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Electronic Processing of Health Claims Speeds Payments, Cuts Costs
Electronic Processing of Health Claims Speeds Payments, Cuts Costs
(WASHINGTON, DC) – The proportion of insurance claims submitted to health plans electronically has more than tripled in the last decade, reducing administrative costs and significantly speeding up payments to doctors and hospitals.
A new study released today by America’s Health Insurance Plans (AHIP) shows that three-quarters of all health insurance claims are now submitted electronically, up from 24 percent in 1995, allowing 98 percent of claims to be processed within a month of receipt from the health care provider. Further, the study found that insurers now process a majority of claims within a week of receipt.
“The concerted efforts of health insurance plans to speed claims payment and cut administrative costs have already led to significant improvement and savings,” said AHIP president and CEO Karen Ignagni.
The study notes that it costs an insurance company an average of 85 cents to process a “clean” claim submitted electronically compared to $1.58 to process a paper claim. Given the huge and growing volume of health insurance claims the industry processes each year, the shift to electronic submission and processing saves consumers several billion dollars annually, Ignagni said.
Much of the change has come in the last four years. In 2002, just 44 percent of claims were submitted electronically, compared to 75 percent today.
There is often a significant delay before health insurance plans receive claims from health care providers, especially for those claims still submitted on paper. In 2006, nearly 3 claims in ten were received more than 30 days after the date of patient service, with one-third of the paper claims not reaching the insurer for 60 days or more.
“These data clearly show the best way to speed claims payment and to further reduce administrative costs is not through costly, new ‘prompt pay’ mandates, but rather to continue encouraging greater use of electronic claims submission,” Ignagni said
She noted that health insurance plans are also using technology to prevent fraud and to ensure that the claims are valid. Claims that are delayed or “pended” because they are incomplete, incorrect or duplicative take on average an extra 9 days for processing, adding to costs and slowing payment.
The study is based on aggregated data from nearly 25 million claims processed by a sample of 26 health insurance companies of various sizes throughout the United States.
The full report is available at http://www.ahipresearch.org/pdfs/PromptPayFinalDraft.pdf
