Company Claims to Save Mass Docs $100 Million

Painfully long claims and billing cycles plague the medical industry and are routinely blamed for strained cash flows and lost payments. This is despite evidence suggesting electronic submission of health insurance claims have more than tripled in the last decade.

Now, one Massachusetts company — athenahealth — says it helped Mass docs avoid nearly $100 million in denied insurance claims last year, and Forrester Research analyst Eric G. Brown is inclined to agree, "[athenahealth has] taken a page from the payer side of the market, where packaged applications are increasingly tied to robust business process outsourcing (BPO) services to manage the entire claim cycle. They are transforming the physician service bureau industry."

The company combines a Web-based practice management system with outsourcing of insurance claims and billing paperwork, which it claims can speed payment by thirty percent and improve collections per doctor by ten percent.

Although athenahealth has only 6,000 doctors signed up, less than one percent of the Massachusetts market, clients like Dr. Peter E. Masucci, a one-man physician practice in Everett, Mass., says "we get our money three times as fast, our days in account receivable have fallen from 60 days to 30-23 days, and things no longer fall through the system because we can now see the paper trail."

Doctors consistently rank billing and claims processing as their number one headache, even ahead of malpractice, and the reimbursement horizon is clouded with the looming Medicare reimbursement reform, and new demands for pay-for-performance and consumer-directed healthcare. Dealing with the complex claims world — a dizzying mess of billing codes and computer protocols — often requires two full-time billers for every three practicing physicians claims athenahealth spokesman John Hallock.

Brown adds that one hour of treatment often requires another full hour to handle billing processes.

Part of athenahealth's "secret sauce," claims Hallock, is a billing rules engine that is continually updated, the largest real-time database of payor rules and regulations in the country. More than 40 million permutations of payer reimbursement rules help produce "cleaner" claims, says Hallock.

Like many similar companies, athenahealth bases its fee on the amount of reimbursements it recovers, an incentive to deliver on marketing promises. Typically, it charges 5.5 percent of revenues, and the company says its clients increase revenue 5-10 percent annually on average with a 30 percent reduction in days in accounts receivable.

In early 2006, athenahealth entered an alliance with California-based delinquent bill-recoverer, Transworld Systems, and that move seems to be paying off. Quoted in a press release, "athenahealth has given [us] visibility and control over our billing and claims processes, but once our delinquent accounts went into collections, they fell off the map entirely," said Deidre Kiley, billing supervisor at a six-physician pediatric practice in Palm Beach, FL. "athenahealth referred us to Transworld Systems, and now it is extremely easy to track and get paid for past due accounts."

Kiley says in just four months the recovery rate on delinquent accounts has risen from 23 percent to 59 percent, totaling $19,000 in additional collected revenue." The two companies jointly serve 115 medical practices and 1,000 physicians.  

athenahealth is far from alone in this market. Last fall, health IT powerhouse McKesson merged with Per-Se, an outsource-billing provider. Cerner is repackaging its hospital software to fit smaller practices, and IDX, now part of GE Healthcare, offers GE Centricity solutions.

Forrester's Brown notes that other industry sectors such as manufacturing, business and service sectors have been relying on companies like Paychex or ADP for years. Why shouldn't healthcare providers let others handle the tiresome business of insurance-bill submissions and record-keeping, he asks? "There are big growth opportunities here."

Weighing in on the matter, former U.S. "Health-IT Czar" David Brailer recently told BusinessWeek, "Outsourcing companies such as athenahealth will help small practices stay viable by spreading the cost. It's a concentrated but decentralized way to do business, and I think it's the future."

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