American physicians waste significantly more time dealing with red-tape associated with the multiple insurance payers in the United States. Compared to Canada – with its single payer – US physicians spend four times as much.
Physicians and administrators in the United States and in Ontario, Canada, were surveyed about time spent interacting with payers to compare costs incurred performing this task. The authors used the 2006 MD Select Canadian Masterfile database to randomly sample 150 family physicians, 180 specialist physicians, and the business managers of 93 large group practices. The methods of the US survey were represented in another publication. Large practice groups were defined as 3 or more physicians. Inclusion criteria for both US and Canadian surveys were office-based, private practice physicians, which excluded physicians in academic and hospital settings, and salaried physicians in community centers. Physicians whose revenues came mainly from patient self-payments (cash paying patients) were also excluded.
The survey was completed by physicians and administrators and included questions on time spent with payers addressing issues such as formularies, denied claims, authorization requests. Because Canada’s single-payer system does not credential physicians or require prior authorizations, these questions were omitted from the Canadian survey.
The cost of interacting with the Canadian single-payer system was compared to the cost of US practices interacting with multiple independent payers. Practice-wide costs were calculated by adding the costs of billing and time spent interacting with payers. US nursing staff were found to interact with payers 20.6 hours per physician, ten times more than their Canadian counterparts who spent only 2.5 hours per physician. Much of US nurses’ time (13.1 hours) was spent on obtaining prior authorizations. Clerical staff in the US spent 53.1 hours per physician on billing and authorizations as compared to 15.9 hours in Canada. The total estimated cost for US practices was four times that of Canadian practices after adjustments for salary and payment rates, exchange rates, and specialty mix ($82,975 US versus $22,205 Canada).
The limitations of this study were design oriented (it was not observational study) and reflected a low weighted response rate. However, if US physicians had similar administrative costs to Canadian physicians, the total savings would approach $27.6 billion per year.
This article illustrates the benefits of a coordinated single-payer system over that of a disjointed multi-payer system. Several policy implications are worthy of mention. It has been widely documented that the administrative costs of a multi-payer system are higher than those incurred under a single-payer plan. The Affordable Care Act seeks to reduce administrative costs by standardizing billing and requiring health plans to integrate electronic health records. The amount by which this measure will reduce administrative costs in the long-run could be substantial. However, an even more profound point becomes clear: time is more important than money.
Far too much time is spent in physician practices dealing with billing and payers. Clarifying formularies and obtaining prior authorizations waste a noticeable amount of time away from patient care. The simplicity of the the Canadian single-payer system permits physicians and staff to expend much less time interacting with payers, leaving more time for patient care.
Recommendations offered by the authors reflect an attempt to improve upon the inefficiencies consequent to a multi-payer system. Standardizing the interactions between payers and providers reduces benefit variability and the time spent differentiating plans. Electronic submission of billing claims reduces administrative costs of staff and paperwork burdens. Unified physician credentialing reduces time and paperwork since physicians would not have to provided the same information to multiple health plans. Utilization of a single quality measurement process would greatly improve efficiency and align incentives. Automated verification of benefits would reduce time lost for clerical staff.
If adopted en mass, these recommendations would essentially attempt to simulate Canada’s single-payer system within the United States’ current multi-payer arena. The message is clear. Are US policymakers listening?
Renee Volny, DO, MBA
- Physicians for a National Health Program
- Cornell University’s Chronicle Online
- American Medical News
- The Advisory Board Company
- The New York Times Well Blog
- The LA Times