RWJF Content Alert - Simplifying Medical Billing Could Lead to Big Savings

Publication Date: 
April 29, 2010

Simplifying Medical Billing Could Lead to Big Savings

New Study Finds that Simplifying and Standardizing Medical Billing Could Save $7 Billion a Year
A streamlined medical billing process for physicians could save $7 billion a year—an average of four hours a week of physicians' time, and five hours a week of physician support staff time—according to a new study published in Health Affairs with support from the Robert Wood Johnson Foundation funded Changes in Health Care Financing and Organization (HCFO) and The Commonwealth Fund. After analyzing a large group physician practice working with multiple payers and rules, researchers found that complex, and sometimes excessive, administrative procedures cost physicians nearly 12 percent of their net revenue.

Specifically, researchers found that:

  • Physicians and their administrative staff spent $33.1 million of staff time preparing paperwork and contacting payers about prescriptions, diagnoses, treatment plans and referrals.
  • $5.6 million in costs were directly associated with processing and billing claims and an additional $6 million was lost due to claims that were initially rejected by payers.

Noting that administrative costs are a known driver of increased health care costs, the authors recommend developing a single transparent set of payment rules, a single claim form and standard rules for submission.

Read the report.