AMA Wire

Wednesday, July 3, 2013

Special Feature

AMA's latest report card shines light on administrative burden from insurers

AMA's latest report card shines light on administrative burden from insurers

New data released by the AMA last month ranks the level of unnecessary administrative cost commercial health insurers contribute to the billing and payment of medical claims.

The AMA's new Administrative Burden Index (ABI), which was unveiled as part of its sixth annual National Health Insurer Report Card, shows that administrative tasks associated with avoidable errors, inefficiency and waste in the medical claims process resulted in an average ABI cost per claim of $2.36 for physicians and insurers.

Of the nation's seven largest commercial insurers included in the report card, Cigna had the best ABI cost per claim of $1.25, or 47 percent below the commercial insurer average. HCSC had the worst ABI cost per claim of $3.32, or 41 percent above the commercial insurer average.

Overall Administrative Burden Index

Payer

Overall rework cost
per claim

HCSC

$3.32

Anthem

$2.65

Humana

$2.29

Regence

$2.28

UnitedHealthcare

$2.13

Aetna

$1.68

Cigna

$1.25

The AMA estimates that $12 billion a year could be saved if insurers eliminated unnecessary administrative tasks with automated systems for processing and paying medical claims. This savings represents 21 percent of total administrative costs that physicians spend to ensure accurate payments from insurers.

"The high administrative costs associated with the burdens of processing medical claims annually should not be accepted as the price of doing business with health insurers," AMA Board of Trustees member Barbara L. McAneny, MD, said in a news release. "The AMA is a strong advocate of an automated approach for processing medical claims that will save precious health care dollars and free physicians from needless administrative tasks that take time away from patient care."

Also for the first time this year, the report card examined the portion of health care expenses that patients are responsible for through copayments, deductibles and coinsurance. During February and March of this year, patients paid an average 23.6 percent of the amount that health insurers set for paying physicians.

"Physicians want to provide patients with their individual out-of-pocket costs, but must work through a maze of complex insurer rules to find useful information," Dr. McAneny, MD, said. "The AMA is calling on insurers to provide physicians with better tools that can automatically determine a patient's payment responsibility prior to treatment."

The report card also found some significant improvements this year, including:

  • Error rates on claims paid by commercial insurers dropped from nearly 20 percent in 2010 to 7.1 percent in 2013. While dramatic improvements have been made in accuracy during the last three years, the AMA estimates that more than $43 billion could have been saved if commercial insurers consistently had paid claims correctly since 2010.
  • Medical claim denials dropped 47 percent after a sharp spike in 2012 among most commercial health insurers. The overall denial rate for commercial health insurers went from 3.48 percent in 2012 to 1.82 percent in 2013.
  • Response times to medical claims improved by 17 percent from 2008 to 2013.
  • The transparency of rules used to edit medical claims have improved by 37 percent from 2008 to 2013. Reducing the use of undisclosed payer-specific edits unlocks the flow of transparent information to physicians and reduces the administrative costs of reconciling medical claims.

"We've seen dramatic improvements this year, but there is still more work to be done," Dr. McAneny said.

The National Health Insurer Report Card is the cornerstone of the AMA's Heal the Claims Process™ campaign. Launched in June 2008, the campaign's goal is to lead the charge against administrative waste by improving the health care billing and payment system.