The High Cost of Getting Paid - Physician's Expense Per Claim...

AMA: The administrative burden of being a physician

ARDIS D. HOVEN, MD | POLICY | SEPTEMBER 15, 2013

A guest column by the American Medical Association, exclusive to KevinMD.com.

The administrative burden of being a physician continues to fuel discontent among doctors. The unfulfilling interface with the insurance bureaucracy is a major contributor to physician dissatisfaction. But not all health insurers are equal when it comes to hassle factors imposed on physicians.

New data released by the American Medical Association (AMA) ranks major health insurers according to their administrative cost burdens for billing and paying 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
United Healthcare	$2.13
Aetna	$1.68
Cigna	$1.25

When these rework costs are compounded by the thousands of medical claims filed by a typical medical practice in a month, the total burden can quickly drain time and resources from patient care. 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.

There has been noticeable progress since the AMA launched the National Health Insurer Report Card in 2008 to lead the charge against unnecessary administrative waste in the health care billing and payment system, and this has helped physicians tremendously. In fact, health insurers’ constructive response to our call to improve the accuracy, efficiency and transparency of their claims processing is evident in the significant improvements found in this year’s report card, including:

• Error rates on claims paid by commercial insurers dropped from nearly 20 percent in 2010 to 7.1 percent in 2013.
• 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 has improved by 37 percent from 2008 to 2013.

We’ve seen dramatic improvements this year, and while there is good reason to celebrate meaningful progress there is still more work to be done. The AMA is committed to helping physicians navigate this transformation era in health care and has made preserving professional satisfaction and practice sustainability for physicians a key pillar in our new strategic focus.

To learn more the National Health Insurer Report Card and the new Administrative Burden Index, please visit the National Health Insurer Report Card.

Ardis D. Hoven is president, American Medical Association. 

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