Health Information Management

Study reveals overspending on U.S. billing and insurance paperwork

HIM-HIPAA Insider, January 19, 2015

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The U.S. may be overspending on medical billing and insurance-related paperwork by as much as $375 billion annually, according to a recent study by physicians and health policy researchers.

In the U.S., healthcare organizations spent approximately $471 billion on paperwork related to billing and insurance in 2012. According to the study “Billing and insurance-related administrative costs in United States’ health care: synthesis of micro-costing evidence,”  80% of the money spent on these processes may have been wasted. The study was published in BMC Health Services Research.
Adopting a simplified, single-payer insurance system similar to Medicare could save the U.S. approximately $375 billion annually or more than $1 trillion in three years. The money saved by adopting a universal insurance system could help cover uninsured Americans and upgrade coverage for those with inadequate policies without increasing healthcare spending, according to the study.
Using a standard definition of “billing and insurance-related costs” (BIR), researchers found that physician practices spent approximately $70 billion on the paperwork in 2012. Hospitals spent roughly $74 billion, and other institutions (e.g., nursing homes, home health care agencies, prescription drug and medical supply companies) spent approximately $94 billion. Private insurers spent approximately $198 billion on BIR compared to $35 billion spent by government-sponsored health insurance programs.
The researchers have ties to the University of California, San Francisco, the City University of New York School of Public Health, and Harvard Medical School.

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