Claims Backlog Slows at Oklahoma State Health Insurance Plan

August 7, 2009

A state workers’ health insurance plan that built up a backlog of more than 200,000 unpaid claims when a new vendor took over processing duties in January has reduced the backlog to 87,000 claims, a state insurance administrator said.

But the vendor, EDS of Plano, Texas, needs to work harder to eliminate the backlog and reduce the number of unpaid claims that are more than 45 days old, an official at the Oklahoma State and Education Employees Group Insurance Board said.

“They are not quite where we want them to be,” said Frank Wilson, deputy administrator of finance for the employees group board. “They’ve got some work to do.”

The board’s HealthChoice plan insures about 125,000 state workers, teachers and retirees. Annual premiums and claims in the HealthChoice plan total about $750 million a year, Wilson said.

EDS won a claims-processing contract through competitive bidding and was supposed to take over processing of the plan’s health, life and dental claims Jan. 1. But the transition took longer than expected and processing did not begin until late January.

Meanwhile, HealthChoice received tens of thousands of electronic and paper claims after its former vendor, Health Harrington, completed its last payment cycle in December.

The system has a backlog of about 50,000 claims under normal circumstances, but the backlog swelled to as high as 270,000, officials said. The health insurance plan receives about 10,000 claims each day.

The backlog has caused financial strains among health care providers, including hospitals, which have had to wait weeks and sometimes months for claims to be paid. Wilson said 65 provider organizations participated in a plan begun last spring that paid a portion of pending claims before they were processed.

In addition, 40 percent of the current backlog of claims are more than 45 days old in violation of the EDS contract.

“That is where the focus is by EDS at this time,” Wilson said. “They will be subject to penalties.”

Wilson said EDS has paid interest as required by law to health care providers as a result of delayed payments. Interest payments so far total about $800,000.

EDS receives an annual administrative fee of between $16 million and $17 million for its claims processing services for HealthChoice.

An EDS spokesman in Washington, Bill Ritz, said the company has processed more than 2 million claims and paid out more than $300 million for health care services since the company became HealthChoice’s claims processor.

“EDS has met its midsummer performance target and we’re continuing to make improvements to the system,” Ritz said. “The system is operating normally now.”

He said 70 percent of properly submitted health care claims are paid in one day.

Ritz said the remaining claims are incomplete or improperly filed. “There are a number of things that we need to just check out,” he said.

He also said EDS inherited 32,000 unprocessed claims from Health Harrington, some dating as far back as 2006.

“Many of those had to be processed by hand. That makes it move much slower,” Ritz said.

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