This news release from the AMA reports the dirty little secret of our current medical reimbursements system, namely it doesn’t work. Read on.

New AMA Health Insurer Report Card Finds Need for More Accuracy
Eliminating health insurer errors could amount to $15.5 billion in savings

The American Medical Association (AMA) today announced that one in five
medical claims are processed inaccurately by health insurers, according
to the AMA’s third annual check-up of the nation’s commercial health
insurers and the systems they use to manage and pay claims.

This was the key finding of the AMA’s 2010 National Health Insurer
Report Card, which for the first time, benchmarked the overall claims
processing accuracy of the nation’s largest health insurers.

“The finding that one in five medical claims are processed by insurers
with errors emphasizes the huge potential for reducing administrative
costs for physicians and insurers,” said AMA Immediate Past President
Nancy H. Nielsen, M.D.

“Creating a single transparent set of processing and payment rules for
the health insurance industry would create system wide savings and allow
physicians to direct time and resources to patient care and away from
excessive paperwork.”

According to the AMA’s findings, the health insurance industry as a
whole has about an 80 percent accuracy rate for processing and paying claims.

Coventry Health Care Inc. came out on top of the seven commercial health
insurers measured by the AMA with a national accuracy rating of 88.41
percent.

Anthem Blue Cross Blue Shield rounded out the list with a national
accuracy rating of 73.98 percent.

The AMA estimates that $777.6 million in unnecessary administrative
costs could be saved if the health insurance industry improves claims
processing accuracy by one percent. Increasing the health insurance
industry’s accuracy rating to 100 percent would save up to $15.5 billion
annually that could be better used to enhance patient care and help
reduce overall health care costs.

“Each insurer uses different rules for processing and paying medical
claims, which cause complexity, confusion and waste,” said Dr. Nielsen.

“Simplifying the administrative process with standardized requirements
will reduce unnecessary costs in the health system and eliminate the
variability that makes it necessary for physicians to maintain costly
claims management systems for each health insurer.”

Currently, the health care system spends as much as $210 billion
annually on claims processing.

One recent study estimated physicians spend the equivalent of five weeks
annually on health insurer red tape.

To keep up with the administrative tasks required by health plans,
physicians divert as much as 14 percent of their revenue to ensure
accurate payments from insurers.