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.