DIGITAL HEALTHCARE, INC. FACT SHEET
What is Digital Healthcare?

The company was originally formed with the idea of automating procedures in healthcare finance that are difficult or impossible to do by hand. As the various kinds of technologies were investigated and applied to the process, it became clear that the system was evolving into a greater tool that could lead to the solution of one of healthcare’s greatest problems: electronic sorting of payors under the rules of primacy, leading to electronic medical records that would save time, money and ultimately lives. Emerging from its start up phase, the company currently holds business process patent applications for technology that can be utilized to protect against the abuse of government insurance payments.

When was the company formed?

It was begun in 1993 as an Ohio corporation known as the COB Clearinghouse. At the suggestion of hospital officials it was renamed Digital Healthcare. Today Digital Healthcare is incorporated in South Dakota. The concept behind the technology began to be developed in the early 1990’s They worked with IBM, ITT, Hewlett Packard, Lockheed Martin, MCI, ATT and other technology companies to complete the system.

How is Digital Healthcare financed?

To date some $5-million has been raised from about 200 individual investors who are located across the U.S.

Who are the principals in the company?

The company is held by five primary stockholders. Mullaghmast Holdings; Jay R. Marshall of Akron, Ohio; Chris Mallin of Mogadore, Ohio; Jeff Patton of St. Paul Minnesota; and Leslie Messmer of North Royalton, Ohio. The officers of the company include President Richard Godoy, Treasurer Pamela Peterson and Secretary Penny Burton. (David Arnold)

Where is Digital Healthcare headquartered?

The company maintains its corporate office in Valley View, Ohio where it has five full time employees. It maintains its data center in Western Ohio under security conditions that match that of the Department of Defense and the National Security Agency. The company also employees more than 30 sales representatives across the country and works with government through 30 lobbying organizations.

How does Digital Healthcare’s technology work?

America’s healthcare system is based on insurance. The first inquiry a hospital or doctor’s office deals with is the kind of insurance the patient carries, but 46% of patients present themselves without any proof of insurance at all, and 20% have double coverage they don’t usually disclose to the Admitting officer. This faulty data becomes the basis for medical record keeping since each procedure performed on a patient is carefully recorded in order to receive payment from either private insurers or government sponsored programs. It is at this initial and vital point in the healthcare system, that Digital Healthcare’s technology takes effect. Its record system matches the patient with every insurer, either government or private, and determines which is responsible for payment of the care. This ability to find primary insurers is becoming increasingly important since a Government Accounting Office study (6-862) found that $64 billion was lost annually because of improper routing of insurance claims to Medicaid alone. To meet this growing crisis, the U.S. Congress passed a law in 2005 to create a system that ensured that Medicaid was not improperly used to pay for care for those who held private insurance. In 2007 Congress passed a similar mandate for Medicare. This means that 4500 private insurers must make their enrollment available to match with the fifty state Medicaid agencies and Medicare. The law imposes very large penalties on commercial insurers which conceal their primacy. Digital Healthcare’s patented process can make this match occur in minutes, saving taxpayers billions of dollars. Digital’s process also saves commercial payors the duty of uploading large enrollment files to 51 separate programs, and allows commercial payors to avoid their own errors of this kind.

How are Medicaid funds that have been used in lieu of private insurance being recaptured today?

According to GAO, most of them aren’t. The tracking of primary payors currently cannot take place at the initial point of registration in a doctor’s office or hospital. This means that a tedious, time consuming and expensive process of checking with some 4,500 private insurers must be undertaken by each state Medicaid office, which is so expensive by telephone that it is not done. Consequently, many claims are paid by Medicaid that should not have been paid. A manual effort to recover claims is made by Medicaid, but it’s average result is less than 1%, while GAO says that over 13% of beneficiaries have commercial coverage. The difference is $64 Billion per year. Digital Healthcare’s technology can accomplish thorough testing before taxpayer money is spent, and do so without slowing down the billing and payment process.

In its start-up phase, how has Digital Healthcare participated in rectifying the Medicaid crisis?

In the late 1990s, Digital healthcare conducted recovery operations for the rubber companies and others, identifying cases where they inadvertently paid claims that belonged to other insurers. Digital Healthcare pursued those recoveries to the US Supreme Court, but found that ERISA (corporate) plan sponsors have no right to recover the millions of dollars in claims errors that exist. It becomes very important under Sarbanes Oxley for corporate plan sponsors to begin pre-empting these errors. In 2000-2003, Digital Healthcare conducted the first actuarially accurate, audited measurement of the insurance primacy process, assembling over 20 Million records, and finding a 21.7% average error rate that accords well with GAO’s 2006 findings. Digital Healthcare contracted with the Medicaid departments in Kansas and Arkansas in 2006 to run a demonstration program. It completed this work as the contract specified but deemed the project incomplete upon discovering that private insurers failed to comply follow the new federal law and provide information leading to the possible recovery of some $3-billion in Medicaid funds, and the states at that time lacked meaningful enforcement tools. Since then Digital Healthcare has supported legislation that will require private insurers to comply with the wishes of Congress, following the Deficit Reduction Act of 2005. Digital Healthcare has advised legislators in seven states and the Congress on the best means of legislatively correcting these problems in healthcare finance.