Medical Claim Errors Cost Heath Care System $15 Billion

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A health insurance claim is a bill for services that your health care provider turns in to the insurance company for payment. Errors on the documentation can result in denial of the claim and non-payment to the doctor. According to a new report presented at the American Medical Association’s annual meeting in Chicago, one in five of these medical claims is processed inaccurately, costing the healthcare system $15 billion.

The third annual AMA report, called the Electronic Remittance Advice accuracy, measured timeliness and accuracy of claims processing for the nation’s seven largest commercial health insurers, including Aetna Inc., Anthem Blue Cross Blue Shield, Cigna Inc, Coventry Health Care, Humana Inc, Health Care Service Corp (parent of Blue Cross Blue Shield of Illinois), and UnitedHealth Group. The report findings are based on a random sample of about 2 million electronic claims submitted from more than 200 physician practices in 76 medical specialties in 43 states between February and March 2010.

The private insurance companies matched their payments to what they agreed to pay doctors about 80% of the time, according to Dr. Nancy Nielsen, immediate past president of the AMA. This is a dramatic improvement over the past three years since the report was first written, says Dr. Nielsen.

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The AMA rated Coventry Health Care highest with a national accuracy rating of 88.4 percent. Anthem Blue Cross was at the bottom, with an accuracy rating of 73.98%. Should claim processing become 100% accurate, the health care system could save about $15.5 billion a year, largely by making health care more efficient and reducing administrative costs. Even just a one percent improvement could save at least $777.6 million annually in wasted administrative effort, according to the AMA report.

Currently, as much as $210 billion is spent annually to process insurance claims.

A major factor in the high error rate is the lack of standardization in insurance plan rules, according to Dr. Nielsen. Each insurer has a different way for paying for certain services thus increasing the difficulty of filing claims from the physician office. The AMA suggests that insurance companies standardize rules for filing claims for reducing costs.

America's Health Insurance Plans, which represents the nation's largest plans, said claims processing would improve if all doctors submitted claims electronically to health plans. WellPoint, parent company of Anthem, said that it is continually trying to improve and is contracting with an electronic claims processing company in five states in an effort to streamline claims.

"Health plans and providers share the responsibility of making the innovations and investments needed to improve efficiency in our health care system," said AHIP spokesman Robert Zirkelbach. "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.

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Comments

What is the average cost to the provider for resubmitting a medical claim?