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Comdata Payment Innovations 2014

Tom Dean SVP Financial Services

Payer to Provider

Payments

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U.S. Healthcare Market Landscape

• Estimated $2.6 trillion in annual healthcare expenditures in the U.S.

• Healthcare expenditures growing approximately 6% annually

• Estimated $150 billion spent on billing and insurance administration

• Estimated $396 billion in inefficient care

Unsustainable Growth in Healthcare Costs

Excessive Administrative Costs

National Health Expenditure ($t)

0.02.04.06.0

2010E 2019E

2.6 4.5

Source: CMS, office of the Actuary

% of GDP

Excessive Administrative Costs

17.9 19.3

Source: Council for Affordable Health Insurance

$2.6t

Other Administrative Costs Inefficient Care

86% $2,140b

14% $360b

16% 396b

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Lowering Cost has Increased Complexity

Emdeon is in the Business of Simplifying Complexity

Sources: [a] Philliou Selwanes Partners, LLC [b] The Kaiser Family Foundation and Health Research and Educational Trust, 2007 [c] Forrester Research, 2005 [d] Susquehanna Financial Group, 2004

Conventional (1)

POS (2) CDHP / SO (3)

Benefit Design Trends Drive Further Complexity [b]

(%)

Consumerism Generating Bad Debt [c] Government Mandates Drive Administrative Burden

Year Mandate

2006 • Recovery Audit Contractor (RAC) program, HIPAA

2008 • NPI

2012 • X12 – 5010

2013 • ICD 10

Consumer Directed Health Plans (#)

PPO HMO

60% of patient billings result in bad debt [d]

Fewer Payers, Yet Greater Complexity [a]

Notes: (1) Conventional plans refer to traditional indemnity plans. (2) Point-of-service plans not separately identified in 1988. (3) Not included in survey until 2006.

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A Consumer Centric Portal in Healthcare

Providers

Patients

Payers

Members

Patients

Patients

Providers

Payers

Providers

Payers

Providers

Payers

Step 1 Eligibility and

Benefits Verification

Provider verifies

the benefits available to the Patient and/or ability to pay

Step 3 Claims

Management

Provider bills the Payer for

Services (a.k.a the Claim)

Step 4a Payment

Distribution

Payer sends payment and remittance

information to Provider

Step 5 Patient Billing and Payment

Provider sends a bill to Patient for

remaining balance

Step 4b Payment

Distribution

Payer sends Explanation of

Benefits to Patient

Medical Treatment

Step 2

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Industry A/R and A/P Challenges

Further Information: www.hipaasimplified.com http://www.caqh.org/ORMandate_EFT.php

Challenge to comply with MLR mandate1

Disparate EFT systems used

by payers, clearinghouses

Exchanges

ACO’s

Reduce Admin costs

ICD-10

Mandated Healthcare Operating Rules: Second Set - EFT & ERA

• Compliance with

regulations

• Reconciliation, Audit and Control processes related to multiple payment modalities

Payer and Provider

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Mandate Compliance 2014 EFT/ERA Mandate Highlights

• Payers must have compliant ACH solution by 1/1/2014

• Payers can still utilize

other Payment tender types unless a Provider requests AHC

• Providers are not mandated to accepted ACH

http://www.emdeon.com/epayment/trace/

http://www.emdeon.com/resourcepdfs/EMDA1040214.pdf

More info at: WWW.HIPAASIMPLIFIED.COM

Goal is electronic distribution using multiple

methods of payment

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ePayment: Virtual Credit Card Payments Description • Virtual credit card is a limited

value, single-use payment number

• Remittance is printed and mailed, faxed, e-mailed or distributed via a portal to providers

• Provider is able to enter transaction into an existing Point-of-Service (POS) terminal

• Electronically routes the payment using credit card networks

• Deposits funds into the provider’s existing merchant account

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ePayment: Virtual Credit Card Payments Key Benefits • A healthcare claims payment (EFT)

vehicle utilizing the card network

• Replaces checks and is optimized for paper Explanation of Payments (EOPs) –maintains current workflow for the provider

• 99% of providers acceptance

• Does not require enrollment or additional agreement

• A source of revenue generation or cost offset for a payer (especially smaller payers who can not drive EFT adoption)

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The vast majority of Provider payments are relatively small which minimize individual interchange fees to Providers

EPN: Value Proposition

Payment Averages: Check: $713 VCC: $203 EFT: 6,442

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FUNDS FUNDS FUNDS

SETTLEMENT BANK

BANK

APPROVAL APPROVAL APPROVAL

Provider Keys in Virtual

Card

NETWORK/ SWITCH

ISSUER

BANK

ACQUIRER

BANK

PROCESSOR

AUTH.REQUEST REQUEST REQUEST

SALES TICKET ITEMS ITEMS

PAYER’S BANK

BANK

EOP and Virtual Card Information

Distribution Processor

Assigns Payer

Cardholder Account Number

Payer EOP and Payment file

Payer Payment Distribution: “Paper” VCARD Model

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What do our customers say?........ Comparison of two forms of electronic payments

Provider Issue VCC ACH / ERA

Cost of processing fees and remittance posting

VCC means merchant discount fees to the provider which can range in cost. VCC is most commonly distributed as paper or fax which means the provider must manually post the remittance information.

The payment cost is low, but the cost of implementing each payer is high and the cost of reconciling the payment to the remittance is high.

The enrollment process is cumbersome and requires that the provider give their bank information to each payer

This is not an issue with VCC, but the provider pays merchant fees or this convenience.

The reason why providers only enroll with their large payers for ACH is that providers find the process too cumbersome for small payers.

Electronic Remittance Advices (ERAs) are different from one payer to the next

VCCs are mostly delivered as paper or fax so the ERA is not an option, this means there is no opportunity for the provider to automate posting.

This is the other reason that providers can only afford to implement large payers. Each payer requires its own costly implementation because of the differences in the file content.

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Payment File

Payment Tender Type Gating

EFT Virtual Card

Closed Loop Check

Delivery Gating

eDelivery Paper Delivery

• Secure Email • ACH • ICL

(Fvtech, Bank Lockboxes) • Portal

(PBPS, Partner Platforms) • Fax

• USPS

Tender Type

Delivery Method

Payment Consolidation

• Payment consolidation so that one payment goes to provider for the Payer

• Manage Provider preferences and ongoing payment modality routing

• Consolidate compose and fulfill selected payment instrument. Comprehensive reconciliation and 1099 service for those who want it

• Distributes payments electronically and physically across a myriad of distribution channels

Challenge - Leveraging this bundle of services in combination and management of both the payer and the provider preference.

EPN EPN Evolution

BI Card

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Questions