Insurers Pay Physicians Incorrectly for 1 in 10 Claims

Susan Jaffe

June 20, 2012

June 20, 2012 — The nation's 7 leading commercial health insurers reduced the number of mistakenly paid medical claims by half compared with last year, saving the healthcare system $8 billion in unnecessary administrative costs, according to the 2012 National Health Insurer Report Card .

The American Medical Association (AMA) released the fifth annual report during its 2012 annual meeting here this week.

The good news was overshadowed, however, by the report's finding of continuing claims processing problems. Physicians received the wrong payment for nearly 1 of every 10 claims (9.5%), and there was a 69% increase in denied claims last year. The AMA estimates that mistakes, such as a wrong deductible amount or treatment code, cost the system $7 billion.

"Imagine you got your credit card bill and 1 of every 10 charges was inaccurate," Robert Wah, MD, chair of the AMA's board of trustees and a McLean, Virginia, reproductive endocrinologist, told Medscape Medical News. "No one would put up with that."

A spokesman for America's Health Insurance Plans (AHIP), which represents nearly 1300 health insurance companies, said insurers have invested in new technology and taken other steps to reduce paperwork, improve efficiency, and reduce costs.

"At the same time, more work needs to be done to reduce the number of claims submitted to health plans that are duplicative, inaccurate, or delayed," the organization's spokesman, Robert Zirkelbach, told Medscape Medical News.

He also said the dramatic improvement in error-free payments may be explained by data used in this year's report card that are "more comprehensive and more reflective of what is happening in the marketplace."

The review was based on a claims processing firm's random sampling of data obtained for the AMA from Aetna, Anthem Blue Cross Blue Shield, Cigna, Health Care Service Corporation, Humana, Regence, and UnitedHealthcare, as well as Medicare. The firm examined about 1 million claims for nearly 2 million medical services submitted in February and March 2012 by more than 380 physician practices in 79 medical specialties in 39 states. The government's Medicare program was the only payer that provided both a reason and some additional comments for all denied claims.

Without adequate explanations from insurers, physicians and their staff have to take time to decipher each insurer's complex processing rules and determine why the claim was denied and how to resubmit the claim correctly. Even when claims are filed electronically, Dr. Wah said, only a person can figure out what went wrong.

"Computers are great if you can tell them exactly what to do," he said.

The review also found a 23% increase compared with 2011 in requirements for prior authorization from insurers before claims can be paid. About 5% of claims were subjected to prior authorization, which the AMA says intrudes on a physician's medical treatment decisions.

AHIP's Zirkelbach said there are wide variations in how medicine is practiced across the country. Prior authorization policies "are in place to ensure that patients are getting the right healthcare at the right place at the right time, and are avoiding unnecessary and potentially harmful treatments."

Dr. Wah countered that physicians should not need an insurance company's permission to provide a procedure or treatment.

"Is it appropriate that a patient's care is being decided by an insurance company, and not a doctor who sees a patient directly?" Dr. Wah rhetorically asked.

Many of the costly and time-consuming hurdles in claims processing can be addressed by a provision of the Affordable Care Act requiring "administrative simplification," Dr. Wah pointed out. Federal officials have sought comments on preliminary rules that would carry out the requirements. For example, standardized procedures for processing claims would help make "real-time" claims possible, so that patients could find out at their physician's office how much their insurance plan will pay for the visit.

"We have the technology to make that happen," he said.

The report also rated insurers on how much time they took to pay claims. Cigna paid 95.32% of the claims reviewed within the first 15 days, whereas Aetna paid only 63.4% of claims during that same time. The companies paid most of the claims within 30 days.

When evaluating which percentage of claims were paid $0 for any reason (eg, claim edits, denials, and patient responsibility), the report found that Anthem did not pay 27% of the claims reviewed because of claim edits, denials, patient responsibility, or other reasons, according to the report. Medicare did not pay 11.1% of its claims.

The report also found that all Medicare claims were paid by electronic fund transfer, whereas Humana paid 73% of its claims electronically. Anthem, Cigna, Humana, Regence, and UnitedHealthcare also paid claims by check, whereas Aetna, Health Care Service Corporation, and Medicare use electronic payments almost exclusively.

Additional details of the report card and a Webinar explaining the results are available on the AMA Web site.

Lara C. Pullen, PhD, contributed to this news story.

American Medical Association (AMA) 2012 Annual Meeting. Presented June 18, 2012.

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