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I worked in the EMR software industry and have certifications that involve hospital & lab billing, among others. I've been on site with healthcare providers, a

I worked in the EMR software industry and have certifications that involve hospital & lab billing, among others. I've been on site with healthcare providers, and there are entire buildings full of people whose job it is just to code and scrub claims, and cover disputes/negotiations with private insurance providers. Consumers do not see it because it's typically off-site from the main hospital care facilities, but believe me, the administrative savings potential is real.

anonsivalley652 7y ago
IIRC, coding is on the order of a million jobs across insurance, hospitals and doctor offices. Then there's all the other non-value-add activities of negotiating of prices, authorizing/denying treatment, billing and management. Oh and there's going through bankruptcy while you have cancer... I forgot that one.
mochomocha 7y ago
I once worked at a US biotech startup getting paid by insurers where we would build ML models just to reverse-engineer the inconsistencies of CPT coding & claim reimbursement by insurers & hospitals so we could get paid. Basically trying to automate "learn that Karen at insurer X processing claims wiht code Y from hospital Z usually decides to reimburse $XX". This whole idea of "free market is more efficient for healthcare" has to die. All the incentives are backwards. For example: insurers don't want efficient claim processing because that means less revenues for them.
- beat 7y ago
  Yes! Perverse incentives are what is making it like this. And the incentives cross boundaries - relationships between providers, insurers, regulators, legislators, and consumers. There's no single guilty party that we can blame and fix. (Since insurance companies are such a target for blame, I've started to say blaming insurance is like yelling at the cashier.)
- BurningFrog 7y ago
  > * This whole idea of "free market is more efficient for healthcare" has to die* The current US healthcare system has very little to do with "free markets"!
  - joe_the_user 7y ago
    "The current US healthcare system has very little to do with 'free markets'!" Sure, the US health care system is certainly not governed by wide open competition, transparent pricing or similar things. But it certainly has something to do with the "free markets". The system is basically "what you get when you realize you have to insure and regulate but you never, ever do it in a centralized rational way, 'cause that would be socialism - plus you never, ever separate an 'entrepreneur' from a real or potential stream profits". Which indeed, builds the worst of all possible systems, sending risks to the consumer and profits to the investor/rent-seekers. And from here, we could go forward to actual socialized, state-run medicine as functions adequately in most industrialized economies or back to a "wild west" system, where costs are lower, treatment is often OK and the heroin runs in large rivers as due the fatal scams(as was the US' 19th century health care reality).
    - maxerickson 7y ago
      Medicine changed so much after ~1880 (or maybe ~1900) that there's little to learn from the prior era.
- chrisdhoover 7y ago
  You realize the market is highly regulated and fully captured by the insurance companies? Not to mention the doctors guild that limits practitioners. The current system is not a free market. It is highly distorted and gamed.
rayiner 7y ago
Medicare billing isn’t any different, it’s just a different payer.
- codegeek 7y ago
  Yes but at least, Govt. is not looking to make record profits.
  - rayiner 7y ago
    No, but government has strong incentives to deny claims to control costs. At least at the state level, governments have gotten extremely aggressive about money collection. E.g. $50 administrative fee for not paying a $4.00 toll.
    - codegeek 7y ago
      Personally, I would go for ANY system right now other than what we have. I am too pissed off at how our healthcare system is. Single Payer may or may not have the same issues but I am ready to take my chances. Status quo is not good enough for me.
      - pw 7y ago
        What problems have you had with the current system?
        codegeek 7y ago
        Many problems. - Every visit to a doctor is a game of cat and mouse. I am never sure what bill to expect and how many bills to expect. - Price is always inflated due to the fact that insurance company has to make money on every visit to the doctor. - Every visit requires a Claim. Claims get filed incorrectly. Fun and games trying to call a bunch of different "departments" trying to understand the claim and why am I being charged ? - In network/out of network game. Ohh, I am sick and unconscious but I have to make sure that the person seeing me is "in network" so that I don't get a million dollar bill. Sorry, bad luck. While you were unconscious, we called a doctor who was "out of network" and not our problem. Have fun fighting wit the insurance company. - Why does every visit require me to show insurance ? I just wanna talk to my damn doctor. Can I not just give you some money directly ? - I visited the doctor. Doctor has to file a claim for $x while the insurance company only allows $y. So the doctor inflates the amount of initial claim knowing that they will be reduced anyway by the insurance company. Cat and mouse game continues and finally, poor me is left with a bill that I now have to figure out. Have I already paid enough (copay, deductible, out of pocket limit) ? Lucky me. - My employer changes my insurance company. Oh, I have to redo the entire paperwork with al my doctors. Ok I did it. Oops the doctor office still filed a claim with my previous company. I am now fighting to get that sorted.
PeteLee-Us 7y ago
About 10 years ago, I was a freelance consultant for clinics, hospitals and insurance companies (EMR, billing, claims, practice management, etc.). I've also been a volunteer EMT for about 20 years and have many friends who are clinicians. The amount of administrative overhead is just absurd: a common and believable number is about 15%. This does NOT include the "shadow labor" that everyday people have to deal with, like being on hold with a billing department or insurance company, the merry-go-round of "prior authorization hell" for procedures or prescriptions, etc. It's TERRIBLE that someone like me--conversant in business practices, ICD/CPT codes, and clinical practice in general--struggles to interpret a bill. It's literally worse than buying a car. I can make lots of choices in life, but one of them isn't health care: if I need it--especially urgently--I'm not in a position to game out every scenario possible to minimize costs because the ecosystem is non-transparent and labyrinthine.
tptacek 7y ago
Nobody is saying there aren't real administrative savings to be had, but the amount we spend on administrative costs is something close to an empirically observable fact, and you can do the mental exercise of taking any credible number and zeroing it out to see how big an impact it would have on overall health spending. It's not huge. Which is to say that even in the most optimistic case, where single-payer forces everyone into a perfectly efficient system where nobody has to waste any time on coding or paper-shuffling and everything is perfectly streamlined, we still won't have meaningfully fixed the problem. The amounts we'd save would be a grocery-store-sale discount.
- laurencerowe 7y ago
  According to this study healthcare administration costs account for the bulk of the difference between US and Canada healthcare spending. 34% of 18% of US GDP (=6% GDP) vs 17% of 11.6% of Canada's GDP (=2% of GDP). https://www.healio.com/primary-care/practice-management/news/online/%7B83beb11a-add5-4324-9bef-03f5edc21f88%7D/a-third-of-us-health-care-spending-stems-from-administrative-costs https://www.healio.com/primary-care/practice-management/news... Other studies looking at only hospital costs put it at 1.43% of GDP. https://www.commonwealthfund.org/publications/journal-article/2014/sep/comparison-hospital-administrative-costs-eight-nations-us https://www.commonwealthfund.org/publications/journal-articl...
  - tptacek 7y ago
    That is a much higher estimate of admin overhead than other sources, covers both payer and provider administrative expenses, and implicitly attributes all provider administrative expenses to billing/coding. But we don't have to litigate this in the context of the Lancet article. That article derives much higher savings from pharmaceutical price reductions than from administrative savings. We know with some certainty what percentage of overall spending comes from pharmaceuticals, and it is a low number.
- burnte 7y ago
  > It's not huge. It's massive. Healthcare is byzantine on purpose. It's opaque to patients so that providers can prevent shopping around and adjust charges per patient, and it's opaque to providers from insurers to help prevent having to pay claims.

anonsivalley652 7y ago

IIRC, coding is on the order of a million jobs across insurance, hospitals and doctor offices. Then there's all the other non-value-add activities of negotiating of prices, authorizing/denying treatment, billing and management. Oh and there's going through bankruptcy while you have cancer... I forgot that one.

mochomocha 7y ago

I once worked at a US biotech startup getting paid by insurers where we would build ML models just to reverse-engineer the inconsistencies of CPT coding & claim reimbursement by insurers & hospitals so we could get paid. Basically trying to automate "learn that Karen at insurer X processing claims wiht code Y from hospital Z usually decides to reimburse $XX". This whole idea of "free market is more efficient for healthcare" has to die. All the incentives are backwards. For example: insurers don't want efficient claim processing because that means less revenues for them.

beat 7y ago
Yes! Perverse incentives are what is making it like this. And the incentives cross boundaries - relationships between providers, insurers, regulators, legislators, and consumers. There's no single guilty party that we can blame and fix. (Since insurance companies are such a target for blame, I've started to say blaming insurance is like yelling at the cashier.)
BurningFrog 7y ago
> * This whole idea of "free market is more efficient for healthcare" has to die* The current US healthcare system has very little to do with "free markets"!
- joe_the_user 7y ago
  "The current US healthcare system has very little to do with 'free markets'!" Sure, the US health care system is certainly not governed by wide open competition, transparent pricing or similar things. But it certainly has something to do with the "free markets". The system is basically "what you get when you realize you have to insure and regulate but you never, ever do it in a centralized rational way, 'cause that would be socialism - plus you never, ever separate an 'entrepreneur' from a real or potential stream profits". Which indeed, builds the worst of all possible systems, sending risks to the consumer and profits to the investor/rent-seekers. And from here, we could go forward to actual socialized, state-run medicine as functions adequately in most industrialized economies or back to a "wild west" system, where costs are lower, treatment is often OK and the heroin runs in large rivers as due the fatal scams(as was the US' 19th century health care reality).
  - maxerickson 7y ago
    Medicine changed so much after ~1880 (or maybe ~1900) that there's little to learn from the prior era.
chrisdhoover 7y ago
You realize the market is highly regulated and fully captured by the insurance companies? Not to mention the doctors guild that limits practitioners. The current system is not a free market. It is highly distorted and gamed.

rayiner 7y ago

Medicare billing isn’t any different, it’s just a different payer.

codegeek 7y ago
Yes but at least, Govt. is not looking to make record profits.
- rayiner 7y ago
  No, but government has strong incentives to deny claims to control costs. At least at the state level, governments have gotten extremely aggressive about money collection. E.g. $50 administrative fee for not paying a $4.00 toll.
  - codegeek 7y ago
    Personally, I would go for ANY system right now other than what we have. I am too pissed off at how our healthcare system is. Single Payer may or may not have the same issues but I am ready to take my chances. Status quo is not good enough for me.
    - pw 7y ago
      What problems have you had with the current system?
      - codegeek 7y ago
        Many problems. - Every visit to a doctor is a game of cat and mouse. I am never sure what bill to expect and how many bills to expect. - Price is always inflated due to the fact that insurance company has to make money on every visit to the doctor. - Every visit requires a Claim. Claims get filed incorrectly. Fun and games trying to call a bunch of different "departments" trying to understand the claim and why am I being charged ? - In network/out of network game. Ohh, I am sick and unconscious but I have to make sure that the person seeing me is "in network" so that I don't get a million dollar bill. Sorry, bad luck. While you were unconscious, we called a doctor who was "out of network" and not our problem. Have fun fighting wit the insurance company. - Why does every visit require me to show insurance ? I just wanna talk to my damn doctor. Can I not just give you some money directly ? - I visited the doctor. Doctor has to file a claim for $x while the insurance company only allows $y. So the doctor inflates the amount of initial claim knowing that they will be reduced anyway by the insurance company. Cat and mouse game continues and finally, poor me is left with a bill that I now have to figure out. Have I already paid enough (copay, deductible, out of pocket limit) ? Lucky me. - My employer changes my insurance company. Oh, I have to redo the entire paperwork with al my doctors. Ok I did it. Oops the doctor office still filed a claim with my previous company. I am now fighting to get that sorted.

PeteLee-Us 7y ago

About 10 years ago, I was a freelance consultant for clinics, hospitals and insurance companies (EMR, billing, claims, practice management, etc.). I've also been a volunteer EMT for about 20 years and have many friends who are clinicians. The amount of administrative overhead is just absurd: a common and believable number is about 15%. This does NOT include the "shadow labor" that everyday people have to deal with, like being on hold with a billing department or insurance company, the merry-go-round of "prior authorization hell" for procedures or prescriptions, etc. It's TERRIBLE that someone like me--conversant in business practices, ICD/CPT codes, and clinical practice in general--struggles to interpret a bill. It's literally worse than buying a car. I can make lots of choices in life, but one of them isn't health care: if I need it--especially urgently--I'm not in a position to game out every scenario possible to minimize costs because the ecosystem is non-transparent and labyrinthine.

tptacek 7y ago

Nobody is saying there aren't real administrative savings to be had, but the amount we spend on administrative costs is something close to an empirically observable fact, and you can do the mental exercise of taking any credible number and zeroing it out to see how big an impact it would have on overall health spending. It's not huge. Which is to say that even in the most optimistic case, where single-payer forces everyone into a perfectly efficient system where nobody has to waste any time on coding or paper-shuffling and everything is perfectly streamlined, we still won't have meaningfully fixed the problem. The amounts we'd save would be a grocery-store-sale discount.

laurencerowe 7y ago
According to this study healthcare administration costs account for the bulk of the difference between US and Canada healthcare spending. 34% of 18% of US GDP (=6% GDP) vs 17% of 11.6% of Canada's GDP (=2% of GDP). https://www.healio.com/primary-care/practice-management/news/online/%7B83beb11a-add5-4324-9bef-03f5edc21f88%7D/a-third-of-us-health-care-spending-stems-from-administrative-costs https://www.healio.com/primary-care/practice-management/news... Other studies looking at only hospital costs put it at 1.43% of GDP. https://www.commonwealthfund.org/publications/journal-article/2014/sep/comparison-hospital-administrative-costs-eight-nations-us https://www.commonwealthfund.org/publications/journal-articl...
- tptacek 7y ago
  That is a much higher estimate of admin overhead than other sources, covers both payer and provider administrative expenses, and implicitly attributes all provider administrative expenses to billing/coding. But we don't have to litigate this in the context of the Lancet article. That article derives much higher savings from pharmaceutical price reductions than from administrative savings. We know with some certainty what percentage of overall spending comes from pharmaceuticals, and it is a low number.
burnte 7y ago
> It's not huge. It's massive. Healthcare is byzantine on purpose. It's opaque to patients so that providers can prevent shopping around and adjust charges per patient, and it's opaque to providers from insurers to help prevent having to pay claims.