Editing Openai/692cb885-da9c-8002-9696-e985fae204bd (section)

===== Simplifying Billing and Claims Processing =====

A core issue is the complexity of billing transactions between providers and payers. Standardizing and automating these processes can yield huge efficiencies:
* National Standard Claims Clearinghouse: One proposal is to establish a single electronic clearinghouse for all medical billinghamiltonproject.org<ref>{{cite web|title=hamiltonproject.org|url=https://www.hamiltonproject.org/assets/files/Cutler_PP_LO.pdf#:~:text=The%20Proposal%20Establish%20a%20clearinghouse,automating%20prior%20authorization%20could%20help|publisher=hamiltonproject.org|access-date=2025-11-30}}</ref>hamiltonproject.org<ref>{{cite web|title=hamiltonproject.org|url=https://www.hamiltonproject.org/assets/files/Cutler_PP_LO.pdf#:~:text=transmission%20of%20billing%20and%20claims,associated%20with%20implementing%20prior%20authorization|publisher=hamiltonproject.org|access-date=2025-11-30}}</ref>. Currently, providers send claims to each insurer (or their designated clearinghouses), each potentially requiring slightly different information. A centralized or interoperable network could route all claims through a uniform format, reducing errors and admin effort. The U.S. already has HIPAA standard transaction codes (X12) for claims, but compliance and consistency are lacking. By mandating one set of data fields and protocols for all payers, providers could submit bills once in one format. This echoes systems in countries like France or Japan, where a standardized billing system processes claims for all insurers. If implemented, a central clearinghouse could cut down on the staff time and software needed to handle multiple billing systems, and reduce claim denials due to format issues. Estimates suggest that standardizing electronic billing and claims submission could save billions annually in administrative costshamiltonproject.org<ref>{{cite web|title=hamiltonproject.org|url=https://www.hamiltonproject.org/assets/files/Cutler_PP_LO.pdf#:~:text=patients,150%20per%20person%20per%20year|publisher=hamiltonproject.org|access-date=2025-11-30}}</ref>.
* Uniform Coding and Documentation Rules: Simplification also means aligning payers on common definitions for services and payment rules. The proliferation of different payment policies (for what’s covered, what documentation is needed, how prior authorization is done) adds burden. Federal regulators, working with industry, can push towards uniform billing codes and documentation standards. For example, requiring all insurers to honor a single set of procedure and diagnostic codes (we have CPT/ICD, but payers often add proprietary edits) and a single claim form structure would make life easier for providers. Additionally, moving toward streamlined clinical documentation – e.g., one universal form for a given service – would prevent the need to tailor notes to each insurer. Efforts like “administrative simplification” rules in the Affordable Care Act set some groundwork (like standardized insurance ID cards and rules for electronic funds transfers), but many provisions were not fully enforced. Revitalizing these efforts at the federal level could force payers to simplify and coordinate their requirements.
* Claims Payment Standardization and Prompt Pay: Another avenue is requiring faster, more automated claims payment. Some countries ensure hospitals are paid a fixed amount per case or per day directly from a government payer, eliminating drawn-out claims adjudication. Short of single-payer, U.S. payers could be required to adopt real-time claims adjudication for most routine claims – meaning a provider gets an instant response on payment when a claim is submitted (analogous to how credit card transactions are approved in seconds). This would necessitate clear-cut payment rules and high-quality data interchange, but would dramatically reduce back-and-forth appeals and resubmissions. Additionally, “prompt pay” laws (already existing in many states) mandate insurers pay clean claims within a certain time or face interest penalties. Strict enforcement of these can discourage insurers from delaying payments and burdening providers with cash-flow issues.
* Financial Impact: The Council for Affordable Quality Healthcare (CAQH) tracks potential savings from automating transactions. The 2024 CAQH Index found that routine administrative tasks (like eligibility checks, prior auth, claim status inquiries) cost $90 billion annually, and about $20 billion of that could be saved by fully automating and standardizing these workflowscaqh.org<ref>{{cite web|title=caqh.org|url=https://www.caqh.org/blog/new-caqh-index-reveals-20b-savings-opportunity-to-cut-waste-reduce-costs-and-improve-patient-access#:~:text=,efficiency%20and%20the%20patient%20experience|publisher=caqh.org|access-date=2025-11-30}}</ref>caqh.org<ref>{{cite web|title=caqh.org|url=https://www.caqh.org/blog/new-caqh-index-reveals-20b-savings-opportunity-to-cut-waste-reduce-costs-and-improve-patient-access#:~:text=,efficiency%20and%20the%20patient%20experience|publisher=caqh.org|access-date=2025-11-30}}</ref>. For example, moving from fax/phone-based processes to standardized electronic transactions can save providers an average of 70 minutes per patient visit in admin timecaqh.org<ref>{{cite web|title=caqh.org|url=https://www.caqh.org/blog/new-caqh-index-reveals-20b-savings-opportunity-to-cut-waste-reduce-costs-and-improve-patient-access#:~:text=,efficiency%20and%20the%20patient%20experience|publisher=caqh.org|access-date=2025-11-30}}</ref>caqh.org<ref>{{cite web|title=caqh.org|url=https://www.caqh.org/blog/new-caqh-index-reveals-20b-savings-opportunity-to-cut-waste-reduce-costs-and-improve-patient-access#:~:text=patient%20care.%20,efficiency%20and%20the%20patient%20experience|publisher=caqh.org|access-date=2025-11-30}}</ref>. On a system level, that translates to clinicians having more time for care (or seeing more patients) instead of chasing paperwork. Another analysis (2019) suggested more ambitiously that comprehensive administrative simplification (including rate regulation and fewer payers) could cut administrative costs by '''$50–$100 billion+ per year'''hamiltonproject.org<ref>{{cite web|title=hamiltonproject.org|url=https://www.hamiltonproject.org/assets/files/Cutler_PP_LO.pdf#:~:text=patients,150%20per%20person%20per%20year|publisher=hamiltonproject.org|access-date=2025-11-30}}</ref>. Even incremental steps – say, reducing billing-related costs by 10% – would save around $50 billion (given the roughly $496B in billing/insurance overheadamericanprogress.org<ref>{{cite web|title=americanprogress.org|url=https://www.americanprogress.org/article/excess-administrative-costs-burden-u-s-health-care-system/#:~:text=Each%20year%2C%20health%20care%20payers,annually%2C%20according%20to%20CAP%E2%80%99s%20calculations|publisher=americanprogress.org|access-date=2025-11-30}}</ref>). These resources could be redirected to patient care or used to reduce premiums.