June 14, 2010
The American Medical Association (AMA) today announced that one in five medical claims are processed inaccurately by health insurers, according to the AMA’s third annual check-up of the nation’s commercial health insurers and the systems they use to manage and pay claims. This was the key finding of the AMA’s 2010 National Health Insurer Report Card.
The AMA estimates that $777.6 million in unnecessary administrative cost could be saved if the health insurance industry improves claims processing accuracy by one percent. Increasing the health insurance industry’s accuracy rating to 100 percent would save up to $15.5 billion annually that could be better used to enhance patient care and help reduce overall health care costs.
National Health Insurer Report Card
By Don McCanne, MD
The private insurance industry is selling us administrative services at an outrageously high price. This report card confirms that we certainly are not receiving value. Not only are we paying them too much, but they also continue to do a lousy job at their most important function – claims processing. Their error rate results in an additional $15 billion annually in administrative waste that could be used for patient care, according to this AMA report.
This year the AMA did not report Medicare’s error rate, but, in the 2008 report card, Medicare’s compliance rate was vastly superior to all of the private insurers – over 98 Percent.
But the greatest argument for changing to an improved Medicare program that covers everyone is not the reduction in waste caused by private insurer claims processing errors which would save about $15 billion, rather it is the replacement of our dysfunctional, fragmented, private/public financing system with a single payer system which would save us about $400 billion annually.
Even if the private insurers could match the claims performance of Medicare, that wouldn’t fix our problems. It’s the financing model that needs to be changed. The $4 trillion that we could recover over the next decade would pay for the needed care for the uninsured and the growing numbers of underinsured. We would have solved our health care financing problems, and that would allow us to direct more of our attention and effort to much needed health system reform.