Study: EHRs Do Not Lower Administrative Billing Costs

Electronic health records (EHRs) do not lower administrative billing costs despite their intent to do so, according to a study published in JAMA.¹

With administrative costs contributing to 25% to 31% of total healthcare expenditures in the United States, largely in part due to billing and insurance-related activities, EHRs emerged as a potential solution to easing the billing process. Particularly, supporters of healthcare's shift to EHR usage have suggested that the systems would yield benefits for physicians by streamlining coding and billing, enhancing productivity and efficiency, and reducing costs due to decreased paper work.²

“Knowledge of how specific billing activities contribute to administrative costs may help inform policy solutions to reduce these expenses,” wrote the authors of the study. “However, most prior studies have analyzed billing costs in aggregate without attributing the costs to specific component activities.”

The authors developed a model to estimate billing-related costs in a single, large academic healthcare system with an EHR system and determined whether those costs varied across 5 key types of patient encounters: primary care visits, discharged emergency department visits, general medicine inpatient stays, ambulatory surgical procedures, and inpatient surgical procedures.

The study assessed an academic healthcare system in North Carolina with 66,000 inpatient stays in 15,000 inpatient beds, more than 90,000 emergency department visits, and more than 2 million outpatient visits in fiscal year 2016.

The healthcare system adopted a certified EHR system in 2014. Interviews were conducted with 27 health system administrators and 34 physicians in 2016 and 2017 to construct a process map charting the course of an insurance claim through the revenue cycle management process. The data were used to determine the cost for each major billing and insurance-related activity and were combined to estimate the health system’s total cost of processing an insurance claim.

The estimated processing time and total costs for billing and insurance-related activities were 13 minutes and $20.49 for a primary care visit, 32 minutes and $61.54 for a discharged emergency department visit, 73 minutes and $124.26 for a general inpatient stay, 75 minutes and $170.40 for an ambulatory surgical procedure, and 100 minutes and $215.10 for an inpatient surgical procedure.

Of the totals, the component of billing and insurance-related activities carried out by physicians were estimated at a median of 3 minutes or $6.36 for a primary care visit, 3 minutes of $10.97 for an emergency department visit, 5 minutes or $13.29 for a general inpatient stay, 15 minutes or $51.20 for an ambulatory surgery procedure, and 15 minutes or $51.20 for an inpatient surgery.

“Billing activities were associated with these high costs despite efforts to streamline billing operations,” wrote the authors. “Examination of the billing process did not reveal any significantly wasteful or inefficient efforts, such as overt duplication of tasks or the performance of low-skill tasks by high-wage personnel.”

The authors concluded that although EHRs system can automatically generate bills for clinical visits, the systems still require the time of high-cost physicians to perform coding and documentation activities unrelated to clinical services, and the billing process still requires multiple steps by many types of personnel.

References:

1. Tseng P, Kaplan R, Richman D, et al. Administrative costs associated with physician billing and insurance-related activities at an academic health care system. [Published online February 20, 2018]. JAMA. doi:10.1001/jama.2017.19148

2. What are the advantages of electronic health records? Office of the National Coordinator of Health Information Technology. https://www.healthit.gov/providers-professionals/faqs/what-are-advantages-electronic-health-records. Accessed February 26, 2018.