2009 National Health Insurer Report Card
The American Medical Association recently released the results of its second annual report card grading eight of the nation's largest health insurers on the strengths and weaknesses of their claims processing systems.
"In response to the need to overhaul the health insurance industry's billing and collection process, the AMA last year launched the 'Heal the Claims Process'™ campaign," said orthopedic surgeon and member of the AMA Board of Trustees, William Dolan, MD. "At the same time," he continued, "the AMA developed its first online rating of health insurers to diagnose the areas of greatest concern within the claims processing system."
Dolan's comments came as part of a Webinar he moderated outlining the 2009 findings. Certainly, he noted, there have been areas of improvement the AMA believes are a direct result of the conversations started by last year's inaugural efforts. However, significant works remains to make the system more efficient and less frustrating for all parties involved.
"During the last year, the AMA campaign has actively encouraged the insurers and physicians to be part of a collaborative solution to eliminate waste from the claims process. In simplest terms, the campaign would eliminate waste by getting things right the first time," Dolan said.
For providers, this means submitting timely and accurate claims to eliminate the cost of redoing work, reviewing claims for accuracy every time to detect and correct errors, and appealing underpaid or denied claims all the time "helping payers improve their processes." Dolan said this would lead to a systematic approach to claims management and ultimately offer physicians the key to spending less time and resources on claims.
"Once free from these administrative burdens, physicians can better use their time and resources to take care of patients," he noted.
"On the payer side," Dolan continued, "the campaign stresses accurate payment the first time as just good business."
Two other priority areas the AMA would like to see payers embrace are the adoption and full implementation of HIPAA electronic standard transactions so that physicians can benefit from the savings information technology produces and for payers to simplify fee schedules, payment policies and other communications.
"Those three steps alone would professionalize transactions, modernize the procedures and clarify what is now a murky mess," he stated.
Dolan called for administrative simplification to be among the chief goals of healthcare reform. He said that since the launch of the "Heal the Claims Process" campaign, it has become widely acknowledged that the "inefficient and unpredictable claims system adds substantial costs to the healthcare system – estimated as much as $200 billion annually."
According to Dolan, a recent study estimated physicians spend the equivalent of three weeks annually dealing exclusively on health insurer "red tape." Another study he cited found clinicians spend 35 minutes a day on administrative tasks tied to health plans.
Currently, he continued, physicians divert as much as 14 percent of gross revenue to the billing and claims process. The goal of the AMA, Dolan said, is to restructure the system to a point where providers spend only 1 percent on these tasks.
"The AMA believes that getting to 1 percent is possible by focusing on these four things: 1) accuracy, 2) timeliness, 3) transparency, and 4) industry standardization," he outlined.
The National Health Insurer Report Card was developed to encourage these goals by setting up an objective and reliable source of information on claims processing systems used by the nation's largest health insurers – Aetna, Anthem/BlueCross BlueShield, CIGNA, Coventry, Humana, UnitedHealthcare and Medicare. The broad performance measures fell under the six focus areas of payment timeliness, accuracy of remittance advice, transparency of fees and payment policies, code edit sources, denial rates and transparency, and workflow improvements.
Mark Rieger, CEO of the National Healthcare Exchange Services (NHXS), said the report card analysis was primarily based on electronic data interchange files totaling 2.5 million services billed on 1.6 million claims between February 1 and March 31, 2009 from providers in 29 states representing 62 specialties.
Rieger said among the lessons learned about payment timeliness, prompt payment laws do seem to have been effective in encouraging insurers to respond quickly. "Median days to the first remittance showed some improvement," he noted. Of continuing concern is that health insurers are not required to report the date a claim was received, but that information is crucial to physicians in order to track compliance with state prompt pay laws.
As for accuracy, Rieger reported, "Health insurers clearly made progress on the accuracy metrics. The match between the payers' reported and the physicians' expected contracted fee schedule rate increased significantly when compared to 2008." In 2009, private health insurers correctly reported the expected contracted rate to physicians 72-93 percent of the time as compared with 62-87 percent of the time in 2008. To continue the momentum, the AMA would like to see payers provide on demand a complete, downloadable, product-specific contracted fee schedule; clearly identify a patient's plan type on each remittance; and then correctly apply the proper contracted fee schedule to each claim.
As with accuracy, payers have made gains in their efforts to improve transparency. Health insurers' Web sites have assisted payers in disclosing important policies and information to physicians through provider portals. However, work still needs to be done when it comes to a lack of transparency in terms of undisclosed claim edits, which adds substantially to the cost of claims reconciliation for physicians.
Denials, which were defined as "an allowed amount of billed charges and a paid amount of zero," improved over the past year for most payers. Only Coventry saw a rise in claims denials from 2008 to 2009 (from 2.88 percent to 3.99 percent). Leading the way in improvement, Aetna's percentage of claim lines denied dropped from 6.8 percent in 2008 to 1.81 percent in 2009. However, the AMA believes the variation between denial rates among payers clearly illustrates the lack of industry standardization.
"In spite of the notable improvements from 2008 to 2009," Rieger summed up, "there continues to be inconsistency and confusion that results from each insurer using different rules for processing and paying medical claims. This translates into physicians having to maintain payer-specific rule sets, which only increase their cost of doing business."
Both Rieger and Dolan agreed that everyone has a part to play in continuing the improvements seen over the past 12 months – certainly payers and providers, but also employers and patients.