As an experienced medical billing company, we handle claims submission for all specialties and strive to ensure that physicians receive maximum reimbursement for their services. A new study from the Vancouver School of Economics has revealed the challenges of medical billing across Medicare, Medicaid and private insurers. The researchers made a startling revelation — Medicaid fee for service billing was much more difficult than other insurance. The study, “The Complexity of Billing and Paying for Physician Care”, was published online on April 2, 2018 in Health Affairs.

MedicaidThough Medicare and Medicaid are federal government healthcare programs, their reimbursement structures vary significantly, including by state. Medicare is basically an insurance program that covers individuals who are 65 years or older, have certain disabilities, and suffer from end-stage renal disease or ALS. Medicaid is an assistance program sponsored by the federal and the state, which helps low-income individuals pay for their healthcare costs. States have their own definition as to who qualifies for Medicaid coverage, but those eligible generally include individuals 65 years or older, children under 19 years old, pregnant women, people living with a disability, parents or adults caring for a child, adults without dependent children, and eligible immigrants. Medicaid beneficiaries may have to pay premiums, deductibles, copayments, and coinsurance to receive coverage.

Depending on a state’s Medicaid expenditures, the federal government funds approximately 57% of the operating costs of its Medicaid program. On the other hand, the Medicare program mainly gets its funds through payroll taxes and Social Security income deductions. Medicare beneficiaries also have to bear a portion of their coverage costs through deductibles for hospital services and monthly premiums for other healthcare services.

Researchers from the Vancouver School of Economics analyzed the data of 68,000 physicians and 44.5 million claims (worth a total of $8.4 billion)from the IQVIA Real-World Data Adjudicated Claims database in order to measure the complexity of the billing process for physicians submitting claims to insurers in the U.S. health care system.The team used multiple metrics to measure health insurance claim complexity:

  • Rates of claim denial and non-payment
  • Number of interactions required for the physician and insurer to resolve
  • Amount of payment disputed between the physician and insurer

The study found that the average claims denial rate was 22% for traditional fee-for-service Medicaid, 10% for insurer-run Medicaid, 3% for fee-for-service Medicare, and 4% for both insurer-run Medicare Advantage and private insurance plans. The other key findings of the study are as follows:

  • MedicareMedicaid billing was 2 to 3 times as complex as Medicare or private insurance for physicians.
  • Medicaid fee-for-service had a claims denial rate 17.8 percentage points greater than the rate for Medicare fee-for-service claims.
  • The share of claims challenged for Medicaid fee-for-service was 10.7 percentage points higher compared to Medicare fee-for-service.
  • Medicaid managed care programs had slightly less billing complexity than state-run fee-for-service Medicaid.
  • Medicaid challenged 18 percent of fee-for-service claims in 2015 compared to just 6 percent of claims challenged by private payers.
  • Medicaid took 19 days longer to adjudicate claims for fee-for-service compared to Medicare fee-for-service.
  • Medicaid managed care had the second most complex medical billing process, with the claims denial rate 6.1 percentage points above the rate for Medicare fee-for-service.
  • Medicare fee-for-service and private payers had similar scoring on complexity measures. Private payers were just 1.3 percentage points more likely to deny a claim compared to Medicare fee-for-service, but paid claims 4.1 days faster.

Lead author and Associate Professor at the Vancouver School of Economics, BC, Joshua D. Gottlieb says that providers could stop accepting Medicaid patients due to medical billing complexity and profitability concerns. Revenue Cycle Intelligence notes that other studies have also reported on the Medicaid reimbursement shortfall. According to a recent American Hospital Association (AHA) report, Medicaid reimbursement was $20 billion short of actual hospital costs in 2016. Another 2016 study reported that Medicaid hospital admissions can be profitable to safety-net healthcare organizations only if they receive supplemental reimbursement, such as Disproportionate Share Hospital payments.

Disputed bills across all insurers amount to $54 billion annually, but the researchers say that up to $11 billion could be saved if all billing efficiency were improved to the best level observed in the data.

The researchers also pointed out some signs of improvement in billing. They found that insurer-run Medicaid’s share of challenged payments fell from 26.2% in 2013 to 20.0% in 2015, while its denial rate decreased from 17.1% to 8.9%. Private payers’ denial rates also declined from 5.6% to 3.9%, the researchers noted. They found that, for Medicare Advantage, denial rates fell from 4.2% to 3.0%, while the rates for fee-for-service Medicare stayed unchanged over the study period.

They recommended that public and private payers should continue to decrease medical billing complexity to realize patient care benefits. This would also benefit physicians, they wrote, as they could they could spend the time spent on medical billing administration on treating more patients instead. In fact, this is precisely what reliable medical billing companies strive to do. They handle the billing process efficiently, freeing up physicians’ time for patient care while optimizing their reimbursement.