First Chicago, Insurer Offer Service for Medical Claims
First Chicago Corp. has teamed up with an insurance company to offer a service for transmitting claims and payments among insurers, hospitals, and physicians.
The bank is the leading supplier of electronic cash management services. It is working with Health Communication Services, a subsidiary of Blue Cross and Blue Shield of Virginia, to electronically pay hospitals that are owed money by the insurance company.
The processing of health claim payments is a growing business for banks that offer corporate-to-corporate electronic payment services, known as financial electronic data interchange, or EDI.
By teaming with HCS, which operates an electronic network for health care facilities, First Chicago can begin offering a claims processing service to large insurance companies that want to convert from paper claims processing to electronics.
Insurance companies must make big reductions in costs, said Barbara Hanania, vice president at First Chicago. "One of the things we can do is give them better and less expensive ways to handle their payables and receivables."
Hospitals send an electronic claim to HCS, which passes the information to Blue Cross. Blue Cross then sends electronic payment instructions from its accounting system to HCS, which converts the information to special computer formats.
The unit then sends computer messages to First Chicago, which sends an electronic payment and reference data to the hospital's or physician's bank. First Chicago receives transaction fees from the insurer.
The hospitals use the reference data, which explain the payment, to reconcile the payment with the claim.
The reference and payment data are now transmitted separately. But later this year a new computer format for health care claim payments will make it possible for the payment and remittance data to be transmitted together.
Developed for Insurers
First Chicago offers the service as part of its Pay Stream EDI product line, which allows corporations to pay their trading partners electronically. The bank developed the new service specifically to drum up more business among large insurance companies.
Blue Cross began paying hospitals and physicians electronically in early June. The company chose First Chicago because it is a leader in EDI.
"We could have used a local bank, but we wanted to work with First Chicago because we're looking toward the future," said Thomas N. Young, cash manager at Blue Cross. "First Chicago has strong relationships with other insurance companies, and they may want to do business with HCS and the bank."