AMA House of Delegates

Insurers mishandle 1 in 5 claims, AMA finds

The Association's latest National Insurer Report Card finds that the accuracy rate for claims payment has declined in the past year.

By Emily Berry — Posted July 4, 2011

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Barbara McAneny, MD, says insurers' inability to consistently pay claims correctly is costing her practice a lot of money -- hundreds of thousands of dollars a year.

"I did a back-of-the-envelope calculation in my own practice and figured if I could get all of the implemented changes the AMA is working for, I could probably drop about $70,000 per physician, per year to our bottom line," said Dr. McAneny, CEO of the New Mexico Cancer Center, an oncology group of 10 doctors in Albuquerque.

Dr. McAneny, a member of the American Medical Association Board of Trustees, presented a report during the AMA Annual Meeting showing that seven top private insurers paid the wrong amount for nearly one in five claims.

That is well below the 99% accuracy rate the AMA has sought since it launched the National Insurer Report Card in 2008 as part of its Heal the Claims Process campaign.

The rate of inaccurate claims is going up, not down, according to the AMA's fourth annual National Insurer Report Card, released June 20. The rate of inaccurate payments increased from 17.3% in 2010 to 19.3% in 2011. The AMA estimates that the increase added 3.6 million inaccurate claims payments in 2011 and an additional $1.5 billion in health care costs. It also said eliminating these payment errors would save $17 billion yearly.

No one speculated as to an explanation for the year-over-year increase.

The report measured a sample of more than 2.4 million claims paid by seven commercial insurers. There were five publicly traded, for-profit plans -- Aetna, Cigna, Humana, WellPoint and UnitedHealth Group -- and two nonprofit BlueCross BlueShield-affiliated plans -- Health Care Service Corp. and the Regence Group.

The report summarized an analysis of nearly 4 million services on those claims, for dates of service between Feb. 1 and March 31.

Analyzed claims were pulled from a database maintained by National Health Care Exchange Services of Sacramento, Calif. Compared with the 80.7% average for commercial payers, Medicare's payments were accurate 96.2% of the time.

For the purposes of the report card, accuracy was defined as the percentage of claim lines in which the electronic remittance matched what the physician expected to be paid, based on his or her contracted fee schedule and disclosed claims edits and payment rules.

Mark Reiger, CEO of National Health Care Exchange Services, outlined the results. "It's clear commercial payers still have significant room for improvement on payment accuracy," he said. "That is the centerpiece of what we're working with physicians every day on -- the simple question of, 'Was I paid correctly?' "

UnitedHealth Group had the best accuracy scores. The company's remittances matched the "expected amount" 90.2% of the time, and the payment rate matched the contracted fee schedule rate 92.3% of the time. For both measures, United was the only private payer to improve from 2010.

"We are grateful for the American Medical Association's recognition," United spokeswoman Cheryl Randolph said in a statement. "The report card is an important reflection of our continued investments and focus on improving claims payment clarity, accuracy and transparency over the last few years."

Meanwhile, WellPoint, which runs for-profit Blues plans in 14 states, saw a marked drop in payment accuracy, from 73.9% in 2010 to 61.1% in 2011 in the percentage of remittances that matched expected payment.

WellPoint spokesman Brandon Davis said the company is working to continually improve its payment accuracy, speed and transparency.

As evidence of that effort, he said the company is working on adopting a companywide claims editing process.

Robert Zirkelbach, spokesman for insurer trade group America's Health Insurance Plans, said physicians need to help improve the claims payment process by reducing duplicate, inaccurate or delayed claims submissions.

Dr. McAneny said physicians need to do their part to help improve speed and accuracy of the claims process. But she said insurers have work to do on their end, as evidenced by the time and money physicians continue to spend in pursuit of fair payment.

"Physicians cannot predict what they will get paid," said Dr. McAneny, a medical oncologist and hematologist. "This is something that wouldn't be tolerated in any other industry."

Prior authorizations

For the first time, the report card included a measure of administrative burden associated with each plan, specifically the percentage of claims that noted a service had required prior authorization.

Commercial payers required prior authorization for services on an average of 3.5% of claims, above Medicare's 3.28%. Cigna had the highest rate of required prior authorization, at 6.15% of claims. The lowest rate measured was 0.04%, for Regence.

In addition to the time spent getting prior authorizations, confusion about whether prior authorization is required wastes time and money, Reiger said.

Because each payer's rules are different, physicians and their staff often call to get approval for a service when it's unnecessary. In a separate AMA survey of 2,400 physicians released in November 2010, 64% of physicians said it was difficult for them to know which tests and procedures require prior authorization.

Sixty-three percent said they typically waited "several days" for preauthorizations; 13% said it usually took more than a week to get preapproval.

"If we all commit to efficiency, transparency and accuracy at every step of the process, we will achieve an incredible savings of time and money," Dr. McAneny said.

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Claims accuracy

The AMA's National Health Insurer Report Card scored large insurers on what percentage of the time the first electronic remittance advice matched the "expected amount," defined as the contracted amount, plus disclosed claims edits and pricing rules. Besides the major publicly traded health plans, the insurers include Health Care Service Corp., parent company of Blues plans in Illinois, New Mexico, Oklahoma and Texas; and the Regence Group, parent company of Blues plans in Idaho, Oregon, Utah and Washington.

Payer 2010 2011
Aetna 81.2% 81.1%
Anthem 74.0% 61.1%
Cigna 84.5% 83.0%
HCSC 87.3% 87.0%
Humana 82.9% 82.0%
Regence Not collected 88.4%
UnitedHealth Group 86.0% 90.2%
Medicare 96.1% 96.2%

Source: National Health Insurer Report Card, American Medical Association (link)

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Meeting notes: Medical practice

Issue: Reducing state Medicaid programs as a cost-saving measure might cost states more in the long run if patients who are knocked off Medicaid are forced to receive care from emergency departments.

Proposed action: Direct the AMA to study successful Medicaid patient-centered medical home models, including pregnancy medical home models, and report back. [Adopted]

Issue: Interpreting services for patients with limited English proficiency often cost more than what Medicaid pays for the visit, causing the physician to incur a financial burden.

Proposed action: Direct the AMA to support efforts encouraging hospitals to pay for interpreting services for the follow-up care of patients physicians are required to accept as a result of the patient's emergency department visit. [Adopted]

Issue: A previous report from the AMA Council on Medical Service regarding increased violence directed toward physicians in the hospital environment did not address incidences of violence and threats toward physicians in office settings.

Proposed action: Direct the Association to survey its membership regarding the threats and violence in nonhospital work environments and draft a written report for the 2012 Interim Meeting with suggested solutions. [Adopted]

Issue: Advance care planning is critical to improving end-of-life care. But such discussions do not occur as often as they should because they are not compensated due to an inaccurate caricature of the talks as constituting "death panels."

Proposed action: Encourage the Centers for Medicare & Medicaid Services to designate such voluntary discussions as covered services in the 2012 physician fee schedule. [Adopted]

Issue: Physicians should be protected from retaliation for exercising their independent judgment in medical staff affairs.

Proposed action: Direct the AMA to endorse a clause to be included in physician employment agreements that guarantees physicians independent judgment in all organized medical staff affairs. [Referred]

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