Chase begins processing health care payments.

Chase Manhattan Bank said Tuesday that it has begun processing health care payments electronically for a network of dentists in Nevada.

Chase, one of the nation's leading wholesale banks, is the latest of a still small number of banks or banking-related companies that hope to profit from a potential revolution in the way health payments and insurance claims are handled.

Its program for the Nevada Pacific Dental managed care program includes the processing of claims for 70,000 members. Chase will be making use of electronic data interchange technology, combining electronic documentation with the transfer of funds.

Unlike some nonbank competitors that have expanded by acquisition into health care processing, Chase partnered with Electronic Claims and Funding, an Atlanta-based insurance processor for the dental industry.

'Paperless' Prowess

The Chase Manhattan Corp. unit is the leading originator of paperless automated clearing house transactions, with last year's volume exceeding 160 million.

Extending that capability to health care, eliminating mountains of paperwork and reducing the chances for human error, is an attractive prospect for both processors and health care providers, said Jean Lutzker, product and relationship manager for Chase's electronic health care payments division.

"It's one of the easiest things to tackle in terms of implementing software and hardware," she said. "There are just fewer problems."

In the Nevada program, Chase and its partner, ECF, receive payment instructions from Nevada Pacific Dental. The money is transferred through the automated clearing house to the appropriate dentist's bank account. ECF also routes a verification of this deposit to each dentist's computer.

Drawing a Crowd

The increasing political focus on health care has helped to draw attention -- and other processors -- to such opportunities.

Card Establishment Services Inc., a Melville, N.Y.-based credit card processor formerly owned by Citicorp, announced in May that it acquired three medical information firms.

Equifax Inc. and First Financial Management Corp., Atlanta-based information service companies with many bank clients, also bought their way in with health care-related acquisitions this year.

Ms. Lutzker said that banks like Chase may have an edge on their nonbank competitors. "Ultimately, you do need a bank to move the funds," she said.

Processors and banks alike appear eager to get involved in "one of the most promising segments of the banking industry," said Edward Furash, the chairman and chief executive officer of Furash & Co., the Washington-based consulting firm.

Streamlined Payments

The health care industry is similar to banking, in that it is looking to streamline and move away from paper. Mr. Furash sees the advantage going to the most efficient and advanced processors, regardless of corporate charter.

He expects that within three years, many processors will be at least in the pilot stage. "It's a big opportunity to do well by doing good," he said.

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