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AS COMMERCE WARNS OF 12 PCT. INCREASE IN HEALTH CARE SPENDING, ANALYSIS IDENTIFIES OVERPAID CLAIMS AS KEY CULPRIT IN RISING HEALTH CARE COSTS

 ROCHESTER, N.Y., Jan. 5 /PRNewswire/ -- On the heels of the Commerce Department report stating that health care spending increased by 12 percent last year, an analysis released today asserts that up to half of the health care cost increases employers face each year can be traced to inaccurate claims payments.
 While most employers are experiencing 10 to 20 percent annual increases in health care costs, they are at the same time overpaying a minimum of seven percent of physicians' health insurance claims for their employees, according to the analysis of more than five and a half million health insurance claims.
 HealthChex, Inc., a Rochester claims editing software company, gathered data on 5.5 million claims filed on behalf of employees throughout the country as part of its work with several major employer groups, HMOs and preferred provider groups over the past three years.
 For employers battling rising costs, the findings tangibly demonstrate the merits of "managed competition," which is being hailed as one of the cornerstones of the Clinton administration's war on rising health care costs.
 "When our new President talks about health care costs potentially sinking this country, the lack of accountability in insurance claims processing represents at least seven percent of the iceberg," said Nancy Boyer, chairman of HealthChex. "That's why managed competition must be an immediate part of the reform equation -- to get at the heart of the problem of rapidly rising health care costs. Employers need to know the value of each dollar they spend on health care and ought to insist on straight answers about what their claims payors are doing to correct inappropriately submitted bills. While it's true that new technology and over-utilization of services drive up costs, so do claims overpayments -- which is a problem employers can address immediately."
 The saving employers could realize through improved claims processing translates into at least $220 per employee per year for companies with less than 50 employees, Boyer said. For larger companies, overpayments could easily reach into the millions of dollars.
 Overpaid claims take a variety of forms. Traditionally, claims processing systems weren't able to cross reference each claim or acknowledge other variables that affect claims accuracy. With the introduction of new claims editing technology such as HealthChex's AUTO AUDIT(R), the system used for the review, methods for judging claims accuracy now go beyond the traditional "usual and customary fee" standards. A system like AUTO-AUDIT allows claims to be traced back to the individual and examines a sophisticated set of variables for each claim that helps verify its accuracy.
 According to Boyer accuracy can and should mean:
 -- paying only once for a surgical and/or medical procedure
 -- making sure physicians aren't billing people as "new patients"
 every time they see them
 -- paying for services that follow nationally-accepted medical
 guidelines
 -- not paying for services for which employees aren't covered, like
 cosmetic or experimental surgery
 Boyer noted that reducing claims overpayments is something employers can do now to cut their costs, while larger health care reform issues are being played out in the public arena.
 Some of the nation's biggest benefits managers and health care analysts agree. Tom Marshall, consultant for Foster Higgins benefits consulting firm, attributes claims payment problems to the fact that most insurers and other claims payors have had no real incentive to reduce inappropriate claims.
 "Traditionally, most insurers were not under pressure from the companies they cover to provide regular information about the claims they pay. But the movement toward performance-based contracting means employers are demanding more accountability," Marshall said.
 Marshall encourages employers to shop around to find claims payors who can and will guarantee better claims accuracy and access to more information.
 On the brighter side, Boyer noted, the HealthChex review also found that 88 percent of physicians are generally "doing things right" when it comes to accounting for the services they perform and the amount they bill for them. Only about 12 percent of physicians regularly practice "creative billing" by submitting and getting paid for inappropriate claims, she said.
 Concluded Boyer, "Employers should take a stand and demand results. They should insist on access to data that shows the validity of each claim they pay so they can judge the performance of their claims payor and the value of their health coverage. Having this information will help employers educate their employees and will assist them to more accurately predict the ongoing cost of health care."
 -0- 1/5/93
 /CONTACT: Barbara Kusha of Jasculca/Terman & Associates, 312-337-7400, or 312-274-1976 (after hours), for HealthChex/


CO: HealthChex, Inc. ST: New York IN: INS SU:

SH -- NY061 -- 1793 01/05/93 13:47 EST
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Date:Jan 5, 1993
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