is so far working in conjunction with the Medical Association of Georgia, the state's largest physician organization, and the Georgia Association of Health Plans to evaluate three models being used by other states.

The new system also would be compatible with an electronic information system being built for the Georgia Department of Community Health for processing claims for Medicaid, the State Health Benefit Plan, the Board of Regents Health Plan and PeachCare for Kids, Pearson said.

Affiliated Computer Services of Dallas won a bid earlier this year for a $77 million annual contract to construct the state's computerized system.

"We are definitely committed to evaluating the possibility of something like this," said Kirk McGhee, director of the Georgia Association of Health Plans. "Hospitals and doctors look to health plans to make a contribution and we don't mind making good investments into technology that will improve efficiency."

And improving efficiency does save money, McGhee said. Managed-care companies shell out, on average, about $5.35 every time they handle a paper insurance claim form. The average cost of an electronically filed insurance claim is just 35 cents.

But developing a broad system to link local hospitals, doctors' offices and laboratories with insurance companies will cost money.

"Anytime you are talking about a claims-paying system you are talking about a lot of programming design," McGhee said. "Even small changes you would think would be no great shakes can cost hundreds of thousands of dollars to do depending on the model you use."

The New Mexico Hospitals and Health Systems Association built and installed its own electronic system, one Georgia leaders are eyeing, two years ago through the association's for-profit entity Hospital Services Corp.

Already the up-front investment is being recouped in the form of monthly subscriptions required to use the system, said Deborah Gorenz, president of Hospital Services Corp.

Gorenz's company formed a partnership with Affiliated Computer Services to develop, from scratch, the HealthxNet system, which allows participating hospitals to look up a patient's insurance information online, check on the status of an insurance claim and file claims electronically.

In exchange, participating insurance companies (so far, three of the area's four major health insurers) receive valuable patient data, which can tell them which of their managed-care members have been admitted to the hospital and allow them to monitor the patient's progress through the health-care system.

The up-front investment to get a couple of health plans hooked up and a few hospitals on board with the system cost in the neighborhood of a quarter million dollars, Gorenz said.

That is quickly coming back through user fees. Participating hospitals, now totaling about 14, pay from $400 to $2,500 a month to use the system. Managed-care companies pay $1,500 to $3,000 a month and individual doctors pay about $150 a month, Gorenz said.

The system is compliant with HIPAA regulations and is being expanded. In July, the state's Medicaid recipients were given swipe cards, which allow hospitals to look up their Medicaid coverage information instantly.

New Mexico's system would be one of the easiest to duplicate, said GHA's Pearson, but state health-care leaders also are considering systems being operated in New England and Utah. The New England Healthcare EDI Network, the Cadillac of electronic systems, is by far the most expensive but also the most comprehensive, Pearson said.

Initial discussions for that system began in 1997 and by February 1998 money had been committed and a pilot program started. Currently 26 hospitals, some 2,000 community physicians and a handful of health plans are participating.

That system also is being tweaked to interface with MedUnite, a national Internet-based health-care transaction system created by some of the key leaders in the insurance industry, including Aetna Inc., Cigna Corp. and Wellpoint Health Networks.

MedUnite was formed, in part, to compete with companies like WebMD Corporation. So-called e-health companies charged out of the gate in the late 1990s seeking to take the entire health-care industry online, only to find that the industry is mired in a tangle of separate, inefficient paper-based systems that are unable to communicate easily with insurers' systems.

The MedUnite system also addresses HIPAA compliance, something health-care industry-watchers predict could cost hospitals up to three times what it cost them to prepare for Y2K.

By October, hospitals, under HIPAA, will be required to use universally accepted methods of transmitting protected patient data, Pearson said. There will be new transaction standards and new formats in place, he said.

By early 2003, hospitals will be required to have systems in place that will protect sensitive data, such as a patient's medical history and Social Security number.

As long as health-care providers already have to do this, it makes sense, Pearson added, to develop a system ahead of time that everybody can agree on.

Such systems also are expected to reduce medical errors, something health-care providers have been under the gun from employers to accomplish.

"Benefits Technology" Benefits Link. Health Care Moves to Paperless Claims.

Retrieved November 20, 2001.