Life Science Compliance Update

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August 15, 2013

AMA Reports Drop in Incorrect Health Claims for Third Year in a Row

The percentage of incorrectly processed health plan claims fell for the third straight year to 7.1% in 2013, according to the American Medical Association (AMA). The AMA's report can be found here.

In 2011, more than 19% of medical claims were incorrectly processed. Last year, the number dropped to 9.5% of claims.

The survey is based on a random sampling of nearly 2.6 million electronic claims from 450 physician practices submitted between February and March 2013. Payers included Aetna, Anthem Blue Cross Blue Shield, Cigna, Health Care Service Corporation, Humana, Regence, UnitedHealthcare, and Medicare.

If insurers sent a timely and accurate response to every claim received, $43 billion in administrative costs could have been saved, according to the AMA.

The AMA also found great variation in the accuracy of commercial payers. For example, Regence had the lowest claim accuracy rate at 85.03%. Medicare led all insurers with an accuracy rate of 98.10%.

The AMA report also showed that medical claim denials fell by nearly half in 2013, dropping from 3.48% in 2012 to 1.82% this year. The timeliness of medical claims processed also improved by 17% since the first AMA report in 2008.

The AMA also added an "Administrative Burden Index" this year to rank commercial insurers according to their level of unnecessary cost.

The report card found administrative tasks with health plans, such avoidable errors, inefficiency and waste in the medical claims process, cost an average of $2.36 per claim for doctors and payers. Cigna had the best cost per claim at $1.25, which was 47% below the commercial payer average. Health Care Service Corporation had the worst cost at $3.32 per claim, 41% above the commercial average.

According to the AMA, $12 billion a year could be saved if health plans eliminated unnecessary administrative tasks. This amount is equal to 21% of physicians' total administrative costs to ensure accurate payments from insurers.

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