Inc. (CLAI.OB)
Interview with: Don Crosbie, President and CEO
Business News, Financial News, Stocks, Money & Investment Ideas, CEO Interview
and Information on their
Internet-based claim processing solutions for the healthcare payer industry, including distinctive, advanced ASP technology.

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This is a printer friendly page!, the first company to provide medical claims processing via the Internet, continues to provide 98% submission accuracy while adhering to HIPAA Regulations

Healthcare Claims Processing

12801 North Central Expressway-Suite 1515
Dallas, TX 75243
Phone: 972-458-1701

Don Crosbie
President and
Chief Executive Officer

Interview conducted by:
Lynn Fosse
Senior Editor
September 2003

Prior to joining Mr. Crosbie was the President and Chief Executive Officer of XactiMed, a leading provider of Internet-based, revenue cycle software solutions and outsourcing services to the healthcare industry. Mr. Crosbie previously served as the Chief Financial Officer and President of North American Operations for Blue Wave Systems, Inc. prior to its sale to Motorola, Inc. and has also served as the President, Chief Operating Officer and Chief Financial Officer of Ypay.Com and as the Chief Executive Officer of Rheumatology Research International. Mr. Crosbie spent ten years with Intervoice, Inc., joining the company as the sixth employee and holding the positions of Vice President of Marketing, Senior Vice President of Marketing and Executive Vice President and Chief Financial Officer. Mr. Crosbie was the Chairman and Chief Executive Officer of ComVest Partners, Inc., which he founded after leaving Intervoice, Inc.

Company Profile: Inc. (CLAI.OB-OTC BB) is a leading provider of Internet-based claim processing solutions for the healthcare payer industry, including distinctive, advanced ASP technology. ClaimsNet offers a highly secure connection and scalable Internet architecture that speeds deployment and minimizes expenses associated with claims submission and claims payment. Internet claims submission improves billing and collections for customers by eliminating the traditional lag time between claims submission and payer acceptance. services feature immediate claims submission to virtually all payers, patient billing statement automation, and eligibility and referral services. was first to move health insurance claims submission to the Internet. Claims submission is fast, easy, and secure. Submitting claims over the Internet eliminates expensive software licensing fees and provides faster implementation at much lower cost. The Claimsnet all-payer claims submission system checks each submitted claim against its 20,000-plus payer-specific edits within seconds, so that claims can be corrected before they are sent to the payer. Both providers and payers gain cost and time savings from processing a much smaller number of resubmitted claims. Ninety-eight percent of claims are accepted by payers the first time they are submitted, the highest acceptance rate in the industry. Claimsnet works with most major practice management software to seamlessly connect providers, laboratories, and billing services to clearinghouses and payers.

Providers can subscribe to Claimsnet's automated statement billing service to lower administrative costs. Statement billing services eliminate in-house statement printing and envelope stuffing. offers special relationships to clearinghouses and third-party vendors. For clearinghouses, Claimsnet's browser-based services can be co-branded or privately labeled to add to existing products and services or to replace inefficient or non-compliant products and services.

CEOCFOinterviews: Mr. Crosbie, where was Inc., when you became its CEO, what changes did you orchestrate, and what attracted you?

Mr. Crosbie: “What attracted me to was the opportunity to turn the company around, which is what I like to do. I knew a reasonable amount about the industry, and knew there was an opportunity to provide a service to the payer community of the healthcare business that I thought was attractive. What has changed since I came to the company is we have restructured on the expense side, refocused on the sales side and dealt with balance sheet issues that needed to be addressed in dealing with past creditors, which has all been done successfully. We have reduced the burn rate from a financial standpoint, and increased the sales and marketing and as a result of that, have started to sign new customers on the payer side. With a good pipeline of opportunities going forward, we hope this leads us to a cash flow positive situation over the next three to six months.”

CEOCFOinterviews: You were the first company to introduce real-time healthcare prevention processing over the Internet; will you tell us more about that?

Mr. Crosbie: “About six years ago, we saw the Internet as a vehicle for transmission of healthcare claims.  The company went out and approached the provider side, and eventually wound up with about 6000 physicians who were sending their claims through us, which we then forwarded through the clearing-house to the payer side. It was not a very good economic model for the company. We changed the focus of the company away from going to the providers as our sponsors to the payer community. We are still doing the same thing, only working for different customers now, which happens to be the payer.”

CEOCFOinterviews: What exactly is it that ClaimsNet does?

Mr. Crosbie: “Provider offices file claims with ClaimsNet electronically rather than on paper and then we run them through an editor to make those claims as accurate as possible from a data standpoint before they are delivered through the adjudication system to the payer community. What that means is that instead of the claims being paper, with all the associated data entry costs, we handle it. Instead of those claims having errors in them, we get them up to about a 98% accuracy rate. When the claims are received by the adjudication system, they can be adjudicated quickly and therefore reduce administrative costs on the payer side. We have what we call an “Edit Engine” which runs about thirty thousand edits, both general service edits and payer specific edits. If data elements are missing, codes are wrong, or the order of service is wrong, we rearrange or reformat the information. If we are not able to do that, we can send it back to the provider for correction before submitting it to the payer. We are the gatekeeper that tries to get the errors taken care of at the source, rather than after they get to the adjudication system. Generally, in the electronics claim business, it is about seventy percent accurate, which means that thirty percent of claims are rejected because of inadequate information. We get it to about 98% accuracy.”

CEOCFOinterviews: Who are your target customers and how does that filter down to the providers?

Mr. Crosbie: “Our target customer is what is generically called the payer community of the healthcare business, which means third-party administrators, preferred provider organizations, HMOs and insurance carriers, as well as some self-insured large employers. They go to their high-volume paper providers and tell them that there is a better way to do things and that they will get paid faster, have less work and we will be much happier. The payers sponsor us into the provider offices.”

CEOCFOinterviews: What is the revenue model?

Mr. Crosbie: “We are paid on a per-claim basis. It is a transaction charge, where for every claim that is filed, we get paid somewhere in the range of twenty-seven cents. In addition to that, we have a set-up implementation fee, which runs between twenty five hundred to ten thousand dollars, depending on the customer and the complexity of the installation.”

CEOCFOinterviews: What are your potential customers using now and how do you reach them to tell them about your services?

Mr. Crosbie: “We started in January with a proactive out-bound sales calling campaign, along with a direct mail campaign to get visibility in the marketplace. As a result of that, through the ‘gestation period’ between four and six months, we have now started to filter all of these prospects through the sales process, and are getting them to sign contracts with us for the handling of their claims. We have customers that are 100% paper, and those that are 60% electronic. We also have customers that are moving away from a current incumbent vendor to us for reasons of both cost and responsiveness and elegance of solution.”

CEOCFOinterviews: Is there competition, and why should people be using you?

Mr. Crosbie: “There is a fair amount of competition in the industry and in many cases customers are already using someone else. The reason that they use us is because they like the solution that we have, and it does not require any software changes on their side or on the physicians’ side. They use us because they like the idea of increasing the accuracy of the claims that they receive for adjudication. The ability to do custom edits for payers, and do them in a timely manner, is very critical.”

CEOCFOinterviews: What do you need to do on your end to keep up with all the changes that happen in terms of reimbursement?

Mr. Crosbie: “We do not deal with the actual price, so we are not part of the reimbursement. We deal with the delivery of the claims. Sometimes those claims will go to a contract repricer, but we do not deal with that aspect of the claim itself. The amount of reimbursement is not something we determine. If anything comes through that we are not aware of, we immediately call the appropriate parties and make changes. This is a moving environment and you have to have the appropriate reports that spin out from the system to let you know what is going on so you can adjust your system accordingly, because things do change, and sometimes they change with advance notice and sometimes they do not.”

CEOCFOinterviews: How do you build on where you are now?

Mr. Crosbie: “We build on where we are now by keeping the sales effort going and extending our penetration into the payer community and moving from smaller payers, which typically you get response from in the early days, to larger payers. We then look at adding services that take in the full scope of handling the claim. We are handling the claim from the doctor to the payer, but there is also a transaction that goes back from the payer to the doctor, which is the check and the explanation of benefits. We are looking at doing things that would complete the cycle electronically, including both ways with the transaction.”

CEOCFOinterviews: Is security still an issue on Internet transactions? How do you maintain the technical end of your service?

Mr. Crosbie: “All of our transmissions are encoded, encrypted, and secured within acceptable standards within this framework. Regarding the security aspect, you have to make sure you do it right and if you do it right, security is not an issue. Our people have been with us a long time, know the industry, and know the technology. They have built that technology so that we can keep abreast of it. We seem to be doing a good job of that currently.”

CEOCFOinterviews: How much of a factor has the general downturn in technology been for or has healthcare escaped?

Mr. Crosbie: “Healthcare has its own Y2K deal with the deadline approaching in October. This is already happening and claims are already being filed. So there is a motivation to look for a more cost-effective and efficient way to handling these claims so that you can reduce the administration costs as the pressure on healthcare costs is growing. It seems to be a good motivator for continuing to look at options here, as to what can be done.”

CEOCFOinterviews: Do you see acquisitions going forward, and is there much consolidation in your industry?

Mr. Crosbie: “We can foresee a consolidation situation in the industry because there is a lot of regional players that are finding it harder to maintain their technological edge, particularly with the cost requirements that are place on us because of HIPAA (Health Insurance Portability and Accountability Act) regulations. We think there will be some consolidation, and we look to be one of those that is consolidating rather than being consolidated.”

CEOCFOinterviews: In closing, what should potential investors know about

Mr. Crosbie: “What potential investors should know is that we have gone through a significant restructuring on the cost side of our business, which has been successful. We are looking at the revenue growth strategy of the company. While we have not showed any progress on that in the first two quarters of this year, with the pipeline that we have and the contracts that we have announced, we will begin to impact the revenue line going forward.  We have a system that does not require us to add many costs as we increase revenue and we are moving rapidly towards profitability.”

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