E-payments to dominate in US healthcare by 2009 - Metavante

Source: Metavante

Healthcare industry e-payments will transition from minority to majority status in the next two years, yet much room for process improvement remains as healthcare payers (insurers) and providers eye overall cost reductions.

That's according to Metavante Payment Progress Index program findings. Metavante, which commissioned Celent LLC to manage the research and obtain the underlying data driving the program, is the banking and payments technology subsidiary of Marshall & Ilsley Corporation (NYSE: MI).

Metavante Payment Progress Index: Healthcare Edition findings predict that e-payments will displace checks as the dominant form of healthcare payer-to-provider payment for the first time, crossing the 50 percent barrier by 2009. According to Metavante, the healthcare industry's move toward transaction automation and cost-reduction is substantive, but significant room for improvement remains due to the industry's traditionally high-payment processing costs and a slow automation adoption rate.

Key findings — Metavante Payment Progress Index: Healthcare Edition:
  • Increase in e-payments: 60 percent market share by 2009, up from 46 percent today
  • 76 percent of surveyed healthcare providers can receive payment explanation electronically (electronic remittance advice)
  • 93 percent of surveyed providers expect to be able to receive electronic remittance advice by 2009
  • Insurers/health plans (Payers) to increasingly migrate payments to an Automated Clearing House (ACH) for transaction cost-reduction and increased customer convenience
  • Payers to also focus on electronification of remittances for direct posting to providers' patient management system
  • Consumer-directed healthcare initiatives driving electronic payments through use of benefit debit cards

"How to wring inefficiencies out of the healthcare system has become a national fixation. Improving the revenue cycle, including the remittance and payment process, is an area in which the banking and payments community will be active, lowering costs through payment processing automation. By focusing on facilitating electronic payments and the re-association of payments and remittance data, the banking and payments commumunity will play an integral role in bringing healthcare payers and providers into the paperless age," said Alenka Grealish, managing director, Celent banking group. "The Metavante Payment Progress Index program provides strategic guidance to the industry and brings into focus how healthcare payments stakeholders can mobilize their resources to drive toward electronic processes and greater operational efficiency."

Metavante forecasts that, as payers increase their use of ACH, they will deliver e-remittances in greater numbers. Over the next two years, payers are expected to increasingly send e-remittances and e-payments. As a result, providers anticipate investing in e-payment technologies to ensure they have the ability to automatically process electronic remittance advices for direct posting to their patient management systems. According to Metavante, providers will make these investments with the goal of moving toward a straight-through processing environment. At the same time, however, providers recognize that they will continue to handle a lot of checks, and hence will look to remote deposit capture, along with image-based wholesale lockbox, to realize processing efficiency gains in the paper world.

Metavante Payment Progress Index: Healthcare Edition is one of the only industry metrics that quantitatively tracks and measures the overall progression of healthcare transactions toward electronification. It incorporates "cost improvement," "e-payment investment" and "satisfaction level" as the sub-indices. Metavante completed this index, which reflects data gathered from over 200 provider respondents, with assistance from Celent.

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