Commercial health insurers inaccurately process 20% of medical claims, AMA says

One in five medical claims is processed inaccurately by commercial health insurers, often leaving physicians shortchanged, the American Medical Association reported Monday in its third annual assessment of insurers.

This report card focused solely on commercial insurers, a break from previous reports, which also looked at Medicare. The AMA report card is an effort to reduce the cost of claims processing for doctors. As much as $210 billion is spent annually to process insurance claims.

Private insurance companies matched their payments to what they agreed to pay doctors about 80 percent of the time, and Nancy Nielsen, immediate past president of the group, said that was a dramatic improvement.

"It is the report card that forced them to pay attention," Nielsen said.

Robert Zirkelbach, a spokesman for America's Health Insurance Plans, said it takes both insurers and doctors to process claims accurately and quickly. Many doctors don't submit claims electronically or promptly, he said. "Government data show that soaring medical costs -- not health-plan administrative costs -- are the key drivers of rising health-care costs."

http://www.washingtonpost.com/wp-dyn/content/article/2010/06/14/AR2010061404969.html

$210 billion per year spent to process insurance claims...

Anyone know what that figure is for Medicare? Comparative percentage of processing costs vs premiums vs what they actually pay to patients..

What I could find..
http://economistsview.typepad.com/economistsview/2009/07/taking-complete-leave-of-their-senses.html
Administrative Costs, by Paul Krugman: Whenever you encounter “research” from the Heritage Foundation, you always have to bear in mind that Heritage isn’t really a think tank; it’s a propaganda shop. Everything it says is automatically suspect.

Greg Mankiw forgets this rule, and approvingly (yes, it’s obvious he approves -no wiggling out) links to a recent Heritage attempt to explain away Medicare’s low administrative costs...

Well, whaddya know — this is an old argument, and has been thoroughly refuted. ...

You should always remember:

1. Don’t believe anything Heritage says.

2. If you find what Heritage is saying plausible, remember rule 1.



Continuing with Example 2, Andrew Gelman can't understand why Greg Mankiw quotes the Heritage Foundation instead of someone from "Harvard's world-class Department of Heath Care Policy" with the authority and credibility to speak on these issues (hence the "Eagle Scout" reference):
________________________________________________________________________________________

From Economist's View Blog

Links to this pdf from University Of California Berkeley. Pasting from it sucks

These administrative spending numbers have been challenged on the grounds that they exclude some aspects of Medicare’s administrative costs, such as the expenses of collecting Medicare premiums and payroll taxes, and because Medicare’s larger average claims because of its older enrollees make its administrative costs look smaller relative to private plan costs than they really are. However, the Congressional Budget Office (CBO) has found that administrative costs under the public Medicare plan are less than 2 percent of expenditures, compared with approximately 11 percent of spending by private plans under Medicare Advantage.16 This is a near perfect "apples to apples" comparison of administrative costs, because the public Medicare plan and Medicare Advantage plans are operating under similar rules and treating the same population.

(And even these numbers may unduly favor private plans: A recent General Accounting Office report found that in 2006 Medicare Advantage plans spent 83.3 percent of their revenue on medical expenses, with 10.1 percent going to non-medical expenses and 6.6 percent to profits—a 16.7 percent administrative share.)17

The CBO study suggests that even in the context of basic insurance reforms, such as guaranteed issue and renewability, private plans’ administrative costs are higher than the administrative costs of public insurance. The experience of private plans within FEHBP carries the same conclusion. Under FEHBP, the administrative costs of Preferred Provider Organizations (PPOs) average 7 percent, not counting the costs of federal agencies to administer enrollment of employees. Health Maintenance Organizations (HMOs) participating in FEHBP have administrative costs of 10 to 12 percent.18

In international perspective, the United States spends nearly six times as much per capita on health care administration as the average for Organization for Economic Cooperation and Development (OECD) nations. Nearly all of this discrepancy is due to the sales, marketing, and underwriting activities of our highly fragmented framework of private insurance, with its diverse billing and review practices.19 Indeed, according to research by the Commonwealth Fund, the United States could save up to $46 billion a year if it spent what other countries with mixed public-private insurance systems, such as Germany, spend on insurers’ administrative costs.

...they incorrectly calculate the deductible on almost every claim. All the errors are in their favor (e.g. you have a 10% deductible, they'll calculate 20%). Most Americans have neither the time nor patience to fight them, time and time again, claim after claim.

Thirty plus years in healthcare administration taught me that health insurance executives are mass murderers.

It's more correctly termed "maximizing shareholder value."