AMA report card finds health insurance error rates cut in half in 2012

Health insurance companies have cut their error rates in half from 19.3% in 2011 to 9.5% in 2012, according to the American Medical Association’s National Health Insurer Report Card, a report which gauges cost performance of commercial health insurers.

“The American Medical Association has been working constructively with insurers, and we are encouraged by their response to our concerns regarding errors, inefficiency and waste that take a heavy toll on patients and physicians,” Robert M. Wah, MD, American Medical Association (AMA) board chair, stated in an AMA release. “Paying medical claims accurately the first time is good business practice for insurance companies that saves precious health care dollars and frees physicians from needless administrative tasks that take time away from patient care.”

According to the release, the improvement in error rates saved the United States $8 billion in health care costs. However, the commercial health insurance industry still paid the wrong amount for nearly one in 10 medical claims.

Error rates decreased from the previous year in each of seven commercial health insurers, the AMA noted in the report. Managed care policies on clinical decisions offset costs improved by insurer accuracy. Need for prior authorization increased 23% since 2011, totaling $728 million in unnecessary health care costs in 2012, according to the report.

The National Health Insurer Report Card also checked health insurers for the speed of their response times, the transparency of their administrative rules and the rate of medical claim denials. Response times of private insurers have improved 17% from 2008 to 2012, according to the report. Rule transparency has improved 33%, and denials increased from 2.1% in 2011 to 3.48% in 2012.

“The costly administrative burdens of the prior authorization process can complicate medical decisions and delay or disrupt patient care,” Wah stated in the release. “The [AMA] calls for replacing the largely manual process with an automated decision support system that will enhance patient care and reduce paperwork costs.”


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