Standardized Medical Billing Could Save $7 Billion a Year

Physicians could save $7 billion a year if insurers standardized medical billing procedures.  If healthcare insurance companies created a standardized billing system, it could cut physician office administrative costs by $7 billion a year, according to a study published in Health Affairs. Standardizing medical billing would assure transparency, as well as create a single claim submission deadline and payment posting rules.

That estimate is based on a 2006 analysis of the labor and overhead costs required to process health insurance benefits and claims at one large academic physician group practice.  According to the study, the physician group could hypothetically save $44 million if it processed all benefits and claims using Medicare payment rules.  Paperwork and follow-up with insurers totaled $33.1 million, while office labor and overhead ate up an additional $5.6 million that could be saved with standardized billing procedures.

According to the study’s authors, “The U.S. system of billing third parties for healthcare services is complex, expensive, and inefficient.  Physicians end up using nearly 12 percent of their net patient service revenue to cover the costs of excessive administrative complexity.  A single transparent set of payment rules for multiple payers, a single claim form, and standard rules of submission, among other innovations, would reduce the burden on the billing offices of physician organizations.  On a national scale, our hypothetical modeling of these changes would translate into $7 billion of savings annually for physician and clinical services.  Four hours of professional time per physician and five hours of practice support staff time could be saved each week.”

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