Medical practice interaction with insurers costs $21B-$31B per year

A recent study has found that medical practices spend between $21 billion  and $31 billion annually dealing with insurers - or more than $68,000 per physician per year.

Conducted by Weil Cornell Medical College, the University of Toronto, the University of Chicago and the Medical Group Management Association, “The Costs to Physician Practices of Interactions with Health Insurance Plans,” found that physicians spend three hours per week - or 43 minutes on average per workday - interacting with health insurance plans.

The study was recently published in Health Affairs.

“These data are yet another indicator of the dire need to streamline healthcare administration for physician practices,” said William F. Jessee, MD, FACMPE, president and CEO of the MGMA.

The research found that primary care physicians spend more time on these interactions than medical or surgical specialists. Nursing staff spend nearly four hours per physician per day interacting with plans, while clerical staff spend 7.2 hours per day. Solo practitioners and their staffs spend up to 50 percent more time interacting with health plans than physicians in larger practices. Non-physicians’ staff time did not vary significantly by specialty.

The study classified interactions with health plans as authorization, formulary, claims/billing, credentialing, contracting and quality data.

Of those interactions, practices spend the most time dealing with formularies. Physicians spend 1.3 hours per week and nursing staff spend 3.6 hours per physician per week. Primary care physicians spend the most time (1.7 hours weekly) on formulary issues. Physicians and their staffs spend the least amount of time on submitting or reviewing quality data.

"While there are benefits to physician offices' interactions with health plans – which may, for example, help to reduce unnecessary care or the inappropriate use of medication – it would be useful to explore the extent to which these benefits are large enough to justify spending three weeks annually of physician time or one-third of the average primary care physician's compensation on physician practice-health plan interaction," said Lawrence Casalino, MD, of Weill Cornell Medical College.

Commenting on the study's findings, Risa Lavizzo-Mourey, MD, president and CEO of the Robert Wood Johnson Foundation, said that in order to get a healthcare system that delivers better value, the United States must address the skyrocketing price of healthcare's administrative costs.


"Administrative costs will never be zero, but we need to make sure that administrative interactions improve the quality of care by working to make care safer and more efficient," she said.

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