![]() The data came from the IQVIA Real-World Data Adjudicated Claims (from IQVIA) and include information on physician visits in the period 2013–15. We used a new data set to construct novel measures of billing complexity. 12 – 15 However, it is not known whether the public insurers compensate for those lower rates with simplified billing practices. ![]() It is well known that Medicare and Medicaid have substantially lower reimbursement rates for physicians than private payers do. Our goals were to measure the complexity of billing for each patient encounter and to analyze the determinants of that complexity. Our study focused on outpatient visits to physicians. This allowed us to compare billing complexity across different payers interacting with the same physicians. In contrast to payer-specific databases, our data contained billing information for multiple payers within the same physician practice. The controls ensured that the differences we observed in billing complexity were not driven by variation in which practices tend to treat which types of patients. Previous analyses, which generally relied on survey data, 9 – 11 could not attain this level of detail. The new data set allowed us to control for numerous detailed characteristics of a visit and the physician involved. This approach provided a level of detail not previously available in the literature. To examine the origins of administrative costs in the context of billing for physician visits, we used a novel data set with information on all interactions between a group of physician practices and insurers. To measure billing complexity, a richer set of detail on billing interactions is needed. Although administrative claims data are excellent sources for measuring care provision, spending, and prices, they do not capture the full set of interactions between doctors and insurers. 8Ī primary reason for this dearth of evidence is the limitations inherent in existing data sources. 7 But the details of these costs remain opaque. 6 In comparisons of overall health care spending between the United States and Canada, the largest source of the difference is administrative costs. Relative to the size of these administrative costs, very little existing research has attempted to shed light on where they arise or how they vary across the US health care system, although the system’s complexity has been shown to influence reimbursement structures. 4 Physician offices’ spending on billing costs totals $30 billion per year. For example, hospitals generally have more billing specialists than beds. 3 Administrative expenses take many forms, but one of the most prominent is the process of billing and paying for medical care. 2 This far exceeds the share of administrative costs in other countries and drives widespread concern about the efficiency of US medical spending. 1 Another study estimated that administrative costs make up one-seventh of total health care spending in the US. ![]() The United States spends a large share of its health care resources on administrative costs, with some authors estimating the share at 30 percent. These costs have significant implications for analyses of health insurance reforms. Based on conservative assumptions, we estimated that the health care sector deals with $11 billion in challenged revenue annually, but this number could be as high as $54 billion. The denial rate for Medicaid managed care was 6 percentage points higher than that for fee-for-service Medicare, while the rate for private insurance appeared similar to that of Medicare Advantage. Fee-for-service Medicaid is the most challenging type of insurer to bill, with a claim denial rate that is 17.8 percentage points higher than that for fee-for-service Medicare. We found dramatic variation across different types of insurance. We advance the nascent literature in this field by developing new measures of billing complexity for physician care across insurers and over time, and by estimating them using a large sample of detailed insurance “remittance data” for the period 2013–15. The administrative costs of providing health insurance in the US are very high, but their determinants are poorly understood.
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