Empire Targets Claims Delays

Empire BlueCross BlueShield has launched a Web site that informs doctors how much they'll be reimbursed immediately after rendering service. The site will save Empire money, reduce hassles for doctors and patients, and halve the waiting time for reimbursement, the company says.

Empire officials say real-time claims adjudication is a breakthrough in health insurance, but many competitors still face difficulties integrating the technologies and processes needed to provide the service.

Web-enabling the full set of transactions in real time will differentiate Empire's effort, says Forrester Research (Cambridge, MA) analyst Doug Johnston. "Empire's done something that's very difficult, almost the Holy Grail of claims processing," Johnston says.

Empire has prepared for the real-time service by moving more processing from host systems to a middle-tier application server. Transactional efficiencies will let the insurer pay doctors in seven days on average, versus 14 or more today.

In short, e-business is improving service quality and pricing and making Empire more competitive, says David Snow, Empire's president and COO. "If you don't do it, you don't survive," Snow says.

By the time a site that serves employers goes live later this year, Empire's e-business investments since 1999 will total about $60 million, Snow says. If adoption meets expectations, full payback on that investment should come by late 2002 or early 2003, he says. Empire's preparations for e-business also meant revamping other internal technologies and business processes, such as integrating Empire's call center with its site for individual members, said Michael Galvin, vice president of telecommunications and network services.

So confident is Empire of the competitive advantage it's created that the company has formed a for-profit subsidiary, called Nexxthealth, that offers the Web-to-host software it's developed to other insurers.

While Empire's physician portal could give the company an edge over other insurers, questions remain. For instance, faster authorization of payments may give doctors strong incentive to work with Empire, but it doesn't necessarily mean that payments will be made more quickly, Forrester's Johnston says.

Even Empire says all claims can't be adjudicated in real time. Up to 90 percent will go through without human intervention, Empire estimates. Johnston says the number may be closer to 80 percent.

IPO in the Works

In another challenge, the company plans to abandon its not-for-profit status as it capitalizes on e-business. That's spurring it to push through regulatory approvals so it can go public and gain access to funding that archrivals Aetna US Healthcare, Cigna, Oxford and United Healthcare have enjoyed. Empire, which boasts four million insureds in its home state of New York, hopes for approval for for-profit status by year's end, with an IPO to follow in a year or two, Snow says. "To keep upgrading our infrastructure, we need to be a for-profit company," Snow says. "Without access to capital markets, we can't keep our competitive edge."

This article was written by David Drucker, assistant editor, InternetWeek; it originally appeared in InternetWeek, a CMP Media publication and sister publication of Insurance & Technology.