W3 Spin|Internet news blog

Well designed medical billing processes will play a critical role in driving down healthcare costs. This article discusses this link and the role medical billing services can play in helping make healthcare more affordable.

Everyone hears about the fact that much of the cost of healthcare is driven by the expense of processing and adjudicating claims. What is often not mentioned is what is truly at the root of these expenses – payers that are attempting to withhold from physicians the money they are due.

The tactics used by payers to save money (and drive up the cost for medical practices to operate a medical billing process) include: Underpaying over 10% of medical claims, “losing” submitted claims on a regular basis, and constantly changing the rules by which they decide if claims are actually payable. If the provider’s medical billing process is not technology savvy, well designed and properly staffed then over 20% of the practice’s revenue can easily be lost to these tactics.

There is a strong economic motivation for payers to maintain the current inefficient billing process. They can increase their profits sharply since more than fifty percent of the claims they misplace or accidently underpay are never noticed by medical providers.

Here is another shocking fact – it costs the average insurance company about $25 each time a representative has to get on the phone and discuss a lost or underpaid claim with a medical billing specialist. A final key fact is that most payers “grade” each provider. The lower a provider’s grade (i.e., a D versus an A) the more likely the payers are to lose or under pay the provider’s claims. Why? Because these providers have no track record of catching these problems and pursuing them.

So, how do all of these facts tie lead to the conclusion that better medical billing processes can lowering the cost of healthcare? If each and every underpaid or lost claim is pursued (which is what a well-designed medical billing process should do) then eventually payers will lose all economic incentive to play games and make the medical billing process complicated and expensive.

If every medical billing company and every billing department relentlessly pursued each claim then the insurance companies would see their costs rise and be forced to revisit their strategy. They would be hit by the double sided sword of increased payouts to providers (since the tactics would only slow down payments not eliminate them) and increased cost of adjudicating claims (since all of those medical billing specialists are sitting on the phone costing the payers $25 per call).

Many companies and individuals are dreaming of the day when the medical billing process disappears entirely and claims are adjudicated in real-time while the patient is standing at the checkout desk. In this system significant costs will be saved, but the system will never emerge until payers no longer have an incentive to play games with medical claims. Medical billing companies and medical providers can make this happen by insuring that all providers are rated A in the eyes of each payer.

Copyright 2008 by Carl Mays II