Improved Medical Billing is a Path to Lower Healthcare Costs
An underappreciated source of today’s high medical care costs is the medical claim adjudication process that is employed by commercial payers. The current process is intentionally fraught with unnecessary hurdles and pitfalls that save the payers money by lowering the amount they reimburse physicians and facilities. Well designed medical billing processes from medical billing companies and medical offices can eliminate the profitability of the current adjudication process and streamline the entire insurance reimbursement process.
Everyone hears about the fact that much of the cost of healthcare is driven by the expense of processing and adjudicating claims. What is often not mentioned is what is truly at the root of these expenses – payers that are attempting to withhold from physicians the money they are due.
Payers consistently and systematically underpay claims. In addition, claims that have been properly submitted and for which proof exists the claim was accepted are simply “lost” by payers and the claims have to be resubmitted (sometimes multiple times) in order to secure payment. I know from experience with many practices that this “lost” claim phenomena is rampant across payers and states.
There is a strong economic motivation for payers to maintain the current inefficient billing process. They can increase their profits sharply since more than fifty percent of the claims they misplace or accidently underpay are never noticed by medical providers.
Here is another shocking fact – it costs the average insurance company about $25 each time a representative has to get on the phone and discuss a lost or underpaid claim with a medical billing specialist. A final key fact is that most payers “grade” each provider. The lower a provider’s grade (i.e., a D versus an A) the more likely the payers are to lose or under pay the provider’s claims. Why? Because these providers have no track record of catching these problems and pursuing them.
So, how do all of these facts tie lead to the conclusion that better medical billing processes can lowering the cost of healthcare? If each and every underpaid or lost claim is pursued (which is what a well-designed medical billing process should do) then eventually payers will lose all economic incentive to play games and make the medical billing process complicated and expensive.
If the medical practices and medical billing services dig in and fight for the last dollar on every claim they will quickly force the insurance payers to adjust their internal processes. With each claim paying in full and their staff inundated with billing specialist asking why a claim was lost or underpaid, the payers will see rapidly shrinking profits that will force them to acknowledge that the costs of the games they play are no longer justified by the savings form unpaid claims.
There is lots of talk about the dream system where claim adjudication happens in real time and physicians immediately receive their reimbursements. Such a system will never happen until the economic incentive payers have to maintain a difficult, complicated and veiled system are removed. This is what well designed and executed medical billing processes can do by doggedly pursuing each claim.
Copyright 2008 by Carl Mays II
Filed under: Outsourcing