Physician Costs and Getting Paid Properly
Friday, July 4th, 2008 Administrative complexity and inefficiency are major cost-drivers in a largely fragmented health care delivery system. A typical physician practice contracts with a dozen or more health plans and must contend with each payer’s way of contracting, credentialing, preauthorizing, coding, billing and reimbursing.
Health insurer contracting and billing represent the major sources of administrative burden for physicians. Physicians divert substantial resources – as much as 14 percent of their total revenue – to ensure accurate insurance payments for their services, according to the AMA’s first National Health Insurer Report Card on claims processing, released last month.
Even in a typical physician office without a fully automated practice management system, replacing traditional paper and telephone calls for insurance administration – i.e., claims submission, referral and preauthorization requests, and patient eligibility verification – with electronic transactions brings a per physician savings of more than $42,000 annually, according to a Milliman Inc. study released January 2006.
Some administrative burden is self-imposed by physicians, particularly small or medium-sized practices that are busy seeing as many patients as possible and don’t take the time to think about standardizing their workflow for efficiency.
The main focus of administrative simplification initiatives has been standardization of data flow between physicians and health insurers. Health insurers reported to physicians the correct contracted payment rate only 62 to 87 percent of the time. When health insurers report an amount that does not adhere to the contracted rate, it adds additional, unnecessary costs to the physician practice to evaluate the inconsistency.
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