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Medical claims paid incorrectly by insurers fell this year, AMA says; Error percentage was cut in half

The number of medical claims paid incorrectly by the nation's largest private health insurers fell by half this year, resulting in $8 billion in health system savings, the American Medical Association reported.

Much of the savings came from a reduction in administrative work to fix errors, the report said.

The National Health Insurer Report Card provides an annual "checkup" for health insurers and examines the strengths and weaknesses of the systems they use to manage, process and pay medical claims.

The study found that the error rate for paid medical claims fell from 19.3 percent in 2011 to 9.5 percent in 2012. Still, insurers paid the wrong amount on nearly one in 10 claims, and the AMA estimated that another $7 billion could be saved if these errors were eliminated.

Individual accuracy rates for the insurers -- Aetna, Anthem BlueCross BlueShield, Cigna, Health Care Service Corp., Humana, Regence, UnitedHealthcare and Medicare -- also improved. None of the three local dominant insurers was reviewed.

"The AMA has been working constructively with insurers, and we are encouraged by their response to our concerns regarding errors, inefficiency and waste that take a heavy toll on patients and physicians," Dr. Robert M. Wah, chairman of the doctors' group, said in a news release.

"Paying medical claims accurately the first time is good business practice for insurance companies that saves precious health care dollars and frees physicians from needless administrative tasks that take time away from patient care."

On the other hand, the AMA said, the savings were partially offset by administrative costs for prior authorization by insurers on clinical decisions. According to the report, 4.7 percent of all claims involved medical services that required prior authorization, up 23 percent from a year ago. The doctors' group estimated that such policies would add up to $728 million in costs in 2012.

The AMA report, essentially examining the quality of insurer practices, is sort of the flip side of what insurers have increasingly been pushing in examining the quality of provider care. Other findings showed that the insurers are responding faster to medical claims and are more transparent about their rules on medical claims but that they are also denying more claims.