Could Your Health Insurer Run “Cash For Clunkers?”

Health insurers are typically required contractually to meet certain turnaround times for manual claims processing and reimbursement. A typical standard would be all "clean" claims (i.e., claims with no missing information) processed and paid withing ten days, while all "exception" claims (i.e., claims with some problems or missing info) within 20-30 days. Actual performance is usually much faster than this, about 100% all claims, clean and exception, within 10-14 days.

Electronic and partly electronic claims processing can be much faster. A good mail order pharmacy can take faxed prescriptions, convert the data to electronic form, process and ship a clean script within one day, while exception scripts that require follow up with the physician take two to three days.

A better example for your article would be pharmaceutical manufacturer rebates to PBM/healthplans/payors. Pharma manufacturers scrub, process and pay the bulk of rebate claims submissions (95%) within 180 days of receipt of data, as these can be fairly complex data and financial transactions involving numerous contractual payment schedules, data formats, third-party involvement, etc. These rebate payments typically are made starting 30 days after receipt of data, and continue until the full amount is processed and paid. About 5% of all claims are scrubbed out due to incomplete/missing data and/or claims fraud.

Medicaid rebates, on the other hand, which are based on standardized formulas, require payment within 38 days (formerly 31 days).

I'm not as skeptical as you are that the healthcare industry would fare as badly as the government did in managing the Cash for Clunkers program. Certainly it has its problems and weaknesses, but it also can be very good and efficient at what it does.

P.S. Advice on plan for writing future articles:

Step 1: Gather data

Step 2: Analyze problem

Step 3: Present conclusions

Dave Lister of CO 5:28PM September 09, 2009

Rick, your points on the reimbursement comparisons are valid, however the main analogy you did not address is the gross miss calculation by the government of the amount of funding needed to support the program the planned timeline. Originally one billion was suppose to last three month, in the end three billion lasted only a month. My concern is if they can’t estimate a 1 billion program, how could anyone take the trillion plus estimate seriously? The government is usually very good at sending money out the door very quickly, as it is not their money.

Brian of MN 6:37PM August 21, 2009