Reducing medical billing errors saves $8B

The American Medical Association says efforts by its members and private health insurers to reduce billing errors saved the healthcare system $8 billion. Dr. Robert M. Wah, chairman of the AMA board of directors, said efforts to transform the health insurance billing and payment system cut in half the number of medical claims paid incorrectly by large health insurance companies -- from 19.3 percent in 2011 to 9.5 percent in 2012 -- resulting in billions in savings due to a reduction in unnecessary administrative work to reconcile errors, Wah said. Despite the improvement, the commercial health insurance industry still paid the wrong amount for nearly 10 percent of medical claims and the AMA estimated an additional $7 billion could be saved if insurers consistently pay claims correctly, Wah added. "The AMA has been working constructively with insurers, and we are encouraged by their response to our concerns regarding errors, inefficiency and waste that take a heavy toll on patients and physicians," Wah said in a statement. "Paying medical claims accurately the first time is good business practice for insurance companies that saves precious healthcare dollars and frees physicians from needless administrative tasks that take time away from patient care." The savings were partially offset by administrative costs associated with a resurgence of intrusive managed care policies on clinical decisions, Wah said. Medical services requiring prior authorization from a commercial health insurer were reported on 4.7 percent of all claims, a 23 percent increase since last year. The AMA estimated prior authorization policies will add as much as $728 million in unnecessary administrative costs to healthcare costs in 2012.