N.Y. Hospitals to Use Chase System

Insurer Link Would Move Data, Money Electronically

Hospitals in New York State plan to use Chase Manhattan Bank's electronic cash management system to move payments and paperwork between health-care facilities and insurers.

New York is the first state to encourage the health-care industry to abandon paper for the efficiencies of electronic funds transfer and computer-to-computer transmission of relevant documents. The technology is known as electronic data interchange, or EDI.

Chase, working in conjunction with CIS Technologies, Tulsa, Okla., expects to sign a contract with the state this summer. The program, which would streamline the dealings of insurance companies and hospitals, would begin in the fall.

Leader in Cash Management

This is a new business for Chase, which is a leading cash management bank for insurance companies and hospitals.

The deal with New York State may pay off in other ways. By adopting this method of electronic payments, the New York State Department of Health program is expected to spur the use of EDI.

Chase Manhattan, along with First Chicago Corp., Northern Trust Co., and a dozen other big cash management banks offer EDI services to corporations as a way to streamline their payments to trading partners. But the service has been slow to catch on among treasurers.

"This is a unique application of electronic funds transfer and electronic data interchange," said Michael E. Aspinwall, vice president at Chase.

Chase's ability to act as a middleman in the New York State deal is expected to be enhanced by its electronics. In a first among banks, Chase recently announced that its computers can handle all electronic documents between trading partners.

Most banks that offer EDI services limit their involvement to electronic funds transfer, along with the relevant invoices. Chase will be able to receive, say, eligibility claims from hospitals for insurance companies, and pass those claims along.

"Payments and claims are all paper-based today," said Mr. Aspinwall. "There is no network for multiple insurance companies to make payments to multiple hospitals." Mr. Aspinwall does not expect to replace all the paper claims, eligibility claims, and checks with EDI. But even for hospitals that want, for example, a copy of invoices, the bank can make sure payments move electronically and a consolidated report generated.

"We will do paper and electronics," said Mr. Aspinwall. "The state can't force a hospital or insurance company into paying or accepting payment in a way they don't want to. We plan to bridge the gap."

CIS Participating

CIS Technologies Inc., Chase's partner for this health care service, announced last week that it is one of two participants in the state's new health-care program. CIS expects to process claims for at least 10 hospitals in New York State.

Other states have shown interest in the program and are expected to follow New York's lead, thus stimulating the use of EDI, Mr. Aspinwall said.

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