Poor report cards tell insurers to do their homework

When schools send kids home with their report cards, it's not only so parents can keep tabs on their children's education. It's also so the students who are not making the grade can see the areas where they need to improve.

The same concept goes for the annual National Insurer Report Card, the fourth iteration of which the American Medical Association released at the end of June. Unfortunately, it does not appear as if enough health insurance companies are learning the lesson.

According to the latest report card, the average rate at which insurers make errors when processing physician claims is a whopping 19.3% this year.

Although that number is high on its own, it's even more distressing when one realizes that figure is a full two percentage points higher than it was in 2010. When it comes to claims-processing efforts, insurers on the whole are getting worse, not better.

An error rate approaching 20% would be intolerable in any profession that relies on third-party payers, but it is especially hard to swallow in a profession that relies on accurate, prompt and hassle-free payment to ensure that the provision of vital patient care goes smoothly. Whenever physicians and their staffs need to call back an insurer or resend a claim because the amount paid out does not match what the practice expected to receive based on the contracted fee schedule, that's time that cannot be spent on patient needs.

And it's not only time-consuming and irritating when this happens, it's also very expensive. Eliminating these errors alone would save an estimated $17 billion every year. That's a great deal more money that could go toward actual patient care instead of administrative waste, and it should be a no-brainer for any company that wants to improve its bottom line or minimize losses.

Some insurers have shown improvements. UnitedHealthcare, for instance, improved its claims-processing accuracy to more than 90% on this year's report card. That was in part due to the fact that the plan, a subsidiary of UnitedHealth Group, is more consistently telling doctors the correct contracted amounts for physician services.

But physicians who have to deal with WellPoint-owned Anthem Blue Cross Blue Shield, for example, reported that the insurer bungled nearly 2 in 5 claims they received. Those are terrible odds for physicians, and they need to be improved.

Insurance companies with unsatisfactory annual report cards need to take concrete steps to turn their grades around. Those that are improving need to stay on that path. That's why the recommendations of the AMA's Heal the Claims Process, a campaign launched in 2008, should be required reading for every insurer. With some practical and achievable improvements, insurers can turn the chaos of claims processing into a system that is calm and collected on all sides.

In the many cases in which physicians file claims only to receive no payment for the services, for instance, the nonpayment is due to the fact that the money is diverted to pay off a patient deductible. Real-time claims processing would eliminate the need for practices to chase down patients for such payments weeks or months later. Physicians and patients also would know ahead of time when a particular service is not going to be covered, giving everyone a chance to figure out the best course of action rather than simply putting practices on the hook when it comes to payment.

Only when the claims-processing error rate undergoes a sharp and sustained drop will the goal of the Heal the Claims Process be met and a smoothly functioning claims system be realized. So insurers need to take a serious look at their report cards -- and then do their homework.