Physician Practice

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

Physician Practice Insider, January 27, 2015

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.
 
This article originally appeared in HIM-HIPAA Insider.

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