Medical Industry Lags Behind in Switch to Electronic Billing Systems

June 12, 2015 in News

The medical industry is largely reliant on paper billing systems, even while other industries have made the change to electronic-based payments systems, Bloomberg Business reports.

Background

According to Bloomberg Business, most other industries in the U.S. have migrated to electronic billing systems. However, the health care sector has seen an increase in paperwork and the number of bills paid with paper checks sent through the mail, making it the only industry to see such an increase in the 21st century.

Further, a PricewaterhouseCoopers Health Research Institute report released last month found that just 15% of commercial health plans pay providers electronically. The report showed that insurers typically end up making paper payments to providers even if they offer an electronic option.

Cigna spokesperson Joe Mondy said this is because many doctors are not enrolled to receive electronic payments.

Meanwhile, financial filings from Emdeon, a clearinghouse that handles paper billing for many health plans, show the company spent $87 million on postage during the first quarter of this year, accounting for almost 25% of its total revenue. According to federal data, such practices have caused the cost of administrating private coverage to reach $173 billion in 2013.

Reasons for the Delay

According to Bloomberg Business, the switch to electronic billing systems in the medical industry has been delayed by various factors, such as the:

  • Fragmented health care system;
  • Financial investment in electronic billing technology;
  • Lack of incentives among providers, payers and other stakeholders to coordinate; and
  • Mindset by some small or individual providers that the switch is not worthwhile.

Efforts To Boost E-Payments

Some startups and health systems are working to facilitate electronic payments.

For example, InstaMed aims to connect providers, patients and insurers on a secure network that can be used to make electronic payments.

John Salzberg — vice president of revenue cycle at UMass Memorial Health Care, which has created ways for insurers and patients to pay bills online — called the process a win-win for patients and the hospital.

In addition, CMS requires Medicare providers to accept electronic payments, and about 75% of Medicare claims are paid electronically (Tozzi, Bloomberg Business, 6/10).

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