1 1 Comdata Payment Innovations 2014 Tom Dean SVP Financial Services Payer to Provider Payments
1 Emdeon Proprietary & Confidential 1
Comdata Payment Innovations 2014
Tom Dean SVP Financial Services
Payer to Provider
Payments
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U.S. Healthcare Market Landscape
• Estimated $2.6 trillion in annual healthcare expenditures in the U.S.
• Healthcare expenditures growing approximately 6% annually
• Estimated $150 billion spent on billing and insurance administration
• Estimated $396 billion in inefficient care
Unsustainable Growth in Healthcare Costs
Excessive Administrative Costs
National Health Expenditure ($t)
0.02.04.06.0
2010E 2019E
2.6 4.5
Source: CMS, office of the Actuary
% of GDP
Excessive Administrative Costs
17.9 19.3
Source: Council for Affordable Health Insurance
$2.6t
Other Administrative Costs Inefficient Care
86% $2,140b
14% $360b
16% 396b
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Lowering Cost has Increased Complexity
Emdeon is in the Business of Simplifying Complexity
Sources: [a] Philliou Selwanes Partners, LLC [b] The Kaiser Family Foundation and Health Research and Educational Trust, 2007 [c] Forrester Research, 2005 [d] Susquehanna Financial Group, 2004
Conventional (1)
POS (2) CDHP / SO (3)
Benefit Design Trends Drive Further Complexity [b]
(%)
Consumerism Generating Bad Debt [c] Government Mandates Drive Administrative Burden
Year Mandate
2006 • Recovery Audit Contractor (RAC) program, HIPAA
2008 • NPI
2012 • X12 – 5010
2013 • ICD 10
Consumer Directed Health Plans (#)
PPO HMO
60% of patient billings result in bad debt [d]
Fewer Payers, Yet Greater Complexity [a]
Notes: (1) Conventional plans refer to traditional indemnity plans. (2) Point-of-service plans not separately identified in 1988. (3) Not included in survey until 2006.
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A Consumer Centric Portal in Healthcare
Providers
Patients
Payers
Members
Patients
Patients
Providers
Payers
Providers
Payers
Providers
Payers
Step 1 Eligibility and
Benefits Verification
Provider verifies
the benefits available to the Patient and/or ability to pay
Step 3 Claims
Management
Provider bills the Payer for
Services (a.k.a the Claim)
Step 4a Payment
Distribution
Payer sends payment and remittance
information to Provider
Step 5 Patient Billing and Payment
Provider sends a bill to Patient for
remaining balance
Step 4b Payment
Distribution
Payer sends Explanation of
Benefits to Patient
Medical Treatment
Step 2
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Industry A/R and A/P Challenges
Further Information: www.hipaasimplified.com http://www.caqh.org/ORMandate_EFT.php
Challenge to comply with MLR mandate1
Disparate EFT systems used
by payers, clearinghouses
Exchanges
ACO’s
Reduce Admin costs
ICD-10
Mandated Healthcare Operating Rules: Second Set - EFT & ERA
• Compliance with
regulations
• Reconciliation, Audit and Control processes related to multiple payment modalities
Payer and Provider
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Mandate Compliance 2014 EFT/ERA Mandate Highlights
• Payers must have compliant ACH solution by 1/1/2014
• Payers can still utilize
other Payment tender types unless a Provider requests AHC
• Providers are not mandated to accepted ACH
http://www.emdeon.com/epayment/trace/
http://www.emdeon.com/resourcepdfs/EMDA1040214.pdf
More info at: WWW.HIPAASIMPLIFIED.COM
Goal is electronic distribution using multiple
methods of payment
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ePayment: Virtual Credit Card Payments Description • Virtual credit card is a limited
value, single-use payment number
• Remittance is printed and mailed, faxed, e-mailed or distributed via a portal to providers
• Provider is able to enter transaction into an existing Point-of-Service (POS) terminal
• Electronically routes the payment using credit card networks
• Deposits funds into the provider’s existing merchant account
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ePayment: Virtual Credit Card Payments Key Benefits • A healthcare claims payment (EFT)
vehicle utilizing the card network
• Replaces checks and is optimized for paper Explanation of Payments (EOPs) –maintains current workflow for the provider
• 99% of providers acceptance
• Does not require enrollment or additional agreement
• A source of revenue generation or cost offset for a payer (especially smaller payers who can not drive EFT adoption)
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The vast majority of Provider payments are relatively small which minimize individual interchange fees to Providers
EPN: Value Proposition
Payment Averages: Check: $713 VCC: $203 EFT: 6,442
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FUNDS FUNDS FUNDS
SETTLEMENT BANK
BANK
APPROVAL APPROVAL APPROVAL
Provider Keys in Virtual
Card
NETWORK/ SWITCH
ISSUER
BANK
ACQUIRER
BANK
PROCESSOR
AUTH.REQUEST REQUEST REQUEST
SALES TICKET ITEMS ITEMS
PAYER’S BANK
BANK
EOP and Virtual Card Information
Distribution Processor
Assigns Payer
Cardholder Account Number
Payer EOP and Payment file
Payer Payment Distribution: “Paper” VCARD Model
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What do our customers say?........ Comparison of two forms of electronic payments
Provider Issue VCC ACH / ERA
Cost of processing fees and remittance posting
VCC means merchant discount fees to the provider which can range in cost. VCC is most commonly distributed as paper or fax which means the provider must manually post the remittance information.
The payment cost is low, but the cost of implementing each payer is high and the cost of reconciling the payment to the remittance is high.
The enrollment process is cumbersome and requires that the provider give their bank information to each payer
This is not an issue with VCC, but the provider pays merchant fees or this convenience.
The reason why providers only enroll with their large payers for ACH is that providers find the process too cumbersome for small payers.
Electronic Remittance Advices (ERAs) are different from one payer to the next
VCCs are mostly delivered as paper or fax so the ERA is not an option, this means there is no opportunity for the provider to automate posting.
This is the other reason that providers can only afford to implement large payers. Each payer requires its own costly implementation because of the differences in the file content.
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Payment File
Payment Tender Type Gating
EFT Virtual Card
Closed Loop Check
Delivery Gating
eDelivery Paper Delivery
• Secure Email • ACH • ICL
(Fvtech, Bank Lockboxes) • Portal
(PBPS, Partner Platforms) • Fax
• USPS
Tender Type
Delivery Method
Payment Consolidation
• Payment consolidation so that one payment goes to provider for the Payer
• Manage Provider preferences and ongoing payment modality routing
• Consolidate compose and fulfill selected payment instrument. Comprehensive reconciliation and 1099 service for those who want it
• Distributes payments electronically and physically across a myriad of distribution channels
Challenge - Leveraging this bundle of services in combination and management of both the payer and the provider preference.
EPN EPN Evolution
BI Card