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The Check is Not in the Mail: Late Payment of Medical Claims Adds to the Cost of Health Care

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By Phil Cohen

Few things rankle a doctor more than an insurance company’s saying it cannot find a claim for medical services, particularly when there is even a signed return receipt to document delivery of the bill.

“We actually had the little green card to show who signed for the dang thing,” said Elizabeth Wertz, chief executive of the Pediatric Alliance, a large group of Pittsburgh doctors. “We sent it by certified mail. The insurance company said they didn’t have it.”

The claim was for several thousand dollars, according to Ms. Wertz, who declined to identify the company, a large regional insurer, for fear of making it more difficult to wrangle payments. It is a problem known to many doctors as they struggle to balance the rising cost of providing patient care with what they see as a reluctance by some powerful insurers to pay promptly.

Pediatric Alliance’s 37 doctors are among the 7,000 physicians, nurse practitioners and other health care providers around the country who are clients of the claims-processing company Athenahealth, which plans today to present a rare warts-and-all look at how well or not the nation’s seven biggest health insurers pay their bills.

Not well enough, in many cases, according to the data and to experts who say the survey provides the most comprehensive look yet at the state of accounts payable vs. accounts receivable in the nation’s health care system.

Tardiness or refusal to pay what doctors consider legitimate medical claims may add as much as 15 to 20 percent in overhead costs for physicians, forcing them to pursue those claims or pass along the costs to other patients, according to Jack Lewin, a family doctor who is chief executive of the California Medical Association, a professional group of 35,000 physicians.

Weighing all the factors in the survey, Athenahealth gave Humana the top overall ranking, closely followed by the federal Medicare program. The federal insurer for military families, Champus/Tricare, was in sixth place, with the commercial insurer WellPoint ranked last.

But because of all the caveats required to understand and justify those overall rankings, experts said the more useful comparative look might be at individual categories like average number of days between the medical service and the payment. By that measure, Humana’s 29.0 days was quickest and Champus/Tricare’s 41.4 days was slowest. The company said it had already alerted some of the insurers to problems that showed up in the survey.

The survey, an analysis of more than five million line items from health insurance claims submitted in the last three months of 2005, sheds light on the challenges that doctors and their patients face in getting their bills paid.

“We all pay that cost,” said Dr. William F. Jessee, a pediatrician who is president of the Medical Group Management Association, a trade group of 20,000 office managers for about half the nation’s doctors. “It winds up getting passed on to consumers and employers who purchase health insurance.”

The data may also provide the glimmer of an answer to a seeming conundrum: How is it, as the nation staggers under growing health care costs, that the commercial insurers responsible for paying much of the bill tend to be highly profitable and have stocks that are performing well? Tight-fisted approaches to paying bills may be part of the answer.

Athenahealth concedes that its survey, while broad and fairly representative of a cross section of the nation’s doctors, is not statistically scientific. That is a limitation that WellPoint, the nation’s largest commercial insurer, quickly pointed out in saying that its own poor showing was unjustified. The survey indicated, among other things, that WellPoint got relatively poor marks on lost bills and delays in payments.

The survey did rate WellPoint relatively high in one category: clearly explaining the reasons claims were denied.

Most of the other national insurers in the report, which also included Aetna, UnitedHealth Group and Cigna, regardless of how they fared, acknowledged the survey as a unique and potentially useful snapshot.

“Athenahealth’s report provides some common metrics that will be useful for future benchmarking,” said Wendell Potter, a Cigna spokesman. “Making improvements for all payers is likely to be a work in progress for some time to come.”

Phil Pead, the chief executive of Per Se Technologies, a large claims-handling company that unlike Athenahealth is paid by insurers as well as care providers, said errors made by doctors’ offices also accounted for a large share of their problems in being paid. “About 40 percent of denials occur because of incorrect information the wrong insurance card or address or other information,” he said.

Athenahealth, which says it collected $1.8 billion on behalf of its physician clients last year, is among the biggest of several thousand companies that help doctors and hospitals get paid by editing their claims and helping them to deal with difficult cases. Health care providers who can afford such services say they have become a necessary part of doing business.

In the case of Pediatric Alliance, with 37 pediatricians in a dozen offices in and around Pittsburgh, the doctors’ group spends at least $250,000 a year on salaries for eight billing clerks who handle claims and pursue money owed by insurers and patients. That is on top of salaries in Pediatric Alliance’s offices for staff members to verify the patient’s coverage and collect co-payments, plus paying an outside company to check for errors before the bills go out.

Ms. Wertz, the alliance’s chief executive, says some insurers’ telephone call centers limit claims-related issues to 10 per call. “That’s incredibly inefficient,” she said. “We see thousands of patients. Our people have to sit on phone 30 minutes to get a live person.”

Athenahealth’s other measurements included the percentage of claims paid without changes within 90 days. Medicare came in first, at 92 percent. Champus/Tricare was last, at 85.1 percent.

In the category of “lost” claims, Humana tied with Aetna with only 0.2 percent lost and Cigna was worst 1.3 percent.

The results are to be posted for public viewing today on a new Web site,, and revised every three months. Physicians Practice, a trade magazine owned by MediQ, a health care publishing company, is also reporting on the Athenahealth results next week. (Although MediQ also publishes a quarterly magazine for Humana, that insurer was treated no differently from any other in the survey, Physicians Practice said in an advance copy of its article.)

“We are very pleased by the outcome,” said Bruce Perkins, a senior vice president at Humana, which fared relatively well in the survey.

Herb Kuhn, director of the federal Center for Medicare Management, a division of the Centers for Medicare and Medicaid Services, said he hoped the survey would prompt commercial insurers to speed their payments to doctors by putting public pressure on them. “This is critical to these folks in managing their competition,” Mr. Kuhn said.

But WellPoint, the nation’s largest commercial health insurer, dismissed the Athenahealth findings. The report has “absolutely no statistical significance,” said James Kappel, a WellPoint spokesman.

He said the number of WellPoint claims in the report was “very small compared with the total number that WellPoint alone processes.”

Athenahealth said it analyzed 266,914 line items from its clients’ claims with WellPoint during the last quarter of 2005. That would be only a tiny fraction of WellPoint’s average of about 600 million line items per quarter, according to Mr. Kappel.

The UnitedHealth Group, the second-largest commercial insurer, tended to rank toward the top of most of the survey’s categories, but raised doubts about the findings. “We are pleased that Athenahealth had fairly positive readings of our provider payment practices,” said Mark Lindsay, a UnitedHealth spokesman, “but we do not believe the study is truly representative of our business.”

Nancy Brown, Athenahealth’s senior vice president for clinical service development, acknowledged that “it is not a statistically valid sample.”

“But in any given market,” Ms. Brown said, “we generally have a relatively good range of medical specialties.”

Athenahealth’s 7,000 physician clients in 31 states represent about 2 percent of the nation’s 450,000 active doctors, according to Eric Brown, a research director at Forrester Research. The company says its customers are mainly small practices with one or two doctors but some have as many as 400 physicians, and clients include doctors in cities, suburbs and small towns.

Doctors in a number of states said they welcomed the Athenahealth report, which also compared dozens of regional insurers around the country. Dr. Molly Katz, a Cincinnati gynecologist and former president of the Ohio Medical Association, said she hoped the publicity would encourage insurers to improve their payment practices.

“I would much rather have my staff talking to patients than talking to insurance companies,” Dr. Katz said.

Source: New York Times, June 1, 2006

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Phil Cohen

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Philip Cohen is the founder and President of PRN Funding, LLC. PRN Funding is an extraordinarily focused niche player in healthcare funding. With years of…... Read More

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