Policy and Clinician Payment: Do You Know These Changes Affecting Your Pocketbook?

Gordon H. Sun, MD, MS


August 10, 2018

The Administrative Burden

Multiple studies have concluded that administrative work, including both billing- and insurance-related (BIR) and non-BIR activities, accounts for approximately 25% of all US healthcare expenditures.[1,2,3] BIR costs totaled about $471 billion in the United States in 2012.[2]

Physician offices spend about $23 to $31 billion annually in time costs interacting with health plans.[4] These costs can consume a substantial proportion of professional revenue. A 2018 activity-based costing study at a large academic health system with an electronic health record (EHR) system found that 14.5% of primary care revenue was consumed by professional billing costs compared with 3.1% for inpatient surgery, 8.0% for general inpatient stays, 13.4% for ambulatory surgery, and 25.2% for emergency department visits.[5] Because billing costs do not include credentialing and charge integrity costs, capital costs of EHR acquisition, and several other expenses, physicians' financial burden of billing was probably underestimated.[6]

A 2018 economic analysis[7] of about 44.5 million medical claims concluded that the total estimated value of challenged claims was as high as $54 billion annually. Billing complexity, represented by number of service lines per claim, billed amounts, and Charlson Comorbidity Index scores, was highest among Medicaid fee-for-service claims. In addition, the denial rate for Medicaid claims was more than triple that of Medicare and private insurance claims. The mean processing and payment time for a Medicaid fee-for-service claim (39.2 days) was more than double the time needed for a Medicare fee-for-service claim. The combination of higher billing complexity and lower reimbursement can be costly for clinicians to treat Medicaid patients, which in turn can reduce patient access as practices "simply give up on seeking full reimbursement through Medicaid."[8]

Changes to Physician Reimbursement


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