IBM to Overhaul Claims Processing

June 13, 2002 ( - International Business Machines Corp. (IBM) has developed a health insurance claims processing service that it says will save billions in administrative costs.

The group anticipates that if the service is widely adopted by health-care insurance carriers, it could save at estimated 35% to 40% of the $250 billion the industry spends on paper processing, cutting the average cost to pennies.

Currently the cost of processing a claim costs between $16 and $40. Antiquated computer systems that cannot manage paperless claims, or are not compatible with the networks used by hospitals, are part of the reason for the high cost of claims processing.

According to IBM, the first insurer to using new service is Empire Blue Cross and Blue Shield with 4.7 million subscribers. IBM will be targeting the services to Blue Cross/Blue Shield, mid-market, smaller self-insured plans and the government health programs that do not want to commit the capital to large technology investments.

IBM would operate the computer network for the new service and charge insurers based on each claim submitted. The service will use application software from deNovis Inc, which can electronically read policy statements, rules and regulations and automatically make the appropriate payments.