Health plans still need to work on basic skills

In just one year since their problems were spotlighted in the American Medical Association's first National Health Insurer Report Card, health plans have made notable progress in the efficiency and transparency of their claims processes. But there is still a lot of room for improvement.

The latest report card, released in July, covered eight major plans' electronic billing and payment systems. It found that nearly all insurers studied had increased their transparency when it came to claims. The report card is available online (www.ama-assn.org/go/preview-2009-nhirc).

For example, insurers were more likely to note the date they had received a claim, disclose policies on billing and make available their fee schedules. They also are more likely to make payments that hewed to those schedules. Thanks to prompt-pay laws, plans cut the amount of time they took to pay claims.

These improvements happened in large part because of the AMA's "Heal the Claims Process" campaign. That effort seeks to get all participants in the health care claims process to eliminate waste and inefficiencies.

Despite the attention the campaign focused on health plan problems, not all the news in the report card was positive. Plans need to be more efficient in handling prior authorizations, which the report card said was the No. 1 time-consumer when it came to physicians' dealings with health plans.

The report card also found a wide variation in undisclosed edits -- coding changes made based on the plan's own rules, rather than on CPT or another standard. According to the AMA, there is "inconsistency and confusion that results from each health insurer using different rules for processing and paying medical claims. The variability requires physicians to maintain a costly claims management system for each health insurer."

Currently, physicians spend up to 14% of revenue on costs associated with submitting claims. More systemic changes are needed from health plans and others to reach the AMA's goal of cutting physicians' claims administration spending to 1%. Such a drop would cut significantly the $200 billion annually spent on claims processing, and the aggregate three weeks per year an average physician spends on claims-related issues.

The AMA has suggestions for how various players can make further improvements in the billing process:

• Payers need to encourage wide adoption of electronic transmission, which they can do best by making sure the claims process is transparent and accurate.
• Employers should support electronic claims transmission, as well as educate employees about their health plans.
• Patients must understand their plans and make a good-faith effort to pay their bills. This is especially critical because eligibility questions are still a time-consuming problem for physicians.
• Physicians, their practice staffs and billing partners need to submit timely, accurate claims the first time through. They also should review and reconcile claims, and make sure their own billing process is efficient.
• The government should issue new HIPAA standards that would allow for standardized claim edits, rule sets and payer identifiers to make the billing process more consistent from insurer to insurer. The recommendations come in an AMA white paper dated June 22, its second on the subject of transparency and efficiency in the claims process.

Standard payment rules and common claims-processing requirements, as outlined above, would cut administrative costs for physicians and insurers alike. That money instead would be better spent on providing efficient, high-quality care -- as would the time doctors are spending now on insurer hassles.

The print version of this content appeared in the Sept. 14, 2009 issue of American Medical News.

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