A main tenet of President Obama's ambitious plan to reform the national health care system involves the electronification of health care records and payments. A Metavante Corp. webinar entitled "Healthcare 2.0: Emerging Revenue Opportunities for Financial Institutions" emphasized the vital role banks must play in that implementation.
"If it wasn't for banking, it would be very hard for health care to progress in its core services," said John Casillas, Executive Director, Medical Banking Project. "We think that banks will play a big part in the quality of care, to the delivery of health care IT [information technology], ... as well as impacting that transactional efficiency which is so important."
By transactional efficiency, Casillas was referring to the cost savings associated with electronic payments. According to Casillas, case studies had shown that, by migrating from paper-based to electronic payments and claims processing, one health care provider saved $660,000 in the first year, while another provider saved $4 million in one year.
The second presenter in the webinar, Zahoor Elahi, Vice President and General Manager, Health & Financial Network Solutions, Metavante Healthcare Payment Solutions, said a Metavante survey of health care providers illustrated the cost savings. Processing paper checks costs providers an average of $7.58 per check. But by electronifying checks, processing those payments was reduced to $2.77.
Time savings are also a concern. Under the current system, almost 45 days pass after patients are treated at hospitals or doctors' offices before they receive bills from providers, Elahi said.
"If anyone is running a business, we know that receivables that are going out after 45 days have less of a chance of collection," he stated. "As time goes on, the collection goes down. What the providers are facing is that the collection of their patients is delayed because of the current process."
Elahi added that reports claim 50 percent of payments go uncollected.
To spur greater efficiency in collections, the consumer directed health care (CDHC) model is touted. CDHC is designed to give consumers greater control over their health and well-being. Proponents of CDHC believe that, when consumers take greater ownership over their health care choices (and more of a burden in paying costs out of pocket), they will make wiser decisions.
Under CDHC, providers collect directly from patients, not insurers. Elahi said in 2007 eight to 10 percent of payments came straight from patients. By 2012, Elahi expects that percentage to grow to almost 30 percent.
Casillas called the electronic transformation of the health care system inevitable, but that it would take time and effort to make it happen.
A 2008 Celent LLC report backs up that claim. It estimated consumers spent $250 billion in out-of-pocket health care costs in 2007. But only $8 billion of that amount was paid for using prepaid health care cards tied to flexible spending accounts, health savings accounts and health reimbursement accounts.
If 10 percent of that other $242 billion migrates to electronic payments, industry players may achieve $363 million annually, not including processing fees, finance charges and other revenue streams.
Elahi believes that to speed adoption of electronic health care payments, banks must be at the forefront, Elahi maintained. "We are saying banks need to get into the revenue cycle management field to help providers," he said. "As they get into that, it's very crucial that banks provide the tools for what I'm calling two lifecycles of the claim.
"The claim going out from a provider has a financial life cycle as it goes through the payer system to health insurers. But it also has a financial life cycle as it goes through to the consumer.
"Unless and until banks provide the tools for their providers to attack both of those cycles, they will not be able to help their providers, especially with the advent of consumer directed health care where a bigger burden of collection of the portion of the business is going to the patient."
As part of the CDHC model, banks' Web portals will be instrumental in facilitating health care payments, Elahi said. Unlike the portals put up by employers to keep employees updated on their health care plans - which Elahi said employees typically use only once a year - online bank Web sites are used on average three to five times a week.
"If you can think of the online banking platform as a major portal for supporting Health 2.0 linked to a card, linked to a mobile device, where the bank is managing the digital identity and the permissions, that would probably be in concert with where I think the marketplace is going," Casillas said.
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