Seven Largest Insurers Incorrectly Pay One in Five Claims, Says AMA

Cheryl Clark, June 15, 2010

Health insurers don't correctly process one in five medical claims, causing delays and adding more work, hassle, and cost to the healthcare system, according to a new American Medical Association scorecard

The most accurately paying insurer was Coventry Health Care Inc., which had an 88.41% correct claims processing score. Anthem Blue Cross Blue Shield came out last, with an accuracy rating of 73.98% the AMA survey said. Other companies scored include Health Care Services Corporation, UnitedHealthcare Group, CIGNA Corp., Humana Inc. and Aetna, which scored in between in that order.

That's according to the AMA's latest rating of one of the 17 metrics, called the Electronic Remittance Advice accuracy, which included many of the other metrics as well and which the AMA said reflects the best overall measure of insurance company payment. Other aspects of the scoring include rate of denials, timeliness, and the degree to which health plans communicate their fee schedules to providers.

The physicians' group estimates that $777.6 million annually in wasted administrative effort could be saved if the health insurance industry improved its claims processing accuracy by even 1%. Increasing accuracy to 100% would reduce overall healthcare costs by $15.5 billion, the AMA says.

A major culprit behind the problem is the lack of standardization in insurance plan rules, because each insurer has different ways of paying for certain services, such as when multiple types of care are provided in the same office visit, explains AMA immediate past president Nancy Nielsen, MD. All too often, Nielsen says, physicians and their office staff are unaware what each insurer's plan rules are.

She gave an example of a doctor who sees a patient for a regular checkup. But the patient mentions a swollen knee that the doctor treats with a procedure known as aspiration.

"There will be two claims submitted: One for the physical and one for the knee aspiration. But the insurer will pay either nothing for one of those two claims, or half of the second, or 100% for both. But nobody knows. It's so complicated.

"Doctors end up hiring staff to deal with systems that are unique to every insurer. It's a major source of difficulty," Nielsen says.

"We want (insurance companies) to standardize those rules . . . And once that happens everybody would benefit and it clearly would reduce costs," she says. "Unequivocally in the doctor's office, you wouldn't have to have an army of people fighting with each insurer."

America's Health Insurance Plan spokesman Robert Zirkelbach suggests the blame does not lie exclusively with health plans. "A recent AHIP survey found that nearly one-fifth of all provider claims are not submitted to health plans electronically, and more than 1 in 5 claims are submitted by providers at least 30 days after the delivery of care," he says.

He adds that health plans are investing in technologies that make it easier for providers to submit electronically, to "enable doctors in these states to spend more time with their patients."

And, he reiterated a concern from his organization that according to one government report, the true villain for rising healthcare costs is "soaring medical costs–not health plan administrative costs—that are the key drivers of rising healthcare costs."

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