Medicaid FFS biggest factor in billing headaches, report finds
Medicaid fee-for-service (FFS) denies claims more often than other payers, according to a new Health Affairs report.
The report found that Medicaid FFS has a claim denial rate that was nearly 18 percentage points higher than Medicare FFS in 2015. Looking at other rates, Medicaid managed care’s denial rate was six percentage points higher than Medicare FFS and the rate for private insurance was about the same as Medicare Advantage.
Challenged claims may cost the health sector as much as $54 billion annually, the authors said.
U.S. healthcare spends more on administrative costs than other systems. A recent JAMA report said the country spends more on healthcare mainly because of labor and administrative costs.
Another recent JAMA report found billing costs represented 14.5% of professional revenue for primary care visits, 25.2% for ED visits, 8% for general medicine inpatient stays, 13.4% for ambulatory surgical procedures and 3.1% for inpatient surgical procedures.
The Health Affairs report said administrative costs may account for about 30% of U.S. healthcare costs with the most common type of administrative expense involving billing.
The report reviewed 37.2 million visits in 2015 that accounted for 44.5 million claims. The results showed particular issues involving Medicaid payments:
- Medicaid (both FFS and managed care) had the highest billing complexity compared to other measures.
- Medicaid claims were more likely to be challenged than any other insurer.
- Processing and payment of FFS Medicaid claims took twice as long as FFS Medicare.
- Medicaid claims had more than three times the denial rate as Medicare claims.
- There are more payment disputes involving Medicaid than other payers.
The study authors said cutting administrative costs would benefit physicians and patients. Doctors could spend more time treating patients rather than dealing with administrative work. Plus, easier billing processes could reduce staff workload and billing expenses. All of this could lead to reduced premiums for patients.
“While some of these payment disputes are likely due to legitimate factors, such as fraudulent claims or insurers’ utilization controls, the magnitude of the amount challenged clearly indicates that billing practices are important for physicians across all insurer types,” the study authors wrote.
Medicaid's lower provider payments and higher billing complexity could cause problems for providers and create barriers to patient access. Providers may ultimately decide that it's too costly to treat Medicaid patients if billing issues continue, they said.
"If Medicaid billing complexity remained relatively high, it could reduce Medicaid patients’ access to physicians. Improvements in this area could ultimately be beneficial for physicians, insurers and patients," they wrote.
In addition to focusing on Medicaid and Medicare, the study also dove into challenged claims rates for the five largest private payers and compared those numbers against Medicare FFS. The researchers found that Cigna and Humana had higher shares challenged than Medicare FFS. Aetna, UnitedHealthcare and Anthem all had lower rates than Medicare FFS.