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By: Bill Marvin

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.

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.

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 $2.5 trillion dollars 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.

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 integrates the healthcare network of payers with the payment networks and banks.  Furthermore, this new model will generate tens of billions of dollars of savings and improve efficiency within the industry by increasing payment collections, lowering bad debt, reducing operational costs and increasing patient loyalty.

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

Bill Marvin is the co-founder and CEO of InstaMed, the leading Healthcare Payments Network for providers, payers and patients.  Further details of his viewpoints on RTA and the next steps toward achieving payment assurance in the healthcare payments industry will be published in a white paper in the upcoming Medical Banking Journal.

This article was originally published by the Healthcare Information and Management Systems Society (HIMSS).

Click here for more information on HIMSS and the Medical Banking Project.

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