Medical banking pays off

Wednesday, June 15, 2005 at 12:00am

A local firm has set its sights on significantly reducing the growing cost of health care by streamlining the paper trail.

Franklin-based Medical Banking Project's goal is to reduce part of the $1.9 trillion cost of the medical industry by eliminating the administrative duplication of paperwork that is estimated to make up 30 percent of total health care expenses.

Set up as a clearinghouse of information and direction for the emerging medical banking industry, the for-profit firm acts in a consulting role to banks, health care facilities and other organizations wanting to improve the efficiency of their billing process.

"We coined the term 'medical banking,'" said John Casillas, executive director and founder of the Medical Banking Project. "It offers an improved approach for managing claims by bringing the complex medical remittance process into the digital age."

A handful of banks have already begun to implement electronic medical banking systems, which effectively take over part of a hospital's (or other provider's) accounts receivables department.

"The thrust is really an intersection of applying bank transaction technology to the health care environment, where only a small amount of transactions are done electronically," said Tom Dean, chief executive of Critical Technologies Inc., a software development company specializing in the health care and banking industry headquartered outside Oklahoma City. "Health care providers use mostly paper for their transactions, which is expensive."

According to Dean, heath care companies are notoriously inefficient in how they handle receiving payments from insurance companies and other sources. Banks, on the other hand, are good at working with transactions and standardization, he said.

Medical Banking Project is the only firm Dean is aware of involved with helping to coordinate the enormous effort.

As the health care industry ramps up into a digital world, the banks can provide the rail to do that, Casillas said. He added that, somewhat surprisingly, the federal-government-managed Medicare program already uses the electronic mode to make payments to providers.

The banking community sees the health care industry as a huge potential market. At the same time, the potential transaction services offer a cost savings to providers.

Chicago-headquartered LaSalle Bank is one of the leaders in medical banking. Nav Ranajee, vice president of health care strategies, said, "The service turns the paperwork into electronic digital transactions."

Ranajee explained that the bank scans the information from the insurance company into a computer system and keeps records of the payments. Selected data is electronically retrieved and stored.

A provider can access the records of a particular patient or account from a secure Web site, reconcile the records, and never have to touch the paperwork from the payer.

Reports can be generated from the data as needed by the providers, which are essentially outsourcing their administrative operations, Ranajee continued.

The system can also be used for "denials management" for rejected claims.

Ranajee said LaSalle deals with the HIPAA patient-privacy regulations by contracting with an outside compliance vendor, Dallas-headquartered FisaCure Inc., which takes on the additional risk for the bank.

The banking community sees the transaction management business as only one part of the new health care banking business.

The emergence of heath savings accounts and similar flexible savings accounts are part of an expanding multibillion dollar industry, according to Dean.

Casillas has already seen the enormous potential of medical banking and has set up a number of committees of industry professionals to work on improving and proliferating the many aspects of the business.

"The future looks bright for the industry," he said.

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