VII. ASAE POSITION

President Clinton has recognized the need for employers and individuals to join together in pooling their buying power. Association plans have been doing just that for over 55 years, and can provide a major service to our nation by being allowed to continue.

ASAE supports the basic goals of health care reform, which would provide quality, affordable, accessible health care for all Americans. ASAE further believes that association health care plans possess many years of proven experience in the delivery of benefits through purchasing coalitions. As such, association health care plans can lead the way to the reform goals of providing the efficient delivery of quality health care to more citizens.

Chairman STARK. Let me see, Mr. Kreidler, if we can deal with your problem here, which is somewhat different from other members of the panel, and see if I perhaps don't have this—if in fact Dr. McDermott were successful and there were a single-payer system in the country, you, the association's role in this would be gone, as would everybody else's.

If, in fact, there is a guaranteed open enrollment in every insurance plan and if, as the President suggests, there were premium controls, so you really couldn't offer anything to your members that they couldn't just walk to the corner alliance and buy, you also would be out of business.

Now, from the standpoint of the various associations, that is troublesome on several counts. One, many associations use it, and properly so as a recruiting to get people to join up.

My daughter runs a socialworker's operation out in the West and one of the things they offer their members is health insurance. It is an incentive to join, fair game. The AARP makes money on it. I have no quarrel with that. They split the take with Prudential, a big plan.

You have somewhat the same worries that the insurance agents have, that suddenly if there is this monolithic Federal plan, you all won't have anything to do with it. I guess all I can say to you is, I don't think that is very likely very quickly. Maybe over a period of years. But I rather suspect that if nothing else, while I happen to support Dr. McDermott's single-payer plan, we are a couple of votes shy right now of overriding-well, we are working on it.

But if in fact we must provide a somewhat less generous guaranteed plan, there will basically be a role for supplemental as there is now for Medicare, is my prediction, and that will be a perfectly and logically useful place for the associations to in fact provide a service to their members, because we probably will not be able to raise the money, is my guess, to provide as generous coverage as many of your members have and want.

And so all I can say to you is that while it would be my dream to put you out of the insurance business, and you probably would share that as a social goal to say, Look, we have all got the ultimate insurance and we don't need to go to the Federal Government in my case or the materials dealers have to go to their associations in their case, but don't count on it.

So all I am going to suggest to you is I suspect there will be some role still where the associations will be able to provide a useful service to their members although it may not be as extensive as it is now.

Having said that, until we know the details of the plan it will be hard. But your interests are also supported by the insurance agents who, in a sense, want to participate and they feel, perhaps in many cases rightly so, that they provide a service. They don't want to see themselves knocked out of the ball game, and they in many States are a very potent political force and probably won't be. I guess I can say to you, you are on the sunny side of better than 50-50 of staying very much involved, although there will be a change. If I could tell you what I thought the change was, I would. Unless Mr. McDermott and I get four votes this afternoon, then

you are all out of business. Then we really will have done the right thing.

I hope that makes your trip here worthwhile, a little bit of assur

ance.

Dr. McDermott.

Mr. MCDERMOTT. Thank you, Mr. Chairman.

It has always been a puzzle to me as a practicing physician, but also from a broader public policy perspective, what have been the impediments to the private sector? We hear the private sector is going to fix everything in the President's plan. What have been the impediments to the private sector coming up with a database and standard forms and all the things that people use to argue that we don't want a government plan, we don't want the government intervening. The private sector for 45 years have been out there flopping around.

I practiced medicine in a small psychiatric office where we had to deal with 14 different insurance companies in Seattle. Every form was different.

You are data experts. Why hasn't it happened before they saw the club coming from us?

Mr. HOUTZ. I think in certain sectors it has been happening. There are several companies out there that for several years have been sending electronic claims, electronic encounters, doing some work on eligibility to various insurance companies.

The insurance companies for many years have been a bottleneck to being able to transmit electronic data back and forth to them. In today's environment there are probably less than 25 insurance companies in the United States that have the capability to provide open enrollment systems so a provider's office can call in and find out in an electronic mode which patients are eligible. That part of the industry is also starting to take off, and it will take 4 or 5 years.

Mr. MCDERMOTT. You are saying out of 1,500 insurance companies in this country, only 25 are capable of doing that?

Mr. HOUTZ. Twenty-five or thirty today. There is a push to begin to provide eligibility services for physicians. Although we have had a standard form for physician claims, each insurance company had different requirements of how they wanted to print data on that format; and until just recently, each insurance company had a different electronic format-an electronic claim form, procedure code and a diagnosis code, in addition to those two data elements that are 200 to 300 data elements that can go into an electronic claim, and each insurance company had different requirements.

Our company today prepares over 400 electronic formats. It has been made much easier by the national standard format because there is some consistency of information, and the rapidity with which you can bring up insurance companies has vastly improved. When you say to the private sector, why haven't you done this, I am in the private sector and we have been trying as hard as we can. We work today with every insurance company that will accept a national standard format. We do it for them without charge.

I think insurance companies have been a tremendous bottleneck until recently.

Mr. MCDERMOTT. What was the professional reason for them maintaining themselves as a bottleneck? It must have been to their advantage.

Ms. HERR. Part of the reason has been that a lot of the systems early on became homegrown systems. A lot of hospitals put together their own electronic format so they could do things through electronic transmissions. As they started investing a lot of money in these systems, it became very difficult to find money to change to another type.

Another problem, I still walk into hospitals in this country that don't have a PC to do payroll. The technology is not consistent. When you start looking at the high end of what is achievable you forget there are a lot of low-end folks who will at least need the investment funds for the hardware capability, much less the software needs. That is one of the reasons we have said the voluntary way of doing this will not work.

We support mandated standards for all of this stuff. It will not go forward without mandated standards.

Mr. HOUTZ. Our association is committed and the reason the Association was formed was a commitment to EDI and electronic data interchange. I feel that our association and others we work with, with or without government mandates, I think, will provide the leadership. And we are taking actions to make people adhere and be consistent with the formats, but it is going to take us 6 to 8 years to do that with government help. I don't know if you can get the thing passed within that time.

If

you could help us with the mandates of standards, we could cut that time in half.

Mr. PETERSON. Without taking any kind of policy position, because I am a technical person, not a politician here, but I wanted to explain that with the technology that is available to us, if the impediment is one of 400 different forms or something, this is something that we have dealt with-again, with the school district administration that we have had to do. Every one of these optical memory cards could literally carry its own format, whether the filing-claim filing is to be done electronically, whether it is to be printed on a paper form, whatever, because essentially you are dealing with the same data elements. You are only talking about where you are placing them on a format.

This is almost-it takes time, but for technology purposes it is a no-brainer.

Mr. MCDERMOTT. Do you accept the time line Mr. Houtz has suggested of 4 to 8 years to get the system up and running nationally? Is that too long? Could it be done before that?

Mr. PETERSON. Absolutely. From my standpoint, it is one of how quickly can the technology be moved into place, because setting up to be able to run this technology is not that long a period of time. Mr. MCDERMOTT. These are the ones that are puzzling to me because the more we try to get data, the more difficulties we face. Trying to get it manipulated in the Congressional Budget Office and in Joint Tax was absolutely the biggest bottleneck for us. The reason we haven't had figures out is because we had to wait 6 or 7 months while the CBO tried to drag together from all over the place all the bits and pieces.

It seems to me there are two types of information that we need to make sense out of. One is financial data and the other is medical data. I don't know where we are on the two systems. Are we further ahead in gathering information about financial data than we are with medical data? Is that a fair assessment?

MS. HERR. Yes. The financial transactions have been ready to go for years. Part of the problem with the clinical data is, as we understand it, that there are still not uniform definitions of what some of the things mean. The financial transactions have been ready for years.

Mr. MCDERMOTT. Related to undefined medical events, doesn't that put a problem into your financial data if you don't have what is the dealing with an ulcer?

Ms. HERR. No. Once you know whether an encounter happened or not, the transaction can happen regardless. There is the front end of the process where you ask, are we going to charge this price or are we going to charge that price. Once you have that started, you can get the encounter paid for and the money in the bank without having to have a lot of hoopla about it.

Actually, if you don't do it that electronic way, part of our frustration is you have a lot of billing errors. Hospital errors are notorious for these errors and that happens because you have to re-keystroke a lot of the data. If you could get standardized electronic data to do a lot of the transactions, it could be out very quickly. Mr. MCDERMOTT. You are suggesting that that be decided by us and put out there for everybody?

MS. HERR. Yes, only because we have been struggling for 25 years trying to do it on a voluntary basis. The government currently uses standard forms. No one uses them the same way. You can't submit things electronically if you have to staple an attachment to a claim. That is why you have to have the process mandated from the national level.

Mr. MCDERMOTT. I once did a study in medical school on psychiatric patients and looked at Scandinavian literature. The Danes can find you two left-handed plumbers living in Copenhagen if you want a matched pair.

One of our problems is how to get this done in a timely fashion. Do you all agree that we need to mandate standards from the national level?

Mr. PETERSON. If you are referring to standards as being the definitions of what we are talking about, yes, we need-anything you do with the technology does require some uniformity, so that everybody is calling a right hand a right hand instead of a right hand here, and somewhere else it is called something else.

So you do need the standard definitions. Otherwise, you can't build a database.

Mr. HOUTZ. For example, what the standard does is tell everybody we want the same width railroad track transmitting data. If you had a situation in the States now where every State could define the width of the railroad track that we had, the transportation system of America would be nonexistent.

That is the situation we have today in health care. We have nonstandard data being transmitted back and forth. We are asking for help to define the standards and that is really what the American