AMA’s Report Card on Insurer Performance

Physicians are not generally favorably inclined toward health plan companies, and perhaps vice versa.  One long-time sticking point has been the timeliness and accuracy of claims payment.  For several years the American Medical Association has been issuing a National Health Insurer Report Card, which is based on a sampling of administrative activity between physicians and payers.  The 2012 version is out.   (AMA Report)    The AMA found great improvement in payment accuracy, with “error” rates dropping from 19.3% in 2011 to 9.5% in 2012.  According to the AMA, this saved $8 billion due to reduction of unnecessary administrative work and $7 billion more could be saved by further improving payment.  We don’t know why, but we wonder if the AMA defines a payment “error” as being not paying what the doctor billed; or to put it another way, could a doctor ever make a billing mistake, or even, God forbid, code things in such a way as to try to get more money?  And if insurers just pay a doctor’s bill, how is that going to save money–any administrative savings would be swamped by the service overpayments?

But we digress.  Accuracy ratings ranged from 98.3% for UnitedHealthcare to 87.4% for Humana, but all insurers showed improvement.  Prior authorization requests have begun going up, which the AMA views as intrusive, but the health plans and their clients may view as important to control costs and help ensure the appropriateness of care.  According to the AMA, 4.7% of claims had a prior authorization request in 2012, up 23% from last year.  The AMA says that this leads to $728 in unnecessary administrative expense, but if those prior authorization processes lead to billions in health care service cost savings, which they likely do, they are clearly cost-justified and necessary.  Electronic funds transfer continues to gain rapidly, although days to payment is staying about the same, as payers undoubtedly manage cash.  Payers use a massive number of claims edits, so it is impressive in a way that so many claims get processed and paid quickly.