Effective Wednesday, the Cayman Islands National Insurance Company has switched providers involved in the processing of about 90 percent of the healthcare services claims made via government-issued CarePay cards.
The change led to allegations by the current healthcare claims system provider that the government had breached its contract with the company.
CINICO chief executive Lonny Tibbetts said civil servants would experience no difference in healthcare service as the government hospital system transitions most of its insured members from the processing system operated by Advanced Information Systems Cayman Ltd. to Detroit-based ABS Automated Systems.
“It’s part of a strategic plan to utilize our new third-party administrator in the U.S. and [efforts to] improve our customer service online,” Mr. Tibbetts said.
CarePay cards are still needed for Health Services Authority customers to verify eligibility, Mr. Tibbetts said. The new ABS claim processing system would allow CINICO members to view their claims online, he said.
The CarePay cards, introduced by the Health Services Authority in 2011-2012, were put in place to provide “real-time” healthcare claim adjudications, giving the Cayman Islands hospital system more accurate records of patient payments with an eye toward reducing unpaid bills.
In recent months, government leaders questioned both the cost and effectiveness of the system, which has never been fully implemented as intended according to its original contract to include private sector health insurance providers. Also, a criminal investigation into the award of the CarePay cards contract in December 2010 to Advanced Information Systems Cayman Ltd. has been under way for some months.
The chief executive of Advanced Information Systems, Jamaica, Douglas Halsall said Wednesday that he was aware of the government’s decision to stop processing CarePay claims on the AIS system for civil servants, effective Oct. 1. Mr. Halsall said it was his understanding that about 10 percent of the current CarePay card holders, mostly uninsured individuals on the government’s Standard Health Insurance Contract, would still be processed using the AIS-installed system. The other four categories of insured individuals using the CarePay cards would no longer have their claims processed via AIS.
Mr. Halsall said it was his view that the Cayman Islands government was currently in breach of its five-year contract with AIS’s sister company, Health Adjudication Systems, which extends through December 2015. Mr. Tibbetts said CINICO was in talks with AIS about changes in the processing format, but that CINICO healthcare plan members will not be impacted.
Cayman Islands Finance Minister Marco Archer announced in early July that the contract for the CarePay swipe cards would be placed under review.
Questions were raised in the Legislative Assembly’s Finance Committee as to whether the swipe-card system had met its goals, including whether it was helping to reduce the Health Services Authority’s bad debts. As of June 30, the authority’s past-due debts of more than a year stood at $55 million. By the end of June 2015, the amount is expected to increase to $70 million.
The potential to reduce bad debts was promoted by CINICO and the authority as a benefit of the swipe-card system.
According to tender records issued on Dec. 6, 2010, to then-Health Services Authority board chairman Canover Watson: “The HSA is expected to save in excess of $2 million from reduction in bad debts, plus savings in administrative cost.”
Mr. Archer also raised issues in Finance Committee last month over what some members referred to as a lucrative contract for the swipe-card system now used by all patients covered by CINICO at the Health Services Authority hospital and health clinics.
The contract was awarded on Dec. 21, 2010, to AIS Cayman Ltd., an agent of St. Lucia-based Health Adjudication Systems, for five years. According to the contract, a copy of which was obtained by the Cayman Compass, AIS Cayman Ltd. was to receive US$1.37 million for initiating and implementing the computerized swipe-card system. In addition, it would receive from CINICO and from the health authority 4 percent of the value of every swipe-card transaction approved for payment.
The 4 percent charge on the value of each claim was split between CINICO, which was responsible for paying 1.5 percent of it, and the Health Services Authority, which would pay 2.5 percent, according to the contract. Bid documents for the project obtained by the Compass indicated the total costs over the five-year agreement were estimated at US$13.6 million (CI$11.15 million), including the US$1.37 million for the set-up expenses.
Last week, officials with Advanced Information Systems in Jamaica made statements indicating the swipe-card system was never implemented as intended.
In 2011, Cayman Islands health services officials acknowledged they were allowing patients who owed the hospital system money to get payment plans for debts that were more than five years old. That practice was identified as having “negative implications” for accounts receivable and bad debts, the authority’s then-chief information officer said. Continuing to allow for payment plans would complicate hospital finances and was expected to delay, at the time, the implementation of the CarePay swipe-card system.
“The CarePay card-swipe system can adjudicate claims 24/7/365 for [the Health Services Authority] and inform [the health services] of the amount to be collected from the patient,” according to an email send on behalf of Mr. Halsall. “It cannot physically collect this money from the patient.”
The email quotes former Health Services Authority Chief Information Officer Dale Saunders as advocating the introduction of CarePay to other healthcare providers whose patients used the hospital system back in 2011.
“Without the facility to adjudicate private sector claims online, real-time … as was initially planned, the Cayman Islands Health Services Authority will never realize this promised reduction in bad debts,” the email sent on behalf of Mr. Halsall indicated. “We have steamlined CINICO, but CINICO is one of seven [locally operating healthcare insurance companies].”
Mr. Halsall also said yearly revenues from the CarePay card swipes were around US$1.5 million, not the $2.4 million stated in the original bid documents.