Standardizing medical billing by insurers could cut physician office administrative costs by about $7 billion, according to a newly published study in the journal Health Affairs.
Standardized billing could save $7 billion, study projects
Researchers drafted the estimate based on a 2006 analysis of labor and overhead costs to process health insurance benefits and claims at one large academic physician group practice. The analysis also included $6 million in lost revenue for wrongly denied claims, according to the researchers' calculations. The study estimated savings of $44 million should the group practice process all benefits and claims using Medicare's payment rules as a hypothetical standard for all insurers. Of that amount, paperwork and follow-up with insurers by doctors and staff totaled $33.1 million. Billing office labor and overhead accounted for another roughly $5.6 million in potential savings. Such a standard would end opaque and frequently changing rules among commercial insurers, eliminate outpatient referral rules, create a single claim submission deadline and payment posting rules, the authors said. Other benefits include prompt response to claims and electronic processing, according to the study. Authors noted firm guidelines for billing simplification were not among the provisions in the health reform law and argued that “administrative complexity is likely to remain high and is likely to be a high-value ‘target' for finding savings in ongoing incremental reforms.” Executives, a former billing executive and a research scientist at 907-bed Massachusetts General Hospital, Boston, and the Massachusetts General Physicians Organization conducted the study, which was financed by the Robert Wood Johnson Foundation and the Commonwealth Fund.
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