The Dawning of the Electronic Commerce Age

Larry Rosen, Ph.D.

The National Psychologist

September/October 1996

"Even this interview was by electronic mail"

Henry Saeman

Editor, The National Psychologist

The newest buzzword bringing the practice of mental health and the use of technology closer together is "electronic commerce." What is it? What is its future for psychologists?

To find out, Larry Rosen, Ph.D., The National Psychologist's computer technology critic, interviewed an expert in this burgeoning field, Michael Hurst, Ed.D., president of the InStream Corp., of Woburn, MA which offers behavioral healthcare professionals the ability to communicate critical practice information using a sophisticated electronic system called the InStream Provider Network (IPN). The system also includes the necessary software for conducting electronic commerce among providers, managers and payers.

In keeping with state-of-the-art technology, Rosen conducted the interview via electronic mail. He gained some fascinating information which should be valuable to all mental health practitioners.


Q: InStream has been described as providing "electronic commerce" for mental health professionals. How does it differ from electronic billing?

A: "Electronic commerce" refers to the exchange of information between "business partners." Business partners in healthcare include managed care organizations, other payers, providers and consumers. The information is transmitted over electronic networks according to data definitions, file record layouts and transmission protocols agreed upon by "business partners."

The "information" currently being transmitted includes enrollment data, referrals, claims, eligibility status, encounter reports, outcome assessments, treatment plans, treatment authorizations, explanation of benefits, benefit plan designs and other critical data. Electronic commerce enables fast, accurate, direct communication of this information and replaces traditional communications methods by paper, mail, fax or phone.

InStream is expanding the notion of electronic commerce for behavioral healthcare professionals. New services will include online continuing education, information publishing and look-up services via the public Internet. InStream will also offer services such as decision support (helping managers make valid decisions) and automated decision support tools for the settlement of claims and treatment plans.

The difference between electronic commerce and electronic billing is that "billing" is simply the submission of claims data which "commerce" includes billing, eligibility, treatment plans/authorizations and other important data.

Q: How widespread has the application of electronic commerce become and what does it portend for the future?

A: In behavioral healthcare, we have about 2,000 practitioners and five managed care organizations (MCOs) using InStream technology. In the medical/surgical arena, about 100,000 physician practices use one of several electronic networks. Of 1,400 payers in the U.S. about half now have electronic claims capability. It is clear that the ability to communicate electronically is a dynamic trend within healthcare administration. Even more significant is how fast technology is bringing important new services for the future.

Q: Although many mental health practitioners own a computer, only a small percent are using their computers for anything other than word processing. How can this population be persuaded to use electronic commerce?

A: Electronic commerce is focused on providing additional value to both practitioners and payers. The value currently offered to practitioners is clearly apparent in several areas.

Perhaps the most obvious is the benefit of significantly faster transactions turnaround. This includes transactions such as claims, eligibility inquiries, treatment requests, etc. Financial transactions, for example, result in considerably shorter accounts receivable cycles. Our pilot tests show a reduction from 35 to 8 business days. The obvious result: you get paid faster. Response time for eligibility inquiries, treatment requests and similar requests is quicker, too. No more frustrated staff wasting hours on the phone every day. Our research shows the average wait of 3-7 days reduced to 1-2 days.

MCOs, insurers, and third party payers tell us that 35-45% of all paper or fax-based communications contain errors requiring follow-up. The newest software alleviates these problems. Our software, for example, is among those that provide features that ease data entry and verify entered data so that errors are nearly eliminated. Thus, practitioners greatly reduce the time spent providing corrected or additional data.

Currently MCOs are redefining their criteria for their selection of "preferred" providers. This is an increasingly important issue for practitioners. In addition to profiling providers by outcomes, specialty qualifications, geographic coverage, etc., many MCOs are carefully considering the expense of communicating with their large provider networks. Practitioners who organize as groups with central administrators, practice management systems, and electronic communications capability are looked upon more favorably. From the view of MCOs, electronic communications capability is cost-effective, efficient business and highly beneficial for everyone involved.

An additional area of value is provided by InStream's electronic links to many Internet information sources through its "PsychLink" web site. InStream is currently in the process of developing other services for practitioners using the Internet and a private network.

Q: Electronic billing (E-bill) is an administrative option commonly discussed these days. Can you explain why a practitioner would want to bill electronically? And will you make a guess as to when insurance and managed care organizations are going to start requiring e-bills?

A: The answer lies with the time value of accounts receivable and the process of providing corrections and additions to submissions. For a practitioner billing $100,000 a year, the reduction in an accounts/receivable cycle from 30 to 10 business days is worth $3000 a year.

HCFA has often changed its policies, but Medicaid, Medicare, and CHAMPUS programs will be requiring e-bills in the near future -- probably within a year or two. Some districts already do. Insurers, managed care organizations and TPAs will require E-bills as price competition continues to squeeze their margins.

Practitioners that join MSOs, PHOs, and other mega-groups will find that they are also emphasizing electronic connectivity as well to ensure their price-competitiveness as the industry moves forward.

Q: What do you see as the current role of technology in the practice of mental health? How do you envision it changing in the next five years?

A: Technology's main role is to improve the efficiency of the administrative side of mental health practice, enabling practitioners to spend more time with patients and reduce the cost of the administrative burden.

Technology is also playing a clinical role in areas such as biofeedback, computerized assessments, computerized interviewing, computer-assisted therapy and certain neuropsychological assessments. These latter areas will probably expand, but the impact is primarily on the "overhead" side.

Internet-based technology such as online continuing education and access to mountains of professional journals, databases, and other publications will be increasingly important for mental health practitioners who struggle to expand their billable hours and document and improve their outcomes.

Q: Summarizing, what are electronic commerce's major benefits to a provider?

A: The major benefit is the maintenance and strengthening of the referral and payment relationship with their MCOs as behavioral healthcare completes the transition to electronic communications. Valuable electronic services available for behavioral healthcare are focused on improving this critical relationship.

Q: Where can a provider obtain additional information about electronic commerce?

A: William Roiter and I provide general information and a detailed cost-benefit breakdown in Tom Trabin's book The Computerization of Behavioral Healthcare published earlier this year by Jossey-Bass and CentraLink.


Copyright, 1995, The National Psychologist. Reprinted with permission. The National Psychologist is a privately-owned bimonthly newspaper which may be purchased for $30 a year. Write or call: TNP, 6100 Channingway Blvd., Suite 303, Columbus, OH 43232; telephone: 614.861.1999 or fax with Visa or MC to 614.861.1996.