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A Concrete Plan for Reducing Administrative Red Tape in Healthcare

Posted Jul 31 2009 11:45am
Everyone seems to be in agreement that the administrative costs in healthcare are a major burden and contribute to the rapidly increasing cost of services. A recent article on this topic concluded with a call for physician practices, hospitals, insurance payers, benefits managers and others to adopt a coordinated approach for the reduction of red tape (see: Cutting healthcare red tape could save billions, says coalition ). Below is an excerpt from the article with

The nation could save billions of dollars each year in the healthcare system by addressing certain areas of administrative complexity, according to a new report from the Healthcare Administrative Simplification Coalition. HASC is a public/private partnership of organizations committed to reducing the administrative costs and complexity of healthcare. The report, " Bringing Better Value: Recommendations to Address the Costs and Causes of Administrative Complexity in the Nation's Healthcare System," estimates that reducing administrative costs by 10 percent could save as much as $500 billion over 10 years....

[The following are the key elements in a plan to reduce administrative complexity and costs:]

  • Credentialing physicians and other clinicians – A universal credentialing form would eliminate hundreds of hours of repetitious paperwork that physician practices devote to completing multiple credentialing forms for insurance payers, hospitals and others.
  • Determining and verifying patient eligibility for health insurance – Adoption of an industry-wide standard for interchangeable electronic data would help hospitals and physician practices determine each patient's insurance coverage more quickly and accurately.
  • Standardizing healthcare patient identification cards – Standardizing the design and content of patient ID cards and ensuring they are machine-readable would significantly reduce costly errors and delays in the medical claims billing process.
  • Improving coordination of prior authorization processes for radiology and pharmacy services – A voluntary, standardized approach to how providers request and receive determinations of patient eligibility for pharmacy benefits and radiology services would reduce treatment delays and reduce costly paperwork.

All of this makes so much good sense that one wonders why similar voluntary guidelines have not been adopted in the past in the field. My guess is that the health insurance system, for example, is so large, unwieldy, and fragmented that no one organization had the clout or the incentive to advocate change. Everyone, therefore, perversely accepted the status quo. We are currently in the throes of a major healthcare reform frenzy but it's not clear if anything useful will come out of it. One can only hope that one consequence of this process will be some form of standardization of administrative procedures similar to the one described above.

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