AMA blasts insurers for costly 20 percent error rate

Health insurance errors cost health systems $1.5 billion in unnecessary administrative costs, according to new research released today from the American Medical Association (AMA), which studied the increasing rate of inaccurate claims payments.

Commercial health insurers have an average claims processing error rate of 19.3 percent, up two percent from the previous year, according to AMA's "2011 National Health Insurer Report Card."

"A 20-percent error rate among health insurers represents an intolerable level of inefficiency..." said AMA Board Member Barbara L. McAneny, in a statement. "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."

The AMA report emphasizes problems, including no payment to physicians, reduction in denial rates, administrative requirements such as prior approval for treatment, and issues with accuracy and timeliness.

While many hospitals stress that physicians properly code and bill to ensure payments, as well as avoid fraud, the AMA report highlights that, even with appropriate coding and billing training, payments may still result in error on the insurers' side.

To mitigate possible errors, AMA also suggests improved claims management, including physician practice automation, real-time claims processes, transparency, and disclosure, according to an AMA white paper on administrative simplification.

For more information:
- read the AMA press release
- check out the AMA white paper (.pdf)