Bruce Lefco founded Milwaukee-based Health Payment Systems Inc. to make medical bills easier to understand for consumers, save employers money on their health plans and enable health care providers to receive upfront payment for services. The company began in its development stages in the fall of 2005 and began signing on clients in spring of 2008.
“This is unique. There is no other company in the country that is doing this,” Lefco said. “We needed some pretty diverse skill sets to bring it all together.”
HPS needed to develop its own software systems, its own contracts and its own business model. According to Lefco, it took roughly two years to get everything ready. Early in 2008, they started testing groups in the system.
Four or five months ago, the company started bringing on groups in large quantities and now is adding new groups every week.
Employers who sign on with HPS are privy to the best provider pricing available. Through HPS, providers are able to receive the employee and the employer portion of the payment within 20 days of the service.
The rules of engagement with HPS say that an employer must fund its liability within a set number of days in order to receive the promised discount.
“The employer funding essentially triggers the payment process, so we take very little risk when it comes to the employer portion of the payment. If they don’t pay, then no one gets paid, and they don’t receive the discount,” Lefco said.
In exchange for that guarantee, the providers offer HPS employers the best pricing on services available, Lefco said.
“Employers are able to connect to discounts through third-party claim administrators, but HPS also partners directly with providers.”
HPS has relationships with three of the biggest providers in the state, including Aurora Health Care, Wheaton Franciscan Healthcare and the University of Wisconsin system. The company also has partnerships with several primary care physicians, specialists and multi-specialty clinics, Lefco said.
Lefco, the company’s chairman and chief executive officer, previously was CEO of one of Wisconsin’s largest preferred provider networks, HealthEOS. Today, HPS has a working relationship with HealthEOS, as well as other PPOs in the state, including Interplan Health Group.
Most of the employers that sign on with HPS have 50 to 500 employees and typically self-insure their employees, Lefco said. Typically, a medical provider will bill the insurance company of a business, and bill the employee/patient and wait for each side of the bill to be taken care of.
With the HPS system, the bill gets sent to HPS who sends it to the insurance company to have the benefits applied. HPS then pays both the employer and employee portion of the bill within 20 days. After the medical provider is paid, HPS sends a monthly statement, the super EOB, to the consumer that lists all charges for the month and shows exactly what to pay.
“The Super EOB was designed by consumers for consumers,” Lefco said. “It wasn’t designed by an insurance company so it is easier to read and understand. The charges from all providers are listed from the month so there is only one bill and one payment. It’s a major benefit for the consumer.”
According to Lefco, providers benefit because they can eliminate a lot of the expenses with patient collection.
HPS takes on the risk associated with the consumer not paying, but according to Lefco, HPS gets a percentage of each claim from the provider that become revenue for the company. A portion of that revenue goes in to an account for lost reserve, he said.
“We do take on the risk of the patient not paying, but our experience has been that as a result of the Super EOB, our experience with them paying has been exceptional because they understand their bills better, there is just less confusion.” Lefco said.
“HPS is designed to be an enhancement to anyone’s network. Our desire was to eliminate some of the confusion and make our health care system more efficient.”
