150 billion is Spent annually on Health Care Administration

A blog post by By: Christine Stahlecker, Director, Administrative Simplification Group, Office of E-Health Standards and Services, Centers for Medicare & Medicaid Services at the CMS Blog has some interesting points regarding the costs of Health Care Administration.

According to the post, more than $150 billion is spent annually on health care administration. The data indicates that for an average three doctor office, two full time employees are needed for billing and insurance related tasks. Administrative Simplification is an important part of Health Information Technology to decrease the burden of administrative tasks for the physicians office. Both the Health Insurance Portability and Accountability Act (HIPAA) and the Patient Protection and Affordable Care Act (Affordable Care Act) include administrative simplification requirements.
The goal of these changes is to include changes that create uniform electronic standards, and streamline exchanges between health care providers and payers. Many of these changes are on the back end of the practice management systems, These changes standardize communication between the practice management systems and insurance companies. You may have seen some of these enhancements with the ability to receive electronic remittance statements and automatically post these payments to your practice management system, automatic crossover of claims with automatic sending of primary EOB files to secondary insurance carriers.

Additional changes that we can expect in the near future include standard Health Plan Identifier (HPID); and standards and operating rules for electronic funds transfers (EFT) and claims attachments. These changes will speed up the process of submitting claims to insurance plans and the receipt of payment from insurance plans.

In addition to these changes and initiatives, providers can look forward to the ability to electronically submit documentation for determinations of coverage in addition to having the ability to send information for receive pre authorizations electronically speeding up the process of this transaction and reducing that administrative burden of these processes.
All of these changes are geared toward reducing the administrative costs associated with running a medical practice.