Press Release

Embargoed Until Contact

April 29, 2010
12:01 AM PST

Sue Ducat
Director of Communications
(301) 841-9962


From Health Affairs

How To Simplify Medical Billing While Reducing Medical Costs


Bethesda, MD - As every American knows, the billing process for health care services is complex and time-consuming--for the patient as well as for the provider --because of the involvement of third-party billing entities. According to the authors of a new article in Health Affairs, physicians use nearly 12 percent of their net revenue to cover the costs of these administrative charges. To improve this situation, Bonnie B. Blanchfield and her colleagues have created a hypothetical model, consisting of a single, transparent set of payment rules for multiple payers, a single claim form, and standard rules of submission. They estimate that the changes could result in $7 billion of annual savings for physician and clinical services billings, and four hours per physician and five hours per practice support staff each week.


Saving Billions of Dollars--And Physicians' Time--By Streamlining Billing Practices
By Bonnie B. Blanchfield, James L. Heffernan, Bradford Osgood,
Rosemary R. Sheehan, and Gregg S. Meyer


Blanchfield and Osgood are affiliated with Massachusetts General Hospital in Boston; Heffernan and Sheehan are with the Massachusetts General Physicians Organization in Boston; and Meyer is with both institutions. Support for this paper was provided by the Robert Wood Johnson Foundation and The Commonwealth Fund.


To evaluate and identify the burden of excessive administrative complexity, the authors used case-study methods to analyze the billing system of the physician organization at a large, urban, academic teaching hospital. They initially identified actual administrative functions and the costs pertaining to the billing, processing, and paying of claims for the organization in 2006. The areas found to be the most excessively complex were the processing and receipt of payments for physicians' services, and the administrative functions of physicians and staff in the clinical practices of the organization. One factor compounded the administrative burdens: Up to 12.6 percent of submitted claims are initially rejected based on nonclinical grounds, although 81 percent are eventually paid. The authors' hypothetical model had a single, transparent set of payment rules and reduced the interaction of billing staff with payers, reduced the reprocessing of claims and the reentry and repetition of tasks previously performed, reduced the number of claims initially rejected, and lessened the time spent reviewing payment guidelines. With the passage of health reform legislation, scaling back on administrative complexity is an area needing more careful review. "The savings from reducing administrative complexity could be translated into decreased costs in general," conclude the authors. "Mandating a single set of rules, a single claim form, standard rules of submission, and transparent payment adjudication--with corresponding savings to both providers and payers--could provide systemwide savings that could translate into better care for Americans."

About Health Affairs

Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears each month in print, with additional Web First papers published weekly at The full text of each Health Affairs Web First paper is available free of charge to all Web-site visitors for a two-week period following posting, after which it switches to pay-per-view for nonsubscribers. Web First papers are supported in part by a grant from The Commonwealth Fund.