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Insurance industry

Inaccurate Claims Payments Wasting Billions in US Health System

Strategic Insights

— 2 min read

The American Medical Association (AMA) has issued its fourth annual National Health Insurer Report Card, which reveals a significant increase in inaccurate claims payments among commercial health insurers. According to the report, the average claims-processing error rate has risen to 19.3 percent, resulting in an estimated $1.5 billion in unnecessary administrative costs. This inefficiency not only wastes precious healthcare dollars but also frustrates patients and physicians, with nearly 23 percent of claims submitted to insurers going unpaid.

Key Takeaways:

  • The average claims-processing error rate among commercial health insurers increased to 19.3 percent, up from 17.3 percent last year, resulting in an estimated $1.5 billion in unnecessary administrative costs.
  • The increase in overall inaccuracy represents an extra 3.6 million in erroneous claims payments compared to last year.
  • UnitedHealthcare was the only commercial health insurer included in this year's report card to demonstrate an improvement in claims-processing accuracy, with a rating of 90.23 percent.
  • Anthem Blue Cross Blue Shield had the lowest accuracy rating among the measured insurers, with an accuracy rating of 61.05 percent.
  • Physicians received no payment at all from commercial health insurers on nearly 23 percent of claims they submitted.
  • Real-time claims processing would save time and money, and dramatic reductions in denial rates have occurred since last year at Aetna, Anthem Blue Cross Blue Shield, Health Care Service Corporation, and UnitedHealthcare.
  • CIGNA maintained its industry-leading low denial rate of 0.68 percent, and had the highest rate of claims requiring prior authorization, with over six percent of claims indicating physician work associated with these requirements.

Statistics:

  • 19.3 percent: The average claims-processing error rate among commercial health insurers.
  • $1.5 billion: Estimated unnecessary administrative costs due to insulin errors.
  • 23 percent: The percentage of claims submitted to insurers that went unpaid.
  • 3.6 million: The number of erroneous claims payments compared to last year.
  • 90.23 percent: UnitedHealthcare's claims-processing accuracy rating.
  • 61.05 percent: Anthem Blue Cross Blue Shield's claims-processing accuracy rating.
  • 0.68 percent: CIGNA's industry-leading low denial rate.
  • 6 percent: The rate of claims requiring prior authorization at CIGNA.
  • 4 years: The number of years that UnitedHealthcare has shown consistent improvement in reporting correct contract fees.
  • 15 median days: The longest claims response time among commercial health insurers.

Sources:

  • "AMA Issues Fourth Annual National Health Insurer Report Card", American Medical Association (June 20)
  • National Health Insurer Report Card, American Medical Association (2018)
  • "Heal the Claims Process Campaign", American Medical Association (June 2008)
  • Practice Management Center, American Medical Association (www.ama-assn.org/go/pmc)

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