Insurers concoct a system to ward off WebMD

In one of the sharpest challenges to Internet-based health company WebMD, seven major health insurance companies have formally outlined their plans to provide a Web-based transaction system to speed the movement of paperwork among physicians, insurers and hospitals.

The system, called MedUnite, has been in the works since earlier this year, when the competing health insurers laid aside their own differences to form a challenge to the then-quickly rising power of Internet outsider WebMD (formerly known as Healtheon/WebMD). When the plan was first announced, Atlanta-based WebMD's stock tumbled, and it has yet to recover amid rising skepticism.

The health care companies investing in San Diego-based MedUnite are Aetna, Anthem, Cigna, Health Net, Oxford, PacifiCare and WellPoint Health Networks. The system will allow physicians, laboratories, insurers, hospitals and other health-services providers to electronically send and receive benefits verifications, claim submissions, medical referrals and other such documents.

Dave Cox, 52, formerly executive vice president and a director of Science Applications International, was named MedUnite's chief executive.