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Patients Shoulder Nearly 25% of Medical Bills

 |  By John Commins  
   June 18, 2013

Data from the American Medical Association details the costs of medical billing complexity on patients and physicians, who are put "in the awkward situation of having to ask patients for money," says an AMA board member.

 


Barbara L. McAneny, MD

Higher co-pays, deductibles and other fees have held patients responsible for nearly 25% of their medical bills and forced physicians to become reluctant bill collectors, a new study from the American Medical Association shows.

For the first time in its six year history the AMA's National Health Insurer Report Card [PDF] examined the portion of medical bills that patients are responsible for through co-pays, deductibles and coinsurance. In February and March this year patients paid an average 23.6% of the amount that health insurers set for paying physicians, the report found.  

"The patient isn't always aware of what they signed up for and physicians don't like being the bearers of bad news to these patients," says AMA board member Barbara L. McAneny, MD, a board certified medical oncologist/hematologist from Albuquerque, NM.

"As we have more and more third-party administrator types of insurance claims, and there are more and more payers out there, each of whom has their own rules on how they are going to pay you, it gets more complicated," McAneny said in an interview.  

"Physicians now are concerned with having to collect a significant amount of the money they're contracted to be paid from the patients who are often unaware that they are going to have to pay part of the fee. It puts physicians in the awkward situation of having to ask patients for money and doctors don't like doing that. We're not very good at that."  

Also new this year, the AMA unveiled its Administrative Burden Index [PDF], which ranks commercial plans according to the unnecessary cost they add to the billing and payment of medical claims. The AMA said that red tape 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.  

Cigna had the best ABI cost per claim of $1.25, or 47% below the commercial insurer average. Health Care Services Corporation had the worst ABI cost per claim of $3.32, or 41% above the commercial insurer average. McAneny says the ABI is a simple and accurate way to show physicians the cost of administrative burdens.

"We are trying with this report to quantify this so that when a physician practice looks at options for contracts with payers, they will know early into the process that they may be bargaining for $100 but it is going to cost me $14 to pay for that so what I am really asking for is $86," McAneny says.  

"Physicians are going to have to use tools like this and a lot of other tools the AMA provides because if you are not an efficient physician practice in this market you are going to have a hard time surviving. And we need every physician we possibly have in this country to be able to continue with their practice of medicine and continue taking care of patients, especially as we have all of these new patients who are on insurance plans either through Medicaid expansion or from the exchange-based plans."  

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% of total administrative costs that physicians spend to ensure accurate payments from insurers.

"In this day and age when healthcare costs are so high the AMA is focused on the idea that we need to lower the costs of healthcare without harming patients," McAneny says. "One of the ways that we can lower the cost of healthcare and actually do a better job for patients and for doctors is to eliminate this huge amount of money that goes into the administrative burden that we are trying to quantify with this index."  

McAneny says that the Health Insurer Report Card since it was first published in 2008 has provided an influential and reliable measure of payers' denials, timeliness, accuracy and transparency, and has prompted insurers to clean up their acts and honor the wording of their own contracts.  

"That's a huge benefit for physicians that I don't think a lot of physicians are even aware of. They just think their billing department is doing better at collecting claims," she says. "The fact that a lot of the insurance companies now have gone from under 80% accuracy to upward of 95% accuracy in paying claims is a huge benefit."

Other key findings highlighted in the report card:

Accuracy: Error rates for commercial health insurers on paid medical claims have dropped from nearly 20% in 2010 to 7.1% 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 paid claims correctly since 2010. UnitedHealthcare led commercial plans with an accuracy rating of 97.5%. Regence trailed all plans with an accuracy rating of 85%. Medicare led all insurers with an accuracy rating of 98%.

Denials: Medical claim denials dropped 47% in 2013 after a sharp spike in 2012 among most commercial plans. The overall denial rate for commercial plans went from 3.5% in 2012 to 1.8% in 2013. Among all insurers this year, Cigna had the lowest denial rate at .54%, while Medicare had the highest denial rate at 4.9%. AMA officials have no explanation for the 2012 spike in claims denials.

Timeliness: Plans have improved response times to medical claims by 17% from 2008 to 2013. Humana had the fastest median response time of six days, while Aetna was the slowest with a median response time of 14 days. Medicare's median response time of 14 days has gone unchanged since 2008.

Transparency: Plans have improved the transparency of rules used to edit medical claims by 37% from 2008 to 2013. AMA says 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. .

Robert Zirkelbach, spokesman for America's Health Insurance Companies, did not dispute the accuracy of the AMA report card, but says improving the accuracy and efficiency of claims payments is a responsibility that must be shared by providers and plans.  

"Health plans are doing their part to streamline health care administration to reduce paperwork, improve efficiency, and bring down costs," Zirkelbach said in an email exchange. "A recent AHIP survey found that health plans processed 98% of all claims within 30 days. The AMA report card also found 'dramatic improvements in accuracy,' a 47% drop in claim denials, and improved transparency and response times."

"At the same time, more work needs to be done to increase electronic submission of claims and to reduce the number of claims submitted to health plans that are duplicative, inaccurate, or delayed. For example, AHIP's survey found that 16% of electronic claims and 54% of paper claims were received from health care providers more than 30 days after the service date."

"Importantly, government data show that rising healthcare costs are driven primarily by rising prices for medical services, not health plan administrative costs," Zirkelbach says. "In fact, the most recent National Health Expenditure data found that the portion of premiums allocated to health plans' administrative costs in 2011 was among the lowest in recent years, despite the fact that health plans have been incurring new compliance and regulatory costs related to the health care reform law."

The AMA said the findings from the 2013 report card are based on a random sampling of approximately 2.6 million electronic claims for approximately 4.7 million medical services submitted in February and March of 2013 to Aetna, Anthem Blue Cross Blue Shield, Cigna, Health Care Service Corporation, Humana, Regence, UnitedHealthcare and Medicare. Claims were accumulated from more than 450 physician practices in 80 medical specialties providing care in 41 states.

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John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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