Administrative tasks related to managed care cost physician practices $31 billion per year

Physicians on average are spending the equivalent of three workweeks annually on administrative tasks required by health plans, according to a new national survey of physician practices. The practices report that overall the cost of working with insurance plans is $31 billion annually, and that it is 6.9 percent of all expenditures in the United States for physician and clinical services. More than 3 in 4 respondents say the costs of doing business with health plans have increased over the past two years.

The researchers randomly selected 1,310 private practice physicians. They found that primary care physicians in a solo or two-person practice spent significantly more hours dealing with administrative tasks with health plans than physicians in practices with 10 or more physicians. Across practices, physicians and their staffs spent substantially more time on authorization, formularies, claims, billing, and credentialing than they did on submitting data on quality or on reviewing data on quality provided by health plans.

The study, published in Health Affairs, was co-funded by the Commonwealth Fund and the Robert Wood Johnson Foundation’s Changes in Health Care Financing and Organization (HCFO) Initiative.

Mean dollar value of hours spent

Total per-practice annual cost $68,274

Source: Casalino LP ,et al. What does it cost physician practices to interact with health insurance plans? 2009. Health Aff;28(4):w533-w543