Just The Facts, Please

Learn more about Electronic Claims Processing and Medical Billing

Many claims are filed electronically, in fact, Medicare requires it

A new study recently released 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.

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.

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.

Twenty-nine percent of claims were received from health care providers more than 30 days after the date of patient service, and 15 percent of claims were received from providers more than 60 days after the service was provided. Fourteen percent were pended or delayed due to incorrect or incomplete information, taking an average of nine days longer to process while more information is requested from the provider.

Electronic claims are less costly to process than paper claims. The average cost of processing a clean electronic claim was 85 cents, nearly half the $1.58 cost of processing a clean paper claim. Pended claims requiring manual or other review cost $2.05 on average per claim to process.

Nearly half of all claims (48 percent) were pended due to the submission of duplicate claims (35 percent), lack of complete information or other information needed to justify the claim (12 percent), or invalid codes (1 percent). Twenty-four percent of pended claims were due to coverage issues, including no coverage based on date of service (8 percent), non-covered or non-network benefit or service (7 percent), coordination of benefits (5 percent), or coverage determination (4 percent). Other or miscellaneous reasons were the cause of the remaining 28 percent of pended claims.

In 2006, Medicare expenditures were $382 billion. Also in 2006, the Office of Inspector General estimated that $10.8 billion in fee for service payments were improperly made. There were 43 million Medicare beneficiaries in 2006.

In FY 2006, the enrollment for Medicaid was estimated at 47 million people, with a total outlay of $317 billion.

In the past few years, the healthcare industry has gone through some big changes. Although many claims are filed electronically, there are many factors that cause claims to go unpaid and there are many reasons why providers still need your assistance.

One reason is that employers are moving toward high deductible health plans (HDHPs) to cut costs. There is also a new trend where consumers are moving to health savings accounts (HSAs). Both of these types of health plans require the patient to pay more out of pocket. That means providers must work harder at collecting their money.

Payers and employers will continue to shift the costs of health care to members by moving them into high-deductible health plans (HDHPs) and reducing benefit coverage. As patients bear more of the financial burden for their health care, it will be harder to collect these larger amounts. Providers should expect to re-evaluate how their offices are run to improve collections from patients.

The use of automated technology is very important in today's age of getting insurance claims paid; tools like electronic medical records (EMR), electronic funds transfer (EFT) electronic remittance advice (ERA), real-time adjudication, claim scrubbing services, coding software products and other technology tools are becoming increasingly necessary. However, not all providers can afford to invest in those technologies and some simply don't want to, making outsourcing of the claims process an attractive alternative.

Additionally, while the skill level necessary to get claims paid has risen each year, the skill level of the person performing the task in many provider's offices has remained the same. Insurance claims specialists utilize much of the technologies mentioned above, typically allowing them to produce better results in less time than the average provider's office.

Carriers are also using data mining to create literally millions of edits to reduce payments and deny claims. They employ various ways to improve on the previous technology, such as greater selectivity (applying edits to some providers and not others), longitudinal comparisons (i.e. based on patient history), and pattern matching (i.e. upcoding). 

Experienced medical billers can effectively utilize technologies available to them to get claims paid and to fight claim denials. Every day, it gets harder for healthcare providers to collect insurance dollars. Individually, providers have a great incentive to utilize outsourced billing solutions.

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