Why is Health Insurance Administration driving up the cost of Health Insurance?

Med Claim

Health Insurance Administration is an essential part of the claims and filing process. This extremely complex process, coupled with the numbers of payers in the system leads to increased costs for service providers and insurance companies to maintain. Private pay, private insurance and government coverage are causing service providers to have to negotiate for price.

According to the journal, Health Affairs, more than a quarter of healthcare expenses were directed at administrative costs in the United States. This figure is significantly higher than other nations; the next highest were the Netherlands at over 19 percent and England at 15.45 percent.

Hospital Administrative Costs Graph

The main reason the U.S. spends more on administrative costs compared to other nations is because of the size of the administrative positions needed in order to code, process claims and negotiate with various providers. Other nations have far less payers in their system and lack the tedious billing and coding procedures the U.S. currently has in place.

As hospitals and practices look to reduce their administrative costs, outsourcing billing to a vendor is at the forefront of the conversation. Outsourcing billing activities can help streamline administration and allow providers to spend more time taking care of patients.

TPA Stream is focused on automating health insurance administration for third-party administrators and revenue cycle managers.  For more information about how we can help reduce administrative costs, please visit www.TPAStream.com.

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