Another study noted that practice staff spend at least 20 hours per week, on average, handling prior authorizations and claims denials.3 This study estimated that practices spend an average of $68,274 per physician annually for a variety of interactions with health insurance representatives. These costs are not built into any reimbursement system and are similar to the unfunded mandates that plague physician practices.
Key findings from this study indicate that:
- Physicians spend, on average, approximately three weeks per year interacting with health plans, which is equivalent to three hours per week. Medical specialists’ interactions equal 2.6 hours per week.
- Nursing staff spend, on average, 23 weeks per year, per physician, and clerical staff spend a total of 44 weeks per year interacting with health plans.
- Physicians spend more time than ever dealing with plan formularies—approximately 1.7 hours per week—along with reviewing health plan quality data.
In the book, The Healthcare Imperative: Lowering Costs and Improving Outcomes, James L. Heffernan explains that, to potentially save $26 billion in billing operations nationwide—including saving up to four hours of professional time per physician per week, and five hours of practice support staff time per week—all payers should operate with the same set of administrative guidelines for insurance billing requirements that Medicare uses.4
Steps Toward Working Together
It is imperative for physicians and payers to join forces to eliminate waste and reduce costs for both parties. There are several ongoing initiatives designed to help these groups work together. One is to identify a single, transparent set of payment rules in this multipayer healthcare system that could potentially reduce the administrative and cost burden common to every provider billing office.
Current initiatives in the process include:
- Developing standard forms for all payers;
- Improving the electronic standard transaction 5010 system;
- Approaching multiple stakeholders in an effort to standardize data capture and promote transparency in regulations;
- Backing federal and state initiatives and legal requirements; and
- Supporting the AMA’s “Heal the Claims Process” campaign. This campaign is designed to help physician practices streamline their claims process by providing point-of-care pricing and accepting patient payment at the time of service.
Excessive administrative costs in various areas of the billing and reimbursement system are a problem that needs to be addressed nationwide. The AMA estimates that $12 billion a year could be saved if insurers eliminated unnecessary administrative tasks with automated systems for processing and paying medical claims. This savings represents 21% of physicians’ total administrative expenses to ensure accurate payments from insurers.
