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Insurers are paying faster and denying fewer claims

Health insurers are paying physicians 5% faster and denying 9% fewer medical claims than last year, but there is still room for improvement for some payers, most notably state Medicaid programs, according to athenahealth’s fourth annual PayerView Rankings.

The Internet-based provider of business services to physician practices evaluated 172 national, regional, and government payers in 40 states, which was the largest data set to date. The company used performance data from more than 18,000 medical providers, representing more than 41 million medical charge lines and $7 billion in charges billed in 2008.

Athenahealth found that payers are collaborating more with physicians to automate claims and billing work as they reduce administrative costs and streamlining claims processing. That allows providers to focus more on delivery of care.

The findings underscore results from a study by The Commonwealth Fund and Robert Wood Johnson Foundation’s Changes in Health Care Financing and Organization that found physician practices spend as much as $31 billion annually on administration and business transactions with health insurers. (See “Payers’ administrative practices ... ” on p. 13.)

Jeremy Delinsky, vice president of athenaNet Intelligence at athenahealth in Watertown, MA, says the rankings are not about winners and losers, but improving and streamlining administrative processes so physicians can focus on patient care. Health insurers should focus on reducing administrative waste from the healthcare system, Delinsky says, adding that it’s up to stakeholders to remove inefficiencies, or someone else—such as the federal government and the public insurance option—will.

The problem is health insurers’ varied policies and procedures for claims submissions and payment. Although some have streamlined the process and implemented real-time claim adjudication programs, others have created programs that add extra work for practices. Most health insurers see administration costs as a problem and want to make changes, Delinsky says.

Athenahealth divided the insurers into six groups: national payers, major nationals, regional payers, Blues, Medicare, and Medicaid. Some companies, such as Aetna, Humana, Cigna, and UnitedHealth Group, were in the national payers and major nationals categories.

The researchers found that major nationals achieved high marks in the areas of lowest days in accounts receivable (DAR), highest first-pass resolve (FPR), and lowest denial rate. (See Figures 10–12). Delinsky says that’s because most of the major national insurers understand the importance of lower administrative costs and provider relations.

“I think they take seriously that what’s good for their cost structure is good for the providers,” he says.

Athenahealth also found that some regional payers performed well. For example, Blue Cross Blue Shield of Rhode Island (BCBS-RI) had the lowest DAR at 15.4 days, making 2009 the third year in a row that BCBS-RI ranked the best in the category.

Athenahealth pointed to three reasons for the insurer’s success: it operates in a small state, it’s a dominant player in the market, and it has created a transparent system that lets providers know what is required to get claims accurately processed and paid. These three factors help providers understand what’s expected of them.

Medicaid is a problem

The group that consistently performed poorly in these three areas was state Medicaid programs. Medicaid had a twice longer DAR than other groups and denied more than one in every five claims.

According to athenahealth, there were several reasons for Medicaid’s results:

  • Insufficient resources for providers, which include inadequate call center staff member training to research and/or follow claims, which leads to misinformation and requires additional phone calls to resolve the issues; outdated and difficult-to-find provider manuals and other documentation; and unavailable information obtained from eligibility checks that don’t provide enough information to inform the provider’s actions
  • Greater response from providers in the area of fraud control, including custom claim form and original signature requirements
  • An ever-changing landscape featuring programs that are continuously introduced or phased out based on fund availability, which prevents a provider from understanding the program enough to properly manage his or her Medicaid patient population

“These issues manifest themselves in a higher than average denial rate, a higher than average DAR—due to claims remaining outstanding for a longer period of time, and finally a lower FPR, due to claims having to be submitted multiple times to address unclear billing requirements,” according to athenahealth.

The New York Medicaid program ranked worst for DAR and FPR, which athenahealth suggested was because of complex authorization requirements, use of proprietary claim forms for paper submission, lack of acknowledgment from Medicaid for claims submitted, use of identical remittance codes to indicate denied and pended claim scenarios, and onerous enrollment processes. (See Figure 13 on Page 10.)

These results are quite different from Medicare, which received much higher marks in the rankings. Diving deeper into the findings, athenahealth found that Medicaid managed care programs, which are operated by private insurers, performed much better than state Medicaid programs.

One problem is that states faced with limited budgets often make cuts to Medicaid programs and/or stop paying claims, Delinsky says.

“That is essentially like taking an interest-free loan on the backs of medical providers. There has to be a better way to fund the system than to have providers essentially treat patients for free upward of 90 days. That just doesn’t feel like the states have responsibly managed their budgets if that’s happening. You can understand why the provider wouldn’t want to participate in the program,” says Delinsky.

Humana is tops

On the flip side of Medicaid is Humana, which topped the rankings for the second time in four years. (See Figure 14.) Humana topped the national payers in the areas of lowest DAR.

Mark Smithson, vice president of provider process and network operations at Humana in Louisville, KY, points to two reasons for the high marks: real-time claim adjudication and electronic remittance devices. Smithson says many health insurers say they have real-time claim adjudication, but still require physician offices to log onto the payers’ sites and reenter the information. This merely adds work to physicians’ offices. The key is to integrate the physician practice into the physician offices’ practice management system, he says.

By going through real-time claim adjudication, the office avoids batching the claims, mailing them, and having a third-party vendor intervene.

“We don’t change dramatically how they put their charges in,” he says. “Not only does it help at the patient collection window, it also speeds up the entire process.”

Not that the changes are seamless. Smithson says the health plan and office must work to have the process complement the work flow, but realize the changes will affect work flow. “What this does do is streamline all that so the person is no longer in the back office, but in the front office at the patient window, so it does somewhat disrupt their work flow,” he says.

For example, one practice has color-coded Humana patient charts so the office employees know it has a different work flow. It is important to educate the physicians’ offices from the start so they know what changes are needed. “The better the communications up front, the more smooth the whole transition is going to run,” Smithson says.

It’s Humana’s strategy to be the easiest payer for providers to do business with, and athenahealth’s results show that the strategy is working. Humana’s mind-set is that it would rather pay pennies to process the claims through streamlined processes and avoid back-end phone calls, Smithson says, adding that each phone call avoided saves the company $7.

William F. Jessee, MD, FACMPE, president and CEO of the Medical Group Management Association (MGMA), which represents 22,500 members, says fast, accurate payments are critical to manage business operations of physician practices. Although Humana tops the rankings, “there remains considerable room for improvement across the industry,” Jessee says. “Humana has shown a willingness to reach out directly to MGMA and carefully listen to the needs of our members. Its ability to embrace new technologies and adapt to meet the needs of its group practice customers is clearly beginning to pay off.”

Athenahealth’s rankings look at administrative ease and efficiency, but the company would like to expand its program to include other areas, which Delinsky says will be more meaningful for providers. “I think you can probably make some correlation about administration efficiency if you had more data publicly about these companies, but it doesn’t get into comparative payments yet. That is something we’re likely to do in coming years,” he says.