Increasing the health insurance industry's accuracy rating could save up to $15.5 billion annually, according to a recent report.
The American Medical Association's 2010 National Health Insurer Report Card (NHIRC) shows that health insurers process one in five medical claims inaccurately. According to the AMA, approximately $777.6 million in unnecessary administrative costs could be saved if the health insurance industry improves claims processing accuracy by just 1 percent.
The report is the third annual check-up of commercial health insurers and systems used to manage and pay claims. It benchmarks the overall claims processing accuracy of the nation's largest health insurers.
"Creating a single transparent set of processing and payment rules for the health insurance industry would create systemwide savings and allow physicians to direct time and resources to patient care and away from excessive paperwork," said AMA Immediate Past President Nancy H. Nielsen, MD.
According to the study, the health insurance industry has about an 80 percent accuracy rate for processing and paying claims. Individually, Coventry Health Care came out on top of the seven commercial health insurers measured by the AMA with a national accuracy rating of 88.41 percent. Anthem Blue Cross Blue Shield rounded out the list with a national accuracy rating of 73.98 percent.
"Each insurer uses different rules for processing and paying medical claims, which cause complexity, confusion and waste," said Nielsen.
The healthcare system spends as much as $210 billion annually on claims processing. One recent study estimated physicians spend the equivalent of five weeks annually on health insurer red tape. To keep up with the administrative tasks required by health plans, physicians divert as much as 14 percent of their revenue to ensure accurate payments from insurers.
To encourage a more efficient and streamlined payment system, the AMA's National Health Insurer Report Card provides a snapshot of how each of the nation's seven largest commercial health insurers can improve their claims processing performance.
The health insurers were measured on accuracy, denials, timeliness and transparency.
"We're pleased to note that this year's NHIRC reflects CIGNA's continual improvement in key measures such as claims payment speed, transparency and accuracy," the company said in a statement. "As the metrics illustrate, CIGNA-contracted physicians are getting 'just what the doctor ordered' in several key areas."
As an example, CIGNA has the lowest rate of claims denials among participating plans, denying less than 1 percent of claims in 2010. Also, the company's response time for first time claims remittance was cut in half, from 12 days in 2009 to six days in 2010.
"We are proud of the progress we have made," Aetna officials said. "We look forward to continued frank dialogue with the AMA and to reviewing new information in the Health Insurer Report Card that can help make our processes even better for everyone."
The National Health Insurer Report Card is the cornerstone of the AMA's Heal the Claims Process campaign. Launched in June 2008, the campaign's goal is to spur improvements in the industry's billing process so physicians are no longer at the mercy of a chaotic payment system.