BACKGROUND AND PURPOSE:

• A significant component of total health care spending is related to physician billing and insurance-related activities
• Tseng et al. (JAMA 2018) examined and estimated the administrative costs correlated with physician billing activities in a large academic health care system with a certified electronic health record (EHR) system

METHODS:

• This study used time-driven activity-based costing which include the following steps
  • Construct a process map that charts the path followed by an individual bill through the revenue cycle
  • Calculate a time-driven cost for each major activity that such a bill encounters
  • Add together the costs of each activity to calculate the total cost of processing an insurance claim
• Overhead costs were analyzed separately
• The (1)process map charting the path of an insurance claim through the revenue cycle management process and (2)estimated time to perform billing/insurance activities were based on interviews with multiple administrators and physicians
• These data were used to calculate the cost for each major billing and insurance-related activity and then aggregated to estimate the health system’s total cost of processing an insurance claim
• Outcomes were estimated for billing and insurance-related costs for 5 types of patient encounters:
  • Primary care visits
  • Discharged emergency department visits
  • General medicine inpatient stays
  • Ambulatory surgical procedures
  • Inpatient surgical procedures

RESULTS:

• Data was collected from 27 health system administrators and 34 physicians
• Estimating total processing time and total costs for billing and insurance-related activities were
  • 13 minutes and $20.49 for a primary care visit
  • 32 minutes and $61.54 for a discharged emergency department visit
  • 73 minutes and $124.26 for a general inpatient stay
  • 75 minutes and $170.40 for an ambulatory surgical procedure
  • 100 minutes and $215.10 for an inpatient surgical procedure
• Time and costs for activities carried out by physicians were estimated at a median of
  • 3 minutes for $6.36 for primary care visits
  • 3 minutes of $10.97 for an emergency department visit
  • 5 minutes or $13.29 for a general inpatient stay
  • 15 minutes or $51.20 for an ambulatory surgical procedure
  • 15 minutes or $51.20 for an inpatient surgical procedure
• Of professional revenue, professional billing costs were estimated to represent
  • 14.5% for primary care visits
  • 25.2% for emergency department visits
  • 8.0% for general medicine inpatient stays
  • 13.4% for ambulatory surgical procedures
  • 3.1% for inpatient surgical procedures

CONCLUSION:

• Cost of different procedures can range from $20 for a primary care visit to $215 in absolute costs per visit for an inpatient surgical procedure
• Most previous studies were done before EHR systems
• This study showed costs near 14.5% of a primary care physician’s annual revenue, which is the high end of previous studies, pre-EHR
  • Authors did not find inefficiencies (e.g., duplicated effort)
• The researchers state

These findings suggest that significant investments in certified health information technology have not reduced high billing costs in the United States. Although the EHR system can automatically generate bills for clinical visits, these systems require the time of high-cost physicians to perform coding and documentation activities that are unrelated to clinical services. In addition, the process maps revealed that despite the electronic system, the billing process still required multiple steps by many types of personnel. Full allocation of certified EHRs to billing activities significantly increased billing costs from the base-case estimate.

Learn More – Primary Sources:

Administrative Costs Associated With Physician Billing and Insurance-Related Activities at an Academic Health Care System

The ObG Project is in no way affiliated with any outside entity or professional organization

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