American Medical Association Releases Report Card on Health Insurers’ Claims-Payment Practices

The American Medical Association has issued its first National Health Insurer Report Card based on how quickly and accurately insurers are processing and paying doctors' medical claims.

The report card is based on a random sample pulled from more than 5 million electronically billed services and looks at the claims-processing performance of Medicare, the U.S. government's health insurance program for seniors, and seven national commercial health insurers: Aetna, Anthem Blue Cross Blue Shield, Cigna, Coventry Health Care, Health Net, Humana and United Healthcare.

Among other categories, it looked at adherence to contracted payment rates, claim denials and how quickly insurers pay claims.

Health insurers reported to physicians the correct contracted payment rate only 62% to 87% of the time, the AMA said. UnitedHealthcare scored the lowest, at 62% of the time, according to the AMA. Medicare scored the highest, at 98%.

In response to the report card, Cheryl Randolph, a UnitedHealthcare spokeswoman, said the AMA didn't do an overall ranking of companies. It looked at 14 metrics and UnitedHealthcare ranked the best in lowest denials of claims and among the top three plans in payment timeliness.

"Any provider’s office in the nation now working with UnitedHealthcare has the ability to process their claims with us in real time," Randolph said.

The AMA found there's broad variation in how often health insurers deny claims, from less than 3% of claims to nearly 7%, and in their reasons for a denial. In this category, Medicare had the highest rate of denial, at 6.85%, while Aetna came in a close second at 6.8%.

Aetna, in a statement, said it's committed to paying doctors quickly and accurately. "To help us act on that commitment, we have ongoing dialogue with physicians to better understand and address their business needs," Aetna said.

State prompt-payment laws, which vary by state, have had a positive effect in recent years on the timeliness in paying claims, said Robert Mills, an AMA spokesman. Instead of "exorbitant delays" that occurred in the past, prompt-pay laws have gotten insurers to respond to physicians more quickly, he said. Medicare is mandated by regulation to respond within 14 days so that program is meeting its mandate, Mills said.

Of the commercial insurers, Coventry Health had the fastest median turnaround between receiving a claim and responding, at four days, said Mills. Because Coventry "is doing so well, it seems that there's room for others to improve," he said. Anthem's median turnaround time was seven days; UnitedHealthcare, 10; Health Net, 11; and Humana and Aetna at 13. Cigna and Medicare both took a median of 14 days, he said.

The report card was released this week in conjunction with the AMA's "Cure for Claims Campaign," which the group says is intended to slash administrate waste due to the way insurers process and pay medical claims. Insurers' inefficient claims-processing practices, the group says, adds an estimated $210 billion annually to the health care system. Doctors spend up to 14% of their total revenue to see that insurers are correctly paying for their services, the AMA said.

Dr. William A. Dolan, AMA board member, said in a statement the goal of the campaign is "to hold health insurance companies accountable for making claims processing more cost-effective and transparent and to educate and empower physicians so they are no longer at the mercy of chaotic payment systems that take countless hours away from patient care."

Randolph said that while UnitedHealthcare accepts its accountability in terms of ensuring claims are paid accurately and on time, "we believe that physicians and their billing services also share in that responsibility." Aetna said it will consider the information in the AMA's campaign in its ongoing work to make its processes even better for physicians.

Doctors and health insurers have battled for years over claims payment issues, with some of the biggest insurers reaching multimillion class-action settlements with the nation's doctors (BestWire, June 25, 2007). The accords included insurers promising to make changes to their business practices in this area. But, at least according to the AMA's report card, the rift persists.

The AMA's latest initiative, meanwhile, comes as insurers more recently have begun to rate doctors based on the cost and quality of care they provide -- a practice some doctors contend is based on inaccurate or unreliable data.

According to Karen Ignagni, president and chief executive officer of America's Health Insurance Plans, recent data from PricewaterhouseCoopers show administrative costs have been stable for four decades. "As a result of the move to electronic processing, the cost for each claim has actually declined, enabling insurers to provide value added services to consumers, such as disease management programs, without contributing to rising health care costs," Ignagni said in a statement.

AHIP members have worked with physicians to promote efficiency and move to real-time payment, Ignagni said. Data, she also noted, shows there is often a significant lag time between when services are provided and physician claims are submitted.

(By Fran Matso Lysiak, senior associate editor, BestWeek: [email protected])