Coalition Pushes to Cut Admin Costs - Save $50 Billion a year (ok, maybe 25)

A colalition of organizations, including MGMA, AAFP,AHIMA, United Health and other groups are working to reduce administrative costs by simplifying the administration of healthcare billing and payment. Whether $50 billion a year (half of what the Obama administration needs to cover) is possible is another story, but even if the goal is off substantially, there is a lot of hard cash and the hassle factor (undocumented costs) that can be saved. Here is the release from today:

WASHINGTON, D.C., July 20, 2009 – The nation could save billions of dollars each year in the healthcare system by addressing certain areas of administrative complexity, according to a report released today by the Healthcare Administrative Simplification Coalition (HASC), a public/private partnership of organizations committed to reducing the administrative costs and complexity of healthcare. The report, “Bringing Better Value: Recommendations to Address the Costs and Causes of Administrative Complexity in the Nation’s Healthcare System,” estimates that reducing administrative costs by just 10 percent could save as much as $500 billion over ten years.

“Efforts to reform the financing, delivery and reach of health insurance must include a vigorous assault on the unnecessary and unproductive complexity in healthcare,” says Linda Kloss, American Health Information Management Association Chief Executive Officer.

HASC estimates that as much as a quarter of U.S. healthcare spending goes to administrative functions, not patient-centered services. Much of that administrative activity is duplicative, and little of it has been standardized. While some administrative activity is needed to manage a healthcare system, the current levels of complexity divert too much time and money from clinical care to administrative processes.

“Every dollar spent on a convoluted, redundant or unnecessary administrative process is a dollar poorly spent,” says William F. Jessee, MD, FACMPE, president and CEO of the Medical Group Management Association, a founding HASC member. “We spend more on healthcare than any nation in the world, but we’re getting far less than full value for our investment, partly because of unnecessarily complex administrative processes.”

The coalition of physician and hospital organizations, health and benefits plans, employers, government agencies, and other groups called for voluntary and nationally coordinated changes to reduce red tape in a wide range of administrative processes related to healthcare billing and payment.

“The overwhelming number and complexity of processes in healthcare administration today are adding little or no value to patient care, safety or cost control and, worse, they are costing our nation money and time we cannot spare,” says Doug Henley, MD, FAAFP, Executive Vice President, AAFP.

In the report issued today, HASC outlines a plan for physician practices, hospitals, insurance payers, benefits managers and others to voluntarily adopt a coordinated nationwide approach to conducting key administrative processes for:

• Credentialing physicians and other clinicians – A universal credentialing form would eliminate hundreds of hours of repetitious paperwork that physician practices now devote to completing multiple credentialing forms for insurance payers, hospitals and others.
• Determining and verifying patient eligibility for health insurance – Adoption of an industry-wide standard for interchangeable electronic data would help hospitals and physician practices determine each patient’s insurance coverage more quickly and accurately.
• Standardizing healthcare patient identification cards – Standardizing the design and content of patient ID cards, and ensuring they are machine-readable, would significantly reduce costly errors and delays in the medical claims billing process.
• Improving coordination of prior authorization processes for radiology and pharmacy services – A voluntary, standardized approach to how providers request and receive determinations of patient eligibility for pharmacy benefits and radiology services would reduce treatment delays and reduce costly paperwork.

HASC is a coalition that includes some of the nation’s leading physician and hospital organizations, health and benefits plans, employers, government agencies, and other groups that share the goals of simplifying administrative processes in the nation’s public and private healthcare financing programs. The coalition was founded by the American Academy of Family Physicians (AAFP), the American Health Information Management Association (AHIMA) and the Medical Group Management Association (MGMA).