Well designed medical billing processes will play a critical role in driving down healthcare costs. This article discusses this link and the role medical billing services can play in helping make healthcare more affordable.
Everyone hears about the fact that much of the cost of healthcare is driven by the expense of processing and adjudicating claims. What is often not mentioned is what is truly at the root of these expenses – payers that are attempting to withhold from physicians the money they are due.
Payers employ a series of complicated (and frequently changing) adjudication rules which medical providers and medical billing services must navigate to obtain payment for services rendered. Even when the maze is navigated successfully, payers will frequently (ten percent to twenty percent of the time) underpay claims. To add insult to injury, payers will also frequently simply “lose” claims that have been submitted. Unless the medical billing process is designed to catch these errors the payers never pay the money that is saved though the underpayment and misplacement of claims.
There is a strong economic motivation for payers to maintain the current inefficient billing process. They can increase their profits sharply since more than fifty percent of the claims they misplace or accidently underpay are never noticed by medical providers.
Nothing is free, so payers do incur a price on their end because of the current process. It cost about $25 when a payer that has spotted an underpaid or missing claim gets a insurance representative on the phone. This has lead payers to get quite clever and grade each medical provider. The grade is based upon how well the provider spots issues and calls the payer (thus generating costs for the payers). If the provider catches the payers “mistake” each time they will be rated an A. If they never catch the payer’s errors they will receive a F. Interestingly, the payers that are rated an F seem to have many more lost and underpaid claims than those rated an A.
So, how do all of these facts tie lead to the conclusion that better medical billing processes can lowering the cost of healthcare? If each and every underpaid or lost claim is pursued (which is what a well-designed medical billing process should do) then eventually payers will lose all economic incentive to play games and make the medical billing process complicated and expensive.
If the medical practices and medical billing services dig in and fight for the last dollar on every claim they will quickly force the insurance payers to adjust their internal processes. With each claim paying in full and their staff inundated with billing specialist asking why a claim was lost or underpaid, the payers will see rapidly shrinking profits that will force them to acknowledge that the costs of the games they play are no longer justified by the savings form unpaid claims.
There is lots of talk about the dream system where claim adjudication happens in real time and physicians immediately receive their reimbursements. Such a system will never happen until the economic incentive payers have to maintain a difficult, complicated and veiled system are removed. This is what well designed and executed medical billing processes can do by doggedly pursuing each claim.
Copyright 2008 by Carl Mays II
Carl Mays is the CEO and President of ClaimCare medical billing services and is an expert in medical billing and medical billing companies.
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