Who’s Getting Trampled? Providers

Doctors, Hospitals and other Healthcare Providers

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Health care providers feel the pain of our current health insurance system in wasted time and money, as well as interference with their medical judgment.

• Difficulty Getting Paid. Health care providers waste billions on unnecessary paperwork to deal with thousands of different health plans. US doctors and hospitals spend more than three times as much on administration as doctors and hospitals in Canada. It takes a lot of work for doctors to manage the entire claims filing process: a study published in the New England Journal of Medicine found that a typical doctor's overhead and billing expenses account for 43.7% of his or her gross income. This translates into an average of about one and a half clerical workers per doctor at an average annual cost of $51,564. This does not include the hidden costs like vacation time, insurance, and the like.

  
  So what does the claims process look like?

  
  
  • First, doctors must spend an average of 10 to 15 minutes filling out the correct billing codes, which can take hours a day if the doctor has numerous patients.
  • Every insurance company has different requirements, making it nearly impossible to get all the forms right all the time, but if there are any minute details on the paperwork that are not filled out correctly, the insurance company rejects the entire claim and sends it back to the doctor—unpaid. For example, some insurance companies require that the address given match their records exactly, so if the claim form says “47th St.” but the insurer’s records say “47 St.” the claim is denied.
  • The claim goes back to the doctor’s office, where the staff has to figure out what the problem is, attempt to fix it, and re-submit the claim and hope it is right the second time around.
  • On average 32% of all claims are rejected, 5 to 15% are lost in the shuffle and never collected, and the average time it takes the doctors to collect their money is 60 to 90 days.
  
  

  —“Costs of Health Administration in the U.S. and Canada,” Woolhandler, S. & Himmelstein, D., New England Journal of Medicine, September 21, 2003



• Difficulty Getting Medically Necessary Care Approved for Patients. Another ‘trick’ insurance companies use to avoid paying as much as possible is to make it hard for busy health care providers to get the care they think is necessary for their patients. For example:
  
  
  • Doctors cannot just write a prescription for the medication they think their patient needs. They have to figure out what prescription drugs the patient’s health plan will cover. The complexity of what should be a simple matter becomes evident when you realize that every plan has a different list of covered drugs, or formulary.
  • Doctors also have to jump through hoops when prescribing a necessary test or procedure. Here is a typical sequence of events:
    
    
    • First the doctor has to call the plan and wade through the myriad of choices provided by the mechanical operator. Despite this being a "provider line," there is no skipping the many button presses required to get to the appropriate level, and it is easy to get lost in the labyrinth of choices.
    • The phone call can often take an hour or more, after which many plans require that a form be faxed within 24 hours. If more than 24 hours pass, the doctor has to start the process all over again.
    • If the doctor makes it through all these hurdles, the request may still be denied.
    • Then the doctor has to submit a letter of medical necessity to try to convince the plan to cover what the doctor believes his or her patient needs.
  
  

  —“Survey of Doctors, Medical Society of the State of New York, September 2008

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