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Home / News & IndustryManaged Care Insight and Analysis
Updated: August 11, 2009
Physician Practice Interactions With Health Plans Cost $31 Billion A Year

As policy-makers consider ways to cut health costs as a part of health reform, a new national survey of physician practices finds that physicians on average are spending the equivalent of three work weeks annually on administrative tasks required by health plans.

According to the study by Dr. Lawrence P. Casalino of Weill Cornell Medical College, and colleagues, physician practices report that overall the costs of interacting with insurance plans is $31 billion annually and 6.9 percent of all U.S. expenditures for physician and clinical services.

The study, published in the online issue of Health Affairs, was co-funded by The Commonwealth Fund and the Robert Wood Johnson Foundation’s Changes in Health Care Financing and Organization (HCFO) Initiative.

The survey of physician practices across the U.S. inquired about time spent by all practice staff on specific activities, including prior authorization, pharmaceutical formularies, claims and billing, credentialing, contracting, and collecting and reporting quality data.

This national survey is the first to ask directly about time spent by non-physician staff on interaction with health plans, and the first to provide data by the type of interaction, type of staff, specialty and practice size.

On average, physicians spent three hours a week or nearly three weeks per year on these activities, while nursing staff spent more than 23 weeks per physician per year, and clerical staff spent 44 weeks per physician per year interacting with health plans. More than three in four respondents said the costs of interacting with health plans have increased over the past two years.

"While there are benefits to physician offices’ interactions with health plans — which may, for example, help to reduce unnecessary care or the inappropriate use of medication — it would be useful to explore the extent to which these benefits are large enough to justify spending three weeks annually of physician time or one-third of the average primary care physician’s compensation on physician practice-health plan interaction," said Casalino. "It would also be useful to explore ways to make the interactions more efficient, both on the health plan side and in physician offices."

Other study findings include:

  • Physicians — especially primary care physicians — in a solo or two-person practice spent significantly more hours interacting with health plans than physicians in practices with 10 or more physicians.
  • Across practices, physicians and their staffs spent substantially more time on authorization, formularies, claims and billing and credentialing than they did on submitting quality data or reviewing quality data provided by health plans.

A Closer Look at Billing and Insurance-Related Costs

A separate study, also published in the online issue of Health Affairs and co-funded by The Commonwealth Fund and HCFO, provides an in-depth look at the billing and insurance-related activities performed at a large multi-site, multi-specialty group practice in California to get paid for clinical services.

The study found that clinicians spent more than 35 minutes per day performing billing and insurance-related tasks and that these activities also required the equivalent of 0.67 non-clinical full time staff per full-time physician at an annual cost of $85,276 per physician, representing 10 percent of operating revenue.

The authors note that, even though the practice studied uses an electronic medical record system for billing and clinical record keeping and has implemented extensive automation, the complexity of serving patients covered by hundreds of specific insurance plans, each with different benefits, payment rates and billing procedures, greatly adds to the administrative workload. The challenge of managing these widely varying requirements increase the chance of billing error and dispute and the likelihood of requiring payment follow-up and collections.

"We believe that while minimizing billing and insurance-related administration activities is not the only goal of the healthcare system reform, standardizing health plan features and processing requirements presents a tremendous opportunity for improving efficiency in a multi-payer healthcare system," said lead study author Julie Sakowski, a senior health services researcher at the Sutter Health Institute for Research and Education.

Addresses: Weill Cornell Medical College, 425 E. 61st St., New York, NY 10021; (212) 821-0560, http://weilcornell.edu. Sutter Health Institute for Research and Education, 345 California St., Suite 2000, San Francisco, CA 94104; (415) 916-1820, www.sutterhealth.org.


  This article was taken from:
Pay-For-Performance Reporter

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