A veteran of nearly 25 years in the managed care industry, as well as a decorated veteran of the Vietnam war, Paul Caliendo is the founder and president/CEO of Preferred Medical Claim Solutions (PMCS). With headquarters in Scottsdale, Ariz., and an East Coast office in Summit, N.J., the company bills itself as a leader in medical-claim settlement by delivering faster claims-remittance services.
Caliendo says that the historic emergence of the preferred provider organization (PPO) network in the early 1980s-while offering many advantages to payers and providers-never truly fulfilled the entire contractual terms of the PPO agreement, which promised remittances in a timely and cost-efficient manner. In 1998, after nearly 20 years serving as president and CEO of four different healthcare companies-Health Star Inc., National Health Benefits Corp. and Casualty Corp., Three Rivers Provider Network and First American Health Concepts Inc.-Caliendo struck out on his own and formed PMCS.
Relying on a combination of developing and refining PMCS's proprietary software, as well as instilling in his employees a dedication to radically streamlining the claims-settlement process, Caliendo has grown his company into what he dubs as the "fastest claims-remittance services provider."
PMCS is positioned as somewhat of a pioneer, offering its Advanced Funded Provider (AFP) program, which Caliendo says is an innovative concept that puts his company in the role of a financier or financial mediator. He says the financier niche had not been filled previously in the claims-remittance market.
Caliendo received a bachelor of science degree in Business Finance from San Diego State University after serving three years in the U.S. Marine Corps, where he earned the Purple Heart, the Navy Achievement Medal with Combat "V," the Vietnam Campaign Medal, and the Combat Action Ribbon.
Q. You've worked in the healthcare insurance industry for a long time and seen a lot of changes in the business-to-business relationships between payer and provider. Go back a couple of decades and give us your perspective on how these relationships have changed and why they've changed. Was there a crucial issue that prompted these changes?
A. In about 1985, the make-up of the medical insurance industry shifted to a network of preferred provider organizations. The big issue was this: After about a decade of the transitioning to PPOs, those providers who had gone the PPO route found that they weren't receiving their claim remittances within the contracted period of time.
Basically, we found a market niche whereby we could forward remittances to the provider faster than it was being done by anyone else. We identified specific organizations that understood the concept that embedding proprietary software into their own software would provide their users with a new tool [for reimbursement processing]. At PMCS, we continued to develop and refine our software, and now we have two-way electronic data connectivity with nine different operating platforms.
So that was the issue, and that's how we came to deal with it. Our contribution has been to electronically increase the cash flow for the medical provider-we've speeded it up. That was providers' No. 1 headache, and [we've been able to help our clients reduce their cash-flow issues].
Today, we have two specific client categories: The providers who benefit from our program, and the payer, who has received a seamless method of handling the final process of claim adjudication while reducing their clients' claim expenses. The majority of our clients are self-funded payers, insurance companies, and a full range of providers registered in all 50 states who have come to us to help them expedite their claims remittances.
Q. Obviously, technology has played a major role in significantly expediting claims .processing in the healthcare industry. What are some of the organizational advances that speed up the reimbursement process?
A. I settled medical claims for a long time, and it became evident to me that if a company could pay out of their own funds rather than simply collect remittances and pass them on, then we'd have something new and groundbreaking. That's how the Advance Funded Provider program, or AFP, came about.
Where others act as collectors between providers and payers-they process the claim, adjudicate it, then go about collecting the money from the payer and pass it on to the provider-we are a healthcare financier, or financial mediator. As far as I know, we're the only company in the United States that pays providers, out of its own funds, before receiving reimbursement from the payer.
Q. What issues have sprung up recently for providers?
A. A lot of providers are asking for help on all their claims, not just selected ones linked to their payers. We also have learned that a lot of providers aren't even aware that their remittances aren't being paid in a timely fashion, and that's one reason a lot of providers are going into bankruptcy. After all, they're doctors, not accountants, and sometimes before they know it, their cash flow slows way down.
On the other hand, there are a lot of payers who aren't fully aware that their remittances are lagging behind as much as they are.
Q. What is the benefit of faster payment to payers?
A. In 1990, TPAs said that they were being held to higher performance standards by payers. As the word got out, TPAs began telling clients as a marketing tool that they could process medical claims faster. The prospective clients asked them to put their proposed performance timeline in writing, whereby the TPA would be penalized if it did not process the majority of medical claims within a prescribed number of days.
The second benefit is that by having funds advanced quickly to the provider, the payer remains in compliance with the rules set forth in self-funding medical claims established by the Department of Labor (DOL).
Therefore, the TPA maintains its performance requirements, the payer receives a reduction off the billed charge and satisfies the DOL requirements, and the provider can bring closure to outstanding claims, which ultimately reduces their internal efforts to collect a portion of their outstanding receivables.
Q. In your opinion, what are the most critical issues facing the healthcare industry today?
A. I believe that the ever-present potential of the consolidation of payers is a real issue. It would be a sad thing if that were to happen because it would turn out to be socialized medicine, and that's not a good thing. It limits the choice for the patient, and it limits the development of a true physician/patient relationship.
About PMCS
Preferred Medical Claim Solutions (PMCS) assists payers, provider and patients in reducing the costs associated with out-of-network claims. PMCS’ HIPAA compliant EDI accelerates the efficiency of the adjudication and payment process with a fully customizable solution assuring the most appropriate channel of settlement.
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