Advocates for Evidence-Based Health Policy Speakers
Complex Billing adds to Health Care Headache
International comparisons invariably reveal that the cost of health care in the U.S. is embarrassingly high with disparate return on investment in terms of access. There has been much speculation about the cause of this discrepancy, ranging from “the U.S. has the best health care in the world!” to placing blame on the pharmaceutical and insurance industries to pointing fingers at high physician salaries. Despite speculation, data suggest that a relatively consistent driver of high comparative cost of health care in the U.S. is administrative costs.
In this context, a new study compares the claims processing and billing costs across payers to inform the discussion around the high cost of health care in the U.S. Specifically, the authors sought to quantify the complexity of billing for outpatient encounters using a large claims dataset. A total of 37.2 million visits resulting in 44.5 million submitted claims were analyzed by insurance type from five specialties.
The authors estimated that up to $54 billion of provider charges are contested by health insurers annually with substantial differences between private and public payers in terms of the complexity of billing. The authors found much higher complexity between fee-for-service Medicaid compared to fee-for-service Medicare. As the authors point out, this is particularly troubling in light of concerns around access for patients with Medicaid. If not addressed, higher billing complexity combined with lower reimbursement rates may continue to deter physicians from serving Medicaid patients. Conversely, addressing billing complexity (as well as reimbursement rates) in fee-for-service Medicaid programs may help improve access.
The authors posit that their analysis has several implications – for antitrust policy, improving administrative efficiency across the system, and for improving productivity. An additional dimension of their analysis may have relevance to another challenge facing many physicians – burnout. Evidence suggests that administrative demands may detract from high quality patient care and play a key role in physician burnout. While this analysis does not speak to how the burden of billing complexity is distributed among clinical and non-clinical staff, it is easy to imagine how administrative inefficiency might contribute – both directly and indirectly – to physician burnout.
Abstract
The administrative costs of providing health insurance in the US are very high, but their determinants are poorly understood. We advance the nascent literature in this field by developing new measures of billing complexity for physician care across insurers and over time, and by estimating them using a large sample of detailed insurance “remittance data” for the period 2013–15. We found dramatic variation across different types of insurance. Fee-for-service Medicaid is the most challenging type of insurer to bill, with a claim denial rate that is 17.8 percentage points higher than that for fee-for-service Medicare. The denial rate for Medicaid managed care was 6 percentage points higher than that for fee-for-service Medicare, while the rate for private insurance appeared similar to that of Medicare Advantage. Based on conservative assumptions, we estimated that the health care sector deals with $11 billion in challenged revenue annually, but this number could be as high as $54 billion. These costs have significant implications for analyses of health insurance reforms.
PMID: 29608348
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