AMA‘s latest insurance report card shows progress, continuing problems
Dr. Robert Wah
After concentrated efforts by the American Medical Association to address the number of medical claims paid incorrectly, the organization’s fifth annual National Health Insurance Report Card (NHIRC) showed error rates for private payers dropped from 19.3 percent to 9.5 percent over the past year.
“The AMA has been working constructively with insurers, and we are encouraged by their response to our concerns regarding errors, inefficiency and waste that take a heavy toll on patients and physicians,” said Robert M. Wah, MD, immediate past chair of the AMA Board of Trustees.
For the second year in a row, UnitedHealthcare (UHC) led the way among the seven large commercial health insurance carriers with an accuracy rating of 98.3 percent. Aetna at 95.39 percent, Cigna at 90.62, Regence at 89.02, Anthem BlueCross BlueShield (BCBS) at 88.59, Health Care Service Corporation (HCSC) at 87.57, and Humana at 87.36 followed UHC. Public payer Medicare had a claims accuracy rating of 99.48 percent. Anthem BCBS made the biggest gain since the previous report card, improving more than 27 percentage points from last year’s accuracy rate of 61 percent.
Other positives include improved timeliness with private insurers’ response times to medical claims improving by 17 percent since the first NHIRC in 2008. HSCS and Humana had the quickest median response time of six days, and Humana had the slowest with a median response of 14 days. The AMA found the transparency of rules used to edit medical claims has also improved by 33 percent since 2008.
Wah said casting a bright light on an issue brings a problem into focus and encourages those involved to work toward solutions. As for the specific mechanism, he said report cards are meant to assess progress and motivate change. “Just like any report card, we’re seeing a desired benefit,” he noted of these latest figures.
That said, Wah added there is still significant room for improvement. “One out of 10 claims is still being mishandled,” he pointed out. “Imagine if you got your credit card bill and one out of 10 charges was wrong. People would go crazy.”
Another negative trend is that medical claim denials are on the rise for the first time in several years. The denial rate by private health insurers increased from 2.1 percent last year to 3.48 percent in 2012, which is a 69 percent jump. Humana was the only private insurer that didn’t increase denials between the two years. For 2012, Anthem BCBS had the highest denial rate at 5.07 percent. Four commercial insurers had denial rates under 2 percent — Regence, 1.38 percent; Cigna, 1.39 percent; UHC, 1.71 percent; and Humana at 1.97 percent.
With the error rate cut in half, the AMA estimated the improvement resulted in $8 billion in health system savings by reducing unnecessary administrative work to reconcile errors. However, the AMA estimates an additional $7 billion could be saved if insurers addressed the remaining error rate and consistently paid claims correctly.
The national organization also stated some of the savings generated through improved insurer accuracy were partially offset by a rise in managed care policies requiring prior authorizations. This year, 4.7 percent of all claims required prior authorization from a commercial health insurer, a 23 percent increase over 2011. Private payer Regence, along with Medicare, had prior authorization frequency rates of less than 1 percent. On the other end of the spectrum, Humana’s rate was almost 14 percent. The AMA estimates prior authorization policies will add up to $728 million in administrative costs in 2012.
Wah said the provider community’s concerns aren’t limited to the financial impact on a practice or health system but also extend to the impact on patients. “We’re very concerned about the effect on patients’ credit reports with the mishandling of claims.” He noted the AMA is supportive of the Medical Debt Responsibility Act of 2012, which would require consumer credit reports to erase a bad credit note pertaining to medical bills within 45 days of the bill being fully paid or settled.
Ultimately, said Wah, “Our goal is to have real time explanation of benefits.” He added the AMA believes the technology exists to immediately provide hard figures regarding what a plan covers and what would be the patient’s responsibility at the time of service.
A reproductive endocrinologist, Wah continued, “My perspective as a physician is I want to spend more time taking care of my patients and less time on paperwork.” He noted the report card is one part of the much larger AMA ‘Heal the Claims’ campaign, which is focused on reducing administrative waste by taking the complexity out of the healthcare billing and payment system.
For example, he said, each insurer has a different set of complex rules in the current system of claims. “We’re pushing for a streamlined process and a single set of rules,” he continued, noting this would reduce ambiguity and increase transparency. Wah added that while negotiated rates and benefits could be expected to vary by plan, it shouldn’t be that difficult to establish a common set of rules governing the processing of claims.
Taking a global view, Wah concluded, “We believe the claims are a wound that needs to be healed. They are a wound bleeding money and resources. Every dollar that goes to paperwork doesn’t go to patient care.”
Findings from the 2012 report card are based on a random sampling of approximately 1.1 million electronic claims for approximately 1.9 million medical services submitted in February and March 2012 to the seven largest private insurers and Medicare. The claims were accumulated from more than 380 physician practices in 79 specialties across 39 states.