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What does It Cost for Physicians to Contract with Health Insurance Companies – 23 to 31 Billion a Year

Posted Jun 03 2009 10:19am

As usual, the hardest hit of all is the family practice doctor.  When you look at the numbers of 31 billion being spent on health plan administration, image that’s a huge price tag.  You also have to take into account the formularies that change constantly too.   The average number for a family practice with dollar amounts is around $47,000 a year, and depending on what the income is of the practice, this is big.  The family practice doctor is doing all the referring too for the most part, which again is administrative time spent.  

When it comes to reducing the cost of healthcare, this is certainly one are where some relief would be welcomed.  Insurance companies are always looking to keep cost down, but is some of this at the physicians’ expense?  Recent reports and studies have shown that only about 16% of the doctor’s time actually gets devoted to actual patient care and consult time.  BD  

Physicians know all too well that dealing with the details required by health insurance plans takes time. Now, researchers have tallied up all those physician and staff hours spent on administrative tasks related to pharmaceutical formularies, prior authorizations, claims and billing, credentialing, and contracting, and they have assigned these services a hefty price tag. The researchers estimate the cost of such administrative tasks ranges from $23 billion to $31 billion annually.

Nurses spend about 19 hours per physician per week taking care of such tasks, and clerical staff members spend nearly 36 hours per week on the tasks.

The study authors put the numbers into perspective. "Our estimated mean $31 billion cost to physician practices of time spent on interactions with health plans is equal of 6.9 percent of all U.S. expenditures for physician and clinical services. It is six times the amount the federal government has spent annually on the Children's Health Insurance Program."

"From the physician practices' point of view, it's a nightmare," said Casalino, who is chief of the Division of Outcomes and Effectiveness Research at Weill Cornell Medical College in New York City.

Additionally, the researchers found that primary care physicians spent 1.1 hours a week -- more time than other physicians -- securing prior authorizations for their patients.

Physicians Pay Steep Price to Contract With Health Plans -- AAFP News Now -- American Academy of Family Physicians

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