AMA House of Delegates

AMA meeting: AMA grades health plans on how they handle claims

The Association hopes to reduce the administrative costs and other obstacles doctors face in collecting from insurance companies.

By — Posted July 7, 2008

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The AMA has launched a campaign to fix a claims-payment system that doctors say requires them to spend precious time and their own money to get paid what they're owed by insurance companies.

As a starting point for its Cure the Claims campaign, the AMA released a report card at its Annual Meeting in June comparing the administrative accuracy and efficiencies of Medicare and several commercial payers. The report showed that insurers' claims payments are often late and inaccurate, explanations for denials are inconsistent, and payment rules are sometimes impossible to decipher.

"The AMA report card results clearly convey the daunting task confronting physicians and their staff, just to get paid for the services they have earned," said AMA Board of Trustees member William A. Dolan, MD, who introduced the initiative to members and delegates at the meeting.

Doctors sometimes spend as much as 14% of their total collections on claims administration, and the AMA wants to see the average lowered to 1%, Dr. Dolan said.

"While health insurers insist on high standards for physicians reporting medical claims, I'm afraid they hold themselves to a lower standard of accuracy for processing these claims," he said.

In some cases, health plans questioned the AMA's methodology in compiling the report card but also said they were analyzing the results to find ways to improve.

Eliminating, or at least reducing, the inefficiencies in the current billing system could save millions of dollars and time, freeing physicians to care for patients rather than worrying about getting paid by insurers. That could result in lower health insurance premiums and improve the quality of care doctors deliver, Dr. Dolan said.

"The current system is unacceptable," he said. "The health care system can no longer afford the cost of the current claims processing."

The National Health Insurer Report Card was based on data culled from 5 million claims billed electronically to Medicare and seven commercial health plans: Aetna, Humana, Cigna, WellPoint-owned Anthem Blue Cross Blue Shield, Coventry Health Care, Health Net, and UnitedHealth Group-owned UnitedHealthcare.

The AMA's analysis revealed that it is possible to reduce drastically or virtually eliminate the problems endemic in the health plans' claims-payment systems, because Medicare has done it in most cases, said Mark Rieger, CEO of National Healthcare Exchange Services, a physicians' claims service firm that provided the claims database for the report card project.

Improving claims processing

Cigna spokesman Joe Mondy said that the health plan disagreed with the way it was measured in some areas. For instance, it scored poorly for not listing the date a claim was received on one form when the date actually is disclosed on a different form. But, he said, the company shares the goal of improving the claims-processing system.

"There are some challenges, but it's the first year of the study, and hopefully we'll be able to work with the AMA in refining the methods so it's more meaningful in the future," he said.

A spokeswoman for UnitedHealthcare, Cheryl Randolph, said the health insurance giant was proud to have done well under some measures in the scorecard, including having a low rate of denials and being third best for payment timeliness.

"While we fully accept our accountability in terms of ensuring claims are paid accurately and on time, we believe that physicians and their billing services also share in that responsibility and have opportunities to facilitate their performance," she wrote in a statement. "In order for claims to be processed as efficiently and promptly as possible, both insurers and physicians need to strive for accuracy and timeliness. For example, data show there is often a significant lag time between when services are provided and physician claims are submitted."

Peter V. Lee, executive director for national health policy for the Pacific Business Group on Health, asked doctors to take responsibility for health care costs by holding down their own costs. The group is a nonprofit consortium of business leaders advocating for transparency in health care pricing and accurate, useful quality information for patients.

Lee said business leaders are beginning to understand how critical it is for doctors and other health professionals to be paid correctly and quickly, and are demanding it of health plans.

"That doesn't mean paying claims blindly," he added.

Marcy Zwelling, MD, a primary care physician from Los Alamitos, Calif., and a delegate for the California Medical Assn., said the AMA's campaign isn't the only answer to physicians' frustrations over billing, claims and reimbursement.

She said she has gone to a cash-based practice and no longer deals with insurance companies. She encouraged doctors who could afford it to make the same leap.

"It took a lot of courage for me to say no," she said. "But it's better [now]."

Former family physician and University of Chicago researcher Lawrence Casalino, MD, PhD, is working on a project similar to the AMA's report card. He said anonymous interviews with health plan executives for his research revealed that the people running claims-payment systems know they don't work well, and those systems could be improved if one company would take the first step.

"I don't think there's any disagreement that there's opportunity for improvement in the system," he said.

Dr. Casalino remembered the relentless frustration he and the other doctors in his group felt trying to be paid on time and accurately for their work.

"For 20 years I would go home with the uneasy feeling that I was leaving money on the table."

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The AMA's solution

The Cure the Claims campaign offers a prescription for addressing the cost of getting paid for care. Campaign materials outline ways for doctors and health plans to reduce wasted time and money spent on paying doctors.

How to fix it

  • Physicians should submit claims quickly and accurately the first time.
  • Health plans should pay in a timely manner and at the contracted rate.
  • Plans should make available fee schedules, proprietary edits, payment policies and other payment information on their Web sites.
  • Plans should standardize the language and reasons for claim denials to reduce ambiguity in the pay process.

What the fixes should do

  • Reduce physicians' claim submission costs from the current 14% of collections to 1%.
  • Reduce waste and inefficiency.

Source: American Medical Association

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Keeping score

Health plan scores in the AMA's National Health Insurer Report Card varied by category. No plan failed in every aspect of its claims payment, and of the major payers, only Medicare did consistently well. One key measure was how often the plans' forms and records showed the contracted or "allowed" rate correctly. When plans don't pay according to a contracted rate, it is often difficult for doctors and staffs to figure out why, or to appeal the decision, the report found.

Health planAdherence rate
Anthem Blue Cross Blue Shield72.2%
Coventry Health Care86.7%
Health NetNot reported

Source: AMA 2008 National Health Insurer Report Card

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Meeting notes: Medical practice

Issue: With more practices operating on a cash basis, physicians worry that some patients may not know the fees, or how they are expected to pay them.

Proposed action: The AMA is to adopt principles for a cash-based practice that include an appropriate fee schedule that is understandable and easily accessible to patients. Cash-based practices should encourage patients to have health insurance coverage for catastrophic illnesses. [ Adopted ]

Issue: Medicare rules prohibit patients from compensating physicians above and beyond what Medicare covers, which may discourage physician participation.

Proposed action: The AMA will immediately call upon Congress to remove fee limits under Medicare and to preempt state laws limiting charges for physicians. Progress is to be reported annually to the house. [ Adopted ]

Issue: Antiquated federal rules pose barriers to electronic prescribing.

Proposed action: The AMA will work with federal and private entities to update laws and rules that are roadblocks to e-prescribing, while maintaining a position that physician Medicare or Medicaid pay not be reduced for failing to adopt e-prescribing. The AMA will begin discussions with the Drug Enforcement Administration to allow e-prescribing of Schedule II drugs. [ Adopted ]

Issue: Physicians can't always access patient's preexisting prescriptions for controlled substances.

Proposed action: The AMA will support changes to state prescription drug monitoring programs to allow physicians real-time access to their patients' controlled substance prescriptions across state lines. [ Adopted ]

Issue: Physicians sometimes have limited knowledge of their rights under Medicare's Recovery Audit Contractor program.

Proposed action: The AMA will support a moratorium on the expansion of the RAC program and begin a physician education campaign. [ Adopted ]

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