InstaMed Blog

Over the past 10 years, one of the top administrative priorities for the healthcare industry has been the development of real-time adjudication (RTA) for healthcare claims. By 2005, the RTA effort had attracted a great deal of attention and effort across the industry. However, five years later, the results delivered have been underwhelming for both providers and payers.

The Core Problems

Although RTA makes sense from a high-level standpoint, the healthcare transaction process has nuances, both from a technology and business perspective. These nuances present significant challenges to the development and adoption of RTA. For example, the complex process required to create a claim (coding) limits the value of RTA, as this process is difficult to complete accurately and fast enough to take advantage of RTA. Coding a claim quickly also increases the provider’s risk of fraud and abuse. And while the healthcare industry continues to focus on developing RTA in spite of these significant barriers, it loses sight of RTA’s initial purpose—to deliver payment transparency and efficiency, or payment assurance. This is the problem the industry needs to solve, not the problem of building RTA.

Shifting the Focus

With this goal in mind, the industry can work toward a solution for its lack of payment assurance rather than try to build RTA. The lack of payment assurance generates significant administrative costs that amount to a few hundred billion dollars per year for providers, payers and patients. One of the most visible cost components is the estimated $65 billion in provider bad debt for 2010.1 In aggregate, these administrative costs are at least 10 percent of the $2.7 trillion dollars (and growing) per year that flow through the healthcare system. While RTA is an attractive, logical technology, it is not the silver bullet for reducing these costs or delivering payment assurance. Therefore, the healthcare industry must first understand that its real problem is its lack of payment assurance, not its need for RTA, and then it can shift its focus from getting paid in real-time to developing a more efficient, accurate and reliable payment process with payment assurance.

A New Opportunity with Payment Assurance

Through the promotion and adoption of a new technology and operational model, the industry can achieve payment assurance. With an emphasis on payment processing, this new model should integrate the healthcare network of payers with the payment networks and banks. Furthermore, by focusing on achieving payment assurance, the industry can realize tens of billions of dollars of savings and improved efficiency by increasing payment collections, lowering bad debt, reducing operational costs and increasing patient loyalty.

Reference: 1McKinsey, “U.S. Healthcare Payments: Remedies for an Ailing System,” 2009.

Click here to download the white paper: Unveiling the Truth about Real-Time Adjudication and the Path to Payment Assurance.

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The views expressed within posted comments do not necessarily reflect the views or opinions of InstaMed.

  1. If government wants to reform health care fine but they should be doing it withing the scope of their authority. They are a legislative body not an auto company or a health care provider. They may regulate those industries, in order to ensure they use (at least semi) fair and decent practices, but it is not their job to enter or compete in those industries. There are numerous ways health care can be reformed without having a government-sponsored health care plan, be it at the state or federal level. If they don’t like the way insurance companies are doing business, let’s get some propositions in order and let the American people vote and decide if those propositions should pass or not.

  2. This post on RTA deals exclusively with the private sector, not the government. The reference in the first sentence to “top administrative priorities” deals with the top priorities of private sector health plans, most of which are publicly traded, for-profit entities and some of which are not-for-profit health plans like Blue Cross Blue Shield plans. The matter of RTA is on the administrative side of healthcare, rather than the policy and benefit side of healthcare. Typically, the government weighs in on the policy and benefit side of healthcare, as is the case with the Affordable Care Act. As a private sector company, InstaMed is focused on the administrative side of healthcare and does not focus on or comment on the policy and benefit side of healthcare.

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