Medical Staff Members Spend Many Hours Dealing with Insurance Companies

Caroline Helwick

December 2011, Vol 2, No 7 - Health Policy


Medical practices in the United States spend much more money and time dealing with third-party payers than do Canadian practices, according to a recent report (Morra D, et al. Health Aff. 2011;30:1443-1450).

The study showed that medical staff in the United States spend nearly 21 hours weekly dealing with insurance issues—addressing drug coverage, prior approvals, and other reimbursement issues—while their Canadian counterparts spend less than 3 hours weekly.

Among physicians, there is a little more parity: US doctors spend 3.4 hours weekly on these tasks compared with 2.5 hours for Canadian physicians.

The study was a collaboration between US and Canadian researchers, led by Dante Morra, MD, University of Toronto, and Sean Nicholson, PhD, a policy professor at Cornell University, Ithaca, NY. The researchers sent surveys to officebased physicians and practice managers in Ontario and compared their findings with those of a similar study of US physicians.

The survey, which was completed by 216 Canadians, pointed to substantially different amounts of time that physicians and their staff spend dealing with insurers. A key difference was the time they spent obtaining prior authorizations before treatment. US physicians spend about 1 hour weekly on this task, and US office staff spend 13 hours. Canadians spend very little time on this task, because their singlepayer health system offers 1 service; procedures for approvals, payments, and so forth are much more streamlined, the study suggested.

“Having multiple payers clearly generates more administrative costs than a single-payer system,” the authors observed.

Huge Difference in Administrative Costs
The big difference in time spent on these tasks translates into big money spent as well. Researchers estimated that it costs $23 billion to $31 billion for US physicians to interact with private insurance plans annually. This was based on $82,975 per physician compared with $22,205 per Canadian physician to negotiate within the single- payer system.

If US practices had administrative costs similar to those of the Canadians, the estimated savings would be $28 billion annually, the investigators determined.

Pointing to the benefits of a multiple- payer system—such as enhancement of innovation through competition and more choices for individuals —the author suggests that medical practices could deal with the payers more efficiently. Survey respondents agreed that standardizing transactions and encouraging electronic transactions may help.

Under a proposed rule by the Department of Health and Human Services, insurers would be required to provide uniform information and use uniform formats when communicating claims and coverage information. Part of the Affordable Care Act, the proposed rule could save $12 billion for healthcare providers and insurance companies. Accountable care organizations, which move physicians away from fee-for-service, are also expected to reduce administrative costs.

The authors conclude that “everyone—health plans, physicians and their staffs, and patients—will be better off if inefficiencies in transactions between physicians and health plans can be reduced.”