Medical insurers team up to develop online transaction system

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by Lucas Mearian

(IDG) -- In the latest attempt to standardize the way doctors verify the benefits eligibility of patients and submit medical claims, a group of seven large health maintenance organizations this week announced the details of a plan to create an online transaction system providing direct connections between physicians and insurers.

The system is being developed by MedUnite, a San Diego-based start-up that was funded by the HMOs. This week's announcement comes four months after the insurers said they were working jointly to develop common methods of electronically processing medical-related transactions.

MedUnite's system will be similar to one already operated by WebMD, an Atlanta-based company that has undergone a series of layoffs and management changes in the past few months. Both companies are seeking to provide an interactive service between doctors and insurers that would ostensibly bypass the reams of paperwork that physicians now need to fill out.

Much of that work currently has to be done by doctors themselves or by assistants hired expressly for that purpose. On the insurance side, being able to use the Web to interact with doctors and other health care providers is seen as a potential way to increase the timeliness of treatment decisions and the processing of claims and payments.

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The founding health plans behind MedUnite include Aetna, Anthem Insurance, Cigna, Health Net, Oxford Health Plans, PacifiCare Health Systems, and WellPoint Health Networks. But David Cox, MedUnite's president and CEO, said during a teleconference that the online venture has "many more insurance companies that we'll have as customers and users of the system."

MedUnite initially was called The Coalition for Affordable Quality Healthcare when it was formed last spring. According to Cox, the company has been meeting with physician groups during the past several months to identify issues that create problems in their back-office operations. "If you have 10 insurance companies, you have 10 ways to handle a transaction," he said.

The technology behind MedUnite's attempt to provide a more standardized approach is being provided by a group of vendors that includes Computer Sciences, Deloitte Consulting, Sun Microsystems, and XCare.net. MedUnite said it plans to have a pilot version of the system ready by February and is targeting a launch date of next June or July.

In addition to the initial interactive services planned by MedUnite, the vendors will eventually work with the company to create an online conduit for doctors looking to access databases that contain prescription and patient information.

But Doug Johnston, an analyst at Forrester Research in Cambridge, Mass., said he thinks MedUnite could have a steep hill to climb in order to convince doctors to use the new system.

"Personally, in terms of a first showing, their debut left me unimpressed," Johnston said. "They had no [system] demos. And what makes them believe the doctors will trust the seven [HMOs] any more than they trust WebMD? I think implementation will be slower because of that."

Another concern is that MedUnite didn't announce any tie-ins with software vendors that sell medical-management software, Johnston added. The ideal offering, he said, would be one that let doctors send data directly from their practice-management systems to MedUnite. "I think they're going to have a difficult time creating a Web-only [system]," he said. As part of MedUnite's announcement, Dr. David Nash, director of health policy at Thomas Jefferson University Hospital in Philadelphia, said the concept of the planned Web-based system "would move us in the right direction, with the right technology." Doctors will "no doubt be watching closely to assess the success of its rollout, and the relevance and value of its services to their medical practices," he added.

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