Physician Practices Spend $31 Billion a Year on Health Insurance Plan Interaction

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The average physician spends nearly three weeks a year interacting with health insurance plans, at an estimated annual cost to practices of $31 billion, or $68,274 on average per physician per year, according to a study published as a <em>Health Affairs</em> <a href="/publications/journal-article/2009/may/what-does-it-cost-physician-practices-interact-health">Web Exclusive</a>. <br /><br />Researchers Lawrence P. Casalino, M.D., Ph.D., of Weill Cornell Medical College and colleagues surveyed nearly 900 physicians and medical group administrators to ascertain how much time physician practices spent interacting with health plans on prior-authorization requirements, pharmaceutical formularies, claims, credentialing, contracting, and quality data. Physicians reported spending nearly three weeks per year interacting with plans, while nursing staff spent more than 23 weeks per physician per year, and clerical staff spent 44 weeks per physician per year interacting with health plans. When converted to dollar estimates, the time accounts for as much as $31 billion a year, or 6.9 percent of all U.S. expenditures for physician and clinical services. <br /><br />A separate study published as a <em>Health Affairs</em> <a href="/publications/journal-article/2009/may/peering-black-box-billing-and-insurance-activities-medical">Web Exclusive</a> found billing and insurance tasks in a large medical group practice consume $85,276 per full-time equivalent physician—or 10 percent of operating revenue. The study, conducted by a team led by Julie Sakowski, Ph.D., of the Sutter Health Institute for Research and Education, found that clinicians spent more than 35 minutes per day performing these tasks and that these activities required the equivalent of 0.67 nonclinical, full-time staff per full-time physician. <br /><br />Both studies were co-funded by Robert Wood Johnson Foundation's Changes in Health Care Financing and Organization (HCFO) Initiative and The Commonwealth Fund.