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New Health Affairs: U.S. Docs Spend Four Times More On Payer Interactions Than Canadians


August 5th, 2011
by Chris Fleming

U.S. physician practices spend nearly four times as much per physician as doctors in Ontario dealing with health insurers and payers, says a new study in the August issue of Health Affairs, released yesterday. Most of the difference stems from the fact that Canadian physicians deal with a single payer, in contrast to the multiple payers in the United States. But even so, there are ways that U.S. health insurers could streamline inefficiencies and reduce administrative costs to improve care and reduce the burdens on physicians, the study authors say.

On average, U.S. doctors spent 3.4 hours per week interacting with health plans while doctors in Ontario spent about 2.2 hours. Nurses and medical assistants, spent 20.6 hours per physician per week on administrative duties compared to their Canadian counterparts, who only spent 2.5 hours. “The major difference between the United States and Ontario is that non-physician staff members in the United States spend large amounts of time obtaining prior authorizations and on billing” says lead author Dante Morra of the University of Toronto.

Morra and colleagues point out that high administrative costs in the United States are due to the fact that different payers have different plan requirements, insurance formularies, and rules for billing and claims submission. Conversely, Canadian physicians generally interact with a single payer that offers one product and more streamlined procedures for reporting and payment.

Although the United States is not currently moving as a country toward a single-payer system, researchers offer ways to reduce administrative costs, including standardizing transactions as much as possible and conducting them electronically rather than by mail, fax, and phone. These measures would not only reduce costs but would also reduce the so-called “hassle factor” of physician and staff interruptions for phone calls that interfere with patient care, say the authors. In addition, they cite Affordable Care Act changes such as bundled payments and the creation of accountable care organizations as potentially decreasing administrative burdens over the long term.

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This entry was posted on Friday, August 5th, 2011 at 9:36 am and is filed under All Categories, Health Reform, Insurance, Payment, Physicians. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1 Trackback for “New Health Affairs: U.S. Docs Spend Four Times More On Payer Interactions Than Canadians”

  1. New Health Affairs: U.S. Docs Spend Four Times More On Payer Interactions Than Canadians – Health Affairs Blog | FDA | Scoop.it
    August 6th, 2011 at 6:44 am

2 Responses to “New Health Affairs: U.S. Docs Spend Four Times More On Payer Interactions Than Canadians”

  1. American Medical Assn Says:
    August 5th, 2011 at 3:20 pm

    The latest study on physician administrative costs and the AMA’s National Health Insurer Report Card [www.ama-assn.org/go/reportcard] both show the urgent need to standardize administrative requirements for all insurers in our health care system. These improvements would create much-needed cost savings and allow physicians to focus more time on patient care, rather than excessive paperwork.

    The AMA’s report card found that 19.3 percent of medical claims are processed incorrectly by the health insurance industry. This inefficiency wastes an estimated $17 billion in unnecessary administrative costs annually. The AMA is urging health insurers to put more effort into paying claims correctly the first time to save precious health care dollars and reduce unnecessary administrative tasks that take time and resources away from patient care.

    The latest study also demonstrates the increasing hassle caused by insurers’ requirements to preauthorize care. Health insurers promise savings with these policies, but instead deliver delayed medical services, costly administrative work and complicated medical decisions. According to an AMA survey, physicians spend an average of 20 hours per week on preauthorization requests alone, and 78 percent of physicians believe insurers use preauthorization policies for an unreasonable list of tests, procedures and drugs.

    To significantly reduce administrative and other nonclinical costs that do not contribute to patient care, the AMA supports adopting standardized processes across different types of insurers and the continued development of patient- and physician-friendly electronic systems to efficiently handle pricing, billing and claims processing.

  2. Don McCanne Says:
    August 5th, 2011 at 10:53 am

    Since we are not moving toward a single payer system, would it be adequate to simply standardize transactions and transmit them electronically to achieve the efficiencies of a single payer system? Unfortunately that would have very little impact on total spending.

    On the provider side, you would still have multiple plan variations crafted for a competitive market, with differing provider networks, with ever-changing patient eligibility, and with a reluctance of insurers to abandon their intrusive tools such as prior authorization. These factors alone would perpetuate much of the administrative burden placed on providers.

    On the insurer side, the Affordable Care Act sets administrative costs at 15 or 20 percent of premiums, much higher than the costs in Canada or in our own Medicare program.

    Not only would a single payer system greatly reduce this administrative burden, it would also provide other important benefits. Global budgeting, price negotiation, and separate budgeting of capital improvements are effective in slowing the growth of costs while ensuring that funding is adequate, but not excessive, to maintain the infrastructure and personnel required for the health care delivery system. It would also ensure that everyone would be covered for life with comprehensive benefits. It would reverse our current trend of shifting to under-insurance products with excessive cost-sharing that has impaired access for far too many patients.

    Econometric models and the experience of other nations have demonstrated that we could have all of this without spending more than we already do.

    The United States and Canada followed the same trajectory in the growth of health care costs until they established their single payer system. Since then, they have successfully bent the cost curve whereas we have failed.

    Instead of dismissing single payer with the observation that we are not “currently moving as a country toward a single-payer system,” we should break away from being held hostages in the conservative revolution. We should demand that our policy-makers finally take a serious, in-depth look at the single payer model.

    Being able to take care of all of us in a system that we can afford is too great of an opportunity to pass up.

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