Insurance Administration Creates Burden For Providers, Health Systems

A recent study in JAMA found that the administrative duties required for billing and processing health insurance reimbursement makes up a significant financial and workload burden for providers and health systems.

“Administrative costs have been estimated to represent 25% to 31% of total health care expenditures in the United States, a proportion twice that found in Canada and significantly greater than in all other Organization or Economic Co-operation and Development member nations for which such costs have been studied,” Phillip Tseng, Med, of the Duke University School of Medicine, and colleagues wrote.

In order to study the administrative costs of clinician billing in a large health system with an EHR system, the researchers conducted interviews with 27 health systems administrators, and 34 clinicians in 2016 and 2017. They calculated the costs for major billing and insurance activities using these data. 

Study results showed that the estimated costs for billing and insurance services for a single visit ranged from $20 in primary care to $215 for surgical procedures. The researchers also estimated that administrative costs made up 14.5% of revenue for primary care and 25.2% of revenue for ED visits.

Dr Tseng and colleagues determined that the annual expenses for a single primary care physician in a large health system amounted to $99,000. 

In a related editorial, Vivian S Lee, MD, PhD, MBA, of the Department of Radiology at the University of Utah and Bonnie B Blanchfield, CPA, ScD, of the Division of General Internal Medicine at Brigham and Women’s Hospital, noted that these costs may be even higher among independent physicians.

“As high as these figures are, they likely underestimate the true financial burden of billing for physicians in most health systems,” the wrote. “For one, the hospital and physicians of this academic system share a single billing organization, an unusual efficiency for an industry in which hospitals and physicians are typically separate business entities.”

They concluded that alternative payment models could be harnessed to reduce this costly burden and potentially improve outcomes.

“Now is an opportune time to start unraveling the Gordian knot of health care billing and administration, ultimately, for the sake of the health—both physical and financial—of patients,” Dr Lee and Ms Blanchfield wrote. “Alternative payment models and EHRs may just be the 2 ends of the cord that the health care system has needed to find to help begin the disentangling.”

—David Costill

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