Huntington Bancshare has joined the small but growing number of banks offering a service to process medical bill payments electronically.

An affiliate of the Columbus, Ohio-based bank will act as a receiver of electronic payments and remittance information to hospital and other health-care provider accounts from insurance companies.

The process involves financial electronic data interchange, or EDI - the transmission of payments and other business information from computer to computer in a standardized format.

The new service will result in faster claims processing with fewer errors, said Robert sega, vice president and product manager at Huntington Treasury Management Co.

"It means less redundant keying involved in processing claims from the provider side." he said. "On the payer side, it reduces paper shuffling."

With health care now accountong for 15% of the nation's gross domestic product and with the Clinton administration pursuing legislation to provide universal access, the industry is looking for ways to reduce costs.

"They are under great pressure to cut costs, and this is a cost-reduction system," said Mr. Sega. "The biggest thing is to look at where corporations have gone with financial EDI, and bring in the same structure to the health-care industry."

Huntington is not alone. In the last couple of years, the banking industry has seen this as a potential growth area.

PNC Bank Corp., Pittsburgh, and National City Corp. are among the other big bank offering similar medical-claims processing services.

"We see the health -care industry as a major commitment for the bank," said Mary Ann Francis, vice president and manager of electronic products at Cleveland-base National City, which first began to provide medical-claims processing a year ago.

Ms. Francis also noted that the bank views this service as a way to attract institutions to use other cash-management products.

Huntington began to offer the service in a pilot program begun about a year ago. More recently, it his started to work with a number of large hospital and doctor-operated clinics, which the bank declined to name.

To provide the service, Huntington purchased software from Dallas-based Sterling Software.

"Vector:Connexion is a translation sotfware that attaches very well with other aplications systems," said Mr Sega.

He said that originating remittance payments electronically will cut the cost paper, postage, and account reconciliation, among other things.

"We can process payment and remittance files from a flat file, a proprietary format, or an 835," said Mr. Sega, referring to an EDI format developed by an American National Standards Insitute.

"With this, you are using standards throughout the system. It doesn't matter where the dollars go"" as long as there is a National AutomatedClearing House Associaton receiving point, he said.

Payments are sent through the automated clearing house network to the recipient.

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