A guest column by the American Medical Association, exclusive to KevinMD.com.
There has been some notable progress in just two years since the American Medical Association’s first National Health Insurer Report Card evaluated the claims processing performance of the nation’s largest insurers. Health plans have made improvements in the efficiency and transparency of their claims processes, but there is still a lot of room for improvement – and the AMA is keeping tabs on their progress.
The AMA’s third annual National Health Insurer Report Card, released in June, covered seven major commercial plans and the electronic systems they use to manage and pay claims. For the first time, the report card benchmarked the overall claims processing accuracy of commercial health insurers and found that one in five medical claims are processed with errors.
With about an 80 percent accuracy rate for processing and paying claims, it’s clear that the health insurance industry still needs to work on its basic skills. From best to worse, here are the accuracy ratings for the commercial insurers included in the AMA report card.
88.41 percent – Coventry Health Care
87.83 percent – Health Care Service Corporation
85.99 percent – UnitedHealth Group
84.51 percent – Cigna
82.92 percent – Humana
81.23 percent – Aetna
73.98 percent – Anthem Blue Cross Blue Shield
These accuracy ratings emphasize the huge potential for reducing administrative costs for physicians and insurers. The AMA estimates that $777 million in unnecessary administrative cost could be saved if the entire health insurance industry improves claims processing accuracy by one percentage point. Increasing the health insurance industry’s accuracy rating to 100 percent would save up to $15.5 billion annually that could be better used to enhance patient care and help reduce overall health care costs.
Physicians spend up to 14 percent of revenue to keep up with the administrative tasks required by health plans and ensure accurate claim payments. More systemic changes are needed from health plans and others to reach the AMA’s goal of cutting physicians’ claims administration spending to 1 percent. Such a drop would cut significantly the $210 billion annually spent on claims processing, and the aggregate five weeks per year an average physician spends on health insurer red tape.
As long as each insurer uses different rules for processing and paying medical claims, the system will be hampered by complexity, confusion and waste. Eliminating this variability with a single transparent set of processing and payment rules for the health insurance industry would create system wide savings and allow physicians to direct time and resources to patient care and away from excessive paperwork.
Until there is a common set of claims processing requirements and payment rules, the AMA will spur improvements in the industry’s chaotic payment system through our Heal the Claims Process campaign. Launched in 2008, the campaign has already prompted health insurers to make positive changes that will eliminate waste and inefficiencies.
This year’s report card found that nearly all the commercial insurers studied had increased their transparency when it came to claims. For example, insurers were more likely to note the date they had received a claim, disclose vital policies on billing and make available their fee schedules. They also are more likely to report the correct contract fees to physicians. Improvements such as these add consistency to the payment process and result in fewer payment disputes and less paperwork.
To help physicians participate in the campaign, the AMA offers tools to physicians for cutting through the insurance bureaucracy and making claims management less of a burden. To access these easy-to-use online tools, please visit the AMA’s Practice Management Center.
Cecil B. Wilson is President of the American Medical Association.