System Glitch Slows Insurance Claim Payments in Oklahoma

February 9, 2009

Technicians are working out the kinks in a new claims payment system for an Oklahoma state workers insurance plan that has caused a backlog of up to 200,000 claims over the past six weeks, the plan’s administrator said.

Bill Crain, administrator of the Oklahoma State and Education Employees Group Insurance Board, said a new system for health, life and dental claims processing for the HealthChoice plan was supposed to be up and running by Jan. 1. But the transition took longer than expected and claims payments did not resume until early February.

“This is a much bigger bump in the road than we anticipated,” Crain said. “It is working slowly, not yet as smoothly as it will. We’re still having some issues.”

Tens of thousands of electronic and paper claims have been received by the HealthChoice insurance plan since its former payment vendor, Health Harrington, completed its last payment cycle in December, he said.

The system has a backlog of about 50,000 claims under normal circumstances, but the current backlog is four or five times that amount, according to Crain.

OSEEGIB sought competitive bids for a new processing and payment vendor more than a year ago for its health, life and dental claims. Health Harrington had been the vendor for 15 years, but another company, EDS, won the bid, Crain said.

The new company had wanted 18 to 24 months to make the transition, but the company was given just one year to make the switch, he said.

Crain said the new claims processing system is two or three months away from achieving normal operating speed.

“What we’re doing now is paying very slowly,” he said. Technicians are working to catch as many glitches and errors as they can as the payment system picks up momentum.

“They’ll be spending the rest of this month and the rest of March,” he said.

EDS, which will be paid between $16 million and $17 million a year for claims processing services, will face penalties for the delay in claims payments, the administrator said. State law mandates a penalty of 10 percent simple interest on claims older than 45 days, Crain said.

Meanwhile, OSEEGIB has issued an apology to providers and members on its Web site that states the switch in systems “is very complex.”

“Our network providers as well as our members really have been very patient,” Crain said. “Long term we will like this change.”

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