Doctors Dependent On WebMD Despite Alleged Problems

Because of complexities with claims-processing and new requirements under HIPAA, doctors rely on WebMD and other clearinghouses to handle the work.

Charles Babcock, Editor at Large, Cloud

January 29, 2004

5 Min Read

The maturing field of Web-services technologies has the potential to let physicians' offices file medical claims directly to insurance companies using inexpensive Internet connections, eliminating the need for claims-processing clearinghouses. Yet some are convinced physicians will continue to depend on clearinghouses such as WebMD Corp., the biggest in the industry, because of the complex nature of electronic-claims processing.

Eric Brown, an analyst at Forrester Research, wrote a report six months ago challenging a theory in the medical industry that Web services would eliminate the need for WebMD's Envoy clearinghouse. He stood by that belief in an interview last week--even after the American Medical Association's claim in a letter to WebMD that problematic transactions with Envoy have resulted in hundreds of thousands of dollars in denied or delayed payments to physicians. Brown says the medical industry is too dependent on WebMD and other clearinghouses to give them up, because of the lack of standardization among practice-management systems and the complexities of claims processing that seem to have grown with the recent enactment of Health Insurance Portability and Accountability Act.

Practice-management systems are the IT systems in doctors' offices that collect patient and billing information, then electronically send claims to clearinghouses, which reformat them to insurance-company standards before forwarding those claims. Since the October enactment of HIPAA, clearinghouses have added reformatting for HIPAA compliancy to this service, for which doctors typically pay a monthly fee. WebMD and its brethren won't go away despite the possibilities of Web services, Brown says, because doctors' offices can't deal with the claims-processing complexities brought on by HIPAA. Even big insurance companies have to issue "companion guides" to the HIPAA guidelines to tell clearinghouses how to send them properly formatted claims over the correct protocol, Brown says.

What's more, Brown estimates there are more than 800 types of practice-management systems in use in doctors' offices in the United States and an additional 200 medical-records systems, each churning out claims in its own format. Large clearinghouses are among the few parties with the technical resources to recognize the varied claims and reformat them into files desired by insurance companies, he says. Some insurance companies, particularly Blue Cross Blue Shield, are connecting directly to some physicians' systems, but crafting and maintaining connections with many different vendor applications is beyond the reach of most health plans, Brown says. Still, there are some physicians' offices that are starting to submit payments directly to insurance companies using low-cost Internet connections. Indeed, a few of the physicians who used WebMD Envoy and are having difficulty tracking or receiving payment for claims are now handling claims themselves whenever possible, say representatives of medical societies in Arkansas, Colorado, and Texas.

"Some of the health plans, such as United Healthcare and Aetna, have the ability to take claims on their Web sites," says Teresa Devine, director of the health-care financing unit of the Texas Medical Association. But to make use of that clearinghouse workaround, the staff in a doctor's office first enters the patient treatment information into the office's practice-management system, then goes to the Web site with a printout and re-enters it into the form there.

"They have to rekey the data. They're doing it twice," Devine says. But this practice is limited, she says, as most offices don't have the staff to be doing all of that data entry.

Doctors' offices "could use Web services" such as XML documents and the Simple Object Access Protocol to directly upload claims to insurance companies, says David Wroten, assistant executive VP of the Arkansas Medical Society. "But when a doctor's office tries, it immediately runs into little problems with different browsers," says Wroten, as Netscape Navigator and Microsoft Explorer each present the form differently.

Rather than immerse themselves in technical details, offices rely on a clearinghouse to resolve problems and format the claim correctly. The majority of urban doctors' offices were using a clearinghouse before HIPAA was implemented Oct. 16. and have been reluctant to change since the new regulations went into effect, he says.

In Arkansas, one option is for physicians to use an alternative established by Arkansas Blue Cross Blue Shield through a subsidiary, the Arkansas Health Information Network. The network can accept claims for any insurance company over the Web via a browser interface, says Joseph Smith, CIO of the state Blue Cross Blue Shield plan. Blue Cross extracts its portion of the claims and forwards the rest to other insurance companies. But most doctors are accustomed to submitting their claims through an EDI connection tied into their office's practice-management system, so few make use of the Arkansas Health Information Network's Web-services option, he says. The chaos surrounding claims processing cries out for a "well-behaved, benevolent dictator" in the industry, Brown says. He uses the analogy of Microsoft's success with Windows on the desktop as an example of what benefits can flow from an imposed standard. Many applications were written for the Windows environment, and the value of the desktop grew as a result, he says. Likewise, if practice-management systems generated claims in a standard format, that could open up use of Web-services networks. Brown adds that WebMD is the closest thing that health-care claims processing has to a benevolent dictator, since its Envoy clearinghouse, through various alliances with other clearinghouses, such as IDX Systems Corp. and MiSys Healthcare Systems, and practice-management-system vendors, represents "at least 50%" of the claims traffic.

But complaints about WebMD's inaccurate processing or lost claims were voiced in a Jan. 8 letter from the American Medical Association to WebMD CEO Roger Holstein. The letter said "thousands or hundreds of thousands of dollars" in delayed payments to some offices have resulted from mishandled claims.

About the Author(s)

Charles Babcock

Editor at Large, Cloud

Charles Babcock is an editor-at-large for InformationWeek and author of Management Strategies for the Cloud Revolution, a McGraw-Hill book. He is the former editor-in-chief of Digital News, former software editor of Computerworld and former technology editor of Interactive Week. He is a graduate of Syracuse University where he obtained a bachelor's degree in journalism. He joined the publication in 2003.

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