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Billing and Insurance-Related Administrative Costs in Healthcare James G. Kahn, MD, MPH University of California, San

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Billing and Insurance-Related Administrative Costs in Healthcare James G. Kahn, MD, MPH University of California, San

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    1. Billing and Insurance-Related Administrative Costs in Healthcare James G. Kahn, MD, MPH University of California, San Francisco Healthcare Administrative Simplification Coalition (HASC) Invitational Summit 13 November 2008

    2. Overview Findings on health insurance-related administrative costs in California Updates from current research* Potential impact of simplification options proposed by HASC

    4. Data Private insurers: Milliman USA 129 plans Physician groups: Medical Group Management Association survey 94 practices; & 11 practice visits / interviews Hospitals: OSHPD financial reporting 392 hospitals

    5. Analysis Administrative costs classified by task to extent possible, e.g., sales & marketing; claims billing / payment; medical library. Per source or interview. Billing and insurance-related (BIR) = portion needed for obtaining payment for medical services. BIR assessed by task – 0%, 100%, partial.

    12. SEC filings for Health Insurer MLR / cMLR Goal: Examine trends and patterns in overhead for private for-profit health insurers. Annual company filings with the SEC for 1993-2007. Extracted the medical loss ratio (MLR) Converted the MLR to its complement (cMLR), as an overall measure of overhead as % of premium income.

    13. SEC filing cMLR results In 2007, large insurers retained between 15 to 20% of premium intake for adminis-tration and profits, a narrowing compared with larger and mainly lower ranges in the late 1990s. Small companies retained 13 to 43%, with no clear pattern over time.

    15. Study of large group practice Goal: Evaluate BIR activities in detail at a single, large, multi-specialty medical group. Data from: Semi-structured interviews (60) Observed work-flows Analyzed department budgets On-line survey with clinicians

    16. Findings embargoed from distribution. Study of large group practice

    18. Acknowledgements California BIR analysis: Rick Kronick, Mary Kreger, David N. Gans. Funding: California HealthCare Foundation SEC cMLR data: Ashish Gajjar, Kip Sullivan Large medical group study: Hal Luft, Julie Sakowski, Rick Kronick, Jeff Newman, and respondents at the practice. Funding: Robert Wood Johnson Foundation’s Changes in Health Care Financing and Organization (HCFO) Initiative; co-funding from Commonwealth Fund.

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