Aetna Prescription 3
Repair Relationships (Its adversarial stance hath made Aetna sickly. Insurer, heal thyself)
Automating claims processing is an overdue solution to an old problem: The need to exchange information in smart ways. Now, that information needs to be put at the fingertips of health care customers, so they once again can pick their own doctors and hospitals, effectively.
Rowe wants to make more of Aetna's rich store of information available to customers. "The informed patient makes better choices that result in better outcomes and, often, lower expense," Rowe says. Aetna already provides personalized Web sites where members can check claims status, but he says much more can be done to steer consumers toward healthier habits and more economical care.
Aetna believes disease management programs, which monitor and guide behavior of the chronically ill, can reduce medical costs. As an industry average, 10% of the patients are responsible for 60% of the costs.
Still, if Rowe wants to get consumers on his side, he'll have to convince them he's on theirs. "We practically had to wage war with them" to get claims paid, says Betty Murphy, an Aetna member in Washington, D.C. She and her husband have been Aetna members since 1986. Both have been treated for cancer in the past couple of years. Having worked in doctors' offices, she knows some claims problems aren't the insurer's fault but stem from improperly coded claims submissions. Still, the Murphys complain that Aetna routinely lost claims and that its service representatives did a poor job of explaining and resolving problems.
Aetna also has to mend fences with doctors and hospitals. Here, a basic power struggle is beyond the scope of information systems. Health care providers want better compensation, and they want to put an end to managed care meddling in decisions about what's medically necessary for patients. Meanwhile, companies like Aetna are struggling to control costs, which means pushing for discounts and trying to discourage overuse of healthcare services.
Still, technology can reduce some hassles that add to the overhead of every doctor's office and hospital. That means targeting the long series of phone calls doctors' offices and consumers find themselves making to customer service before a claim is paid and eliminating unnecessary paperwork. The average cost for a physician to resubmit legitimate claims that were lost or improperly rejected is about $9.84 per claim, according to AC Group, but could be cut to less than 80 cents per claim if insurers provided a fully capable self-serve system for resolving such problems over the Web.
Rowe is intimately familiar with Aetna's abrasiveness. In his previous job running Mount Sinai NYU Health, an organization of six hospitals in New York, he was irritated by Aetna's slow payment and underpayment of claims and came to the brink of suing. Shortly after Aetna recruited him to help fix the company from the inside, he had to personally intervene in negotiations with the Mayo Clinic, which was on the verge of leaving the Aetna network. As he told The Wall Street Journal in 2001, he was surprised to learn his company was trying to force the clinic to provide basic primary care when he thought its services only made sense for special cases. Negotiations also had been undermined by unpaid claims, which Aetna's systems had been rejecting for no good reason.
Rowe's efforts to repair relationships with health care providers have been only partly successful. Aetna remains one target of a class-action lawsuit against managed care companies brought by individual physicians and the medical societies of California, Georgia, Florida and Texas. Along with Humana, Cigna, UnitedHealth, WellPoint, Pacificare and Coventry Health Care, Aetna stands accused of conspiring to drive down medical reimbursement and reject valid claims. A series of parallel cases brought by members of these health plans also have been consolidated and are pending in U.S. District Court in Miami, but the judge has not yet certified these as legitimate class-action cases.
In recent months, Aetna has parted ways with 10 HCA Inc. hospitals in the Houston area as well as High Point Regional Health System in High Point, N.C., and Cleveland Clinic Florida in Weston, Fla. It also came close to losing Seattle's Swedish Medical Center, which would have cost it 20% of its physician network in that area. But while the losses have made news, Rowe stresses that Aetna also has added providers. Since the start of the year, Aetna says its PPO network has grown 2.1% and its HMO network has grown 1.7%.
J.D. Kleinke, author of the book Oxymorons: the Myth of a U.S. Health Care System (Jossey-Bass, 2001), says Aetna and its peers have been tolerating inefficiency because they preferred frustrating claims payments to expediting them. "They've been doing it horribly because it paid to do it horribly," he says, meaning they pay slowly because of the investment income they can make on the float. But now the backlash of lawsuits and lost business is forcing health companies to streamline their claims systems to survive.
Payers have their own reasons to value efficient systems, says IntelliClaim's Hickey. "The last thing a payer wants to happen is for a phone call to come in where they have to explain where the claim is." According to Gartner Inc., live telephone service costs about $5.50 per call. One way to lower costs is to steer customer service inquiries to a less expensive channel, such as e-mail or self-service Web sites and automated phone systems. Even better is to pay so promptly that no follow-up is required.
Insurers aren't able to rely on investment income for profits the way they once did. Today, for every $1 a health plan makes off the float, it spends $4.50 in avoidable administrative costsmaking more efficient systems essential.
A Lasting Cure
A return to profitability also requires a better approach to pricing and marketing. For example, Aetna is currently rolling out a new system for quoting health care policies based on Selectica's Internet Selling System. Previously, this function had been scattered among many different systems. "For all the acquisitions they did, they ended up with as many systems," says Selectica CEO Raj Jaswa.
Because it runs on IBM's WebSphere Java application server, the system serves both independent brokers and Aetna's own employees. A clear audit trail also is produced, replacing the spreadsheets that underwriters would previously attach to policies to document pricing adjustments. Jaswa says this is an example of Aetna overcoming what previously was an intractable problem. The Selectica implementation is complete for small group accounts and should be extended to cover other segments by the end of the year.
Along with the unification of non-HMO claims, this is a sign that Aetna is breaking the logjam on integration projects that have lingered for years.
So Dr. Rowe may have his patient moving off the critical list. But the company is not confident enough yet to talk about it. Even so, management's probable strategy for its information systems might not vary much from the prescriptions detailed here. The real question is how effectively Aetna will execute its technology initiatives. "They understand how it can help," says Anderson. "Now they've just got to see if they can get their systems updated quickly."
Transforming itself into an information technology powerhouse could help boost Aetna back into favor with health care providers, benefits administrators and consumers. Failing to do so may lead each of those disgruntled groups to stop paying any attention at all.