AMA: Inaccurate claims payments up, add $17B to healthcare costs in 2010

The average medical claims error rate in 2010 climbed to 19.3 percent, a two percent increase from the previous year, according to the American Medical Association’s fourth annual National Health Insurer Report Card.

The increase of inaccurate payments added more than $1.5 billion to administrative healthcare costs last year, a step in the wrong direction as health plans look to adhere to the new medical loss ratio (MLR) requirements spelled out last year in the Affordable Care Act. In all, the current rate of claim payment errors represents roughly $17 billion in added costs, the AMA report stated.

[See also: NAIC submits final medical loss ratio recommendations to HHS; The Pitfalls of PPACA #1 - The Medical Loss Ratio Rule]

“A 20 percent error rate among health insurers represents an intolerable level of inefficiency that wastes an estimated $17 billion annually,” said Barbara L. McAneny, MD, a member of the AMA board. “Health insurers must put more effort into paying claims correctly the first time to save precious health care dollars and reduce unnecessary administrative tasks that take time and resources away from patient care.”

Most of the health insurance companies measured failed to improve on their error rates since 2009, with UnitedHealthcare the only insurer to improve its claims procession accuracy. It’s rating of 90.23 percent was best among its peers, while Anthem Blue Cross Blue Shield scored an industry-worst 61.05 percent accuracy rate.

Now in its fourth year, the AMA’s National Health Insurer Report Card is intended to provide relevant data to benchmark performance as a means of helping health plans improve their administrative efficiency in claims processing.

The findings for the 2010 report was based on data collected from Aetna, Anthem Blue Cross Blue Shield, CIGNA, Health Care Service Corporation, Humana, The Regence Group, UnitedHealthcare and Medicare. Claims were accumulated from more than 400 physician practices in 80 medical specialties providing care in 42 states and represented a random sampling of approximately 2.4 million electronic claims for approximately 4 million medical services submitted in February and March of 2011.

Other keys findings of the report: