Free Report Example on US Healthcare System: Administrative Complexity and Costly Consequences

Introduction

Anyone using the US health care system is likely to come across administrative intricacy. Examples of such complexity include filling of duplicate forms and sorting out of insurance bills. The cost linked to the administrative complexity is a key reason the US spends twice per capita on health care than other high-income nations. Health care payers and providers in the US spend $496 billion on billing and insurance-related cost. According to the national academy of medicine, on a report published in 2010, the administrative expenses amount to $248 billion annually (Sohn & Sonny Bal, 2015). The main components of the administrative cost are physician practice administration and billing and insurance-related cost. The overhead costs for the insurance health include; providers' claims for submission, reconciling the claims, and processing the claims. Others are record-keeping costs, initiatives to fight fraud and abuse, and programs to improve quality. Even the procedures for claim denials can account for $ 12 billion to $ 54 billion annually (Sohn & Sonny Bal, 2015). There are also instances where claims are overstated to increase the insurer’s profits.

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Data Interoperability

It is pivotal for information in the health system to flow seamlessly. A good example is before an insurer authorizes an operation on patient hands, he would need proof of the damage and that physical therapy did not work. The doctor might not have all the information about patient medical history. Thus the doctor has to seek the information manually to give it out to the insurer. If the system was effective such information is supposed to be in the hands of the insurer and the doctor. The US health system can use an application programming interface (API) to enable different systems to interact. Through an API, one computer can utilize or access information from a second computer without necessarily knowing how the second computer works. (Larjow, 2018) An insurer can access data from hospitals without going to the hospital to be given specific documents about a patient. Through this approach, administrative costs will be reduced drastically. According to Rand Corporation, the administrative cost can be reduced by up to 7% annually. The major hurdle for this model is payers and providers can refuse to give out or share information due to privacy. Such a program needs continuous funding and resource to ensure it functions efficiently. Lack of funds to run the program to completion is also another challenge.

Medical Malpractice System

According to the American Medical Association, nearly a third of physicians have had a claim filed against them. As a physician gets old, the chances of him being sued also increase. The cost associated with the litigation process burdens the health care system financially. Further research has shown that as of 2015, the average expense incurred on medical claims is $ 54,165. Even though 68% of claims were dropped or withdrawn in 2015, they each cost roughly 30,475 (Larjow, 2018). The cost of insuring the physician in terms of premium has also been on an upward trajectory. Thus the medical liability system needs to be fixed to guarantee patients can access the physicians. The model that is going to be applied is the Medical Injury Compensation Reform Act (MICRA) of 1975.

MICRA as a Model for Fixing Medical Malpractice System

MICRA's objective was to reduce the medical liability insurance premiums, which was getting very expensive in California and was instituted in 1975. It meant that now patients could easily access physicians, thus reducing healthcare costs in the state. This model can also be replicated in other states and reduce the cost of healthcare in the country. For example, a man's wife dies due to bleeding when undergoing surgery. The man then sues the doctor for negligence. If the lawyer representing the man does not win the case, he is not entitled to be given any money. The lawyer will have to pay $50,000 to cover the expenses before the case goes to trial.

Under MICRA, non-economic damages can only be paid up to $250, 000 as they fall under pain and suffering. The man cannot also wait for five years then decides he wants to sue the medical practitioner. A statute of limitation has been placed to prevent such occurrences. Lastly, the physician can pay the damages in phases and not once. If MICRA is adopted in all the states, it will reduce the expenses due to malpractice. One advantage of this model is that a lawyer will only pick genuine and not frivolous cases. This will ensure only necessary costs are incurred, thus avoiding wastage of resources. The major disadvantage of this model is that it discourages lawyers from taking cases, and thus physicians are almost certain of not being affected by claims. This reduced the quality of services being delivered.

Conclusion

The long term objective of the above measures is to improve the quality of care given to patients and give physicians a conducive environment to carry on their work. To achieve this, it is paramount that healthcare costs are managed well; otherwise, the whole healthcare system will break down. As noted, the US healthcare cost is always in an upward trajectory compared to other developed countries. To improve the quality of the healthcare system, it is pivotal for the above reforms to be conducted.

References

Cutler, D., Wikler, E., & Basch, P. (2012). Reducing Administrative Costs and Improving the Health Care System. New England Journal Of Medicine, 367(20), 1875-1878.
https://doi.org/10.1056/nejmp1209711

Larjow, E. (2018). Administrative costs in health care—A scoping review. Health Policy, 122(11), 1240-1248. https://doi.org/10.1016/j.healthpol.2018.08.007

Sohn, D., & Sonny Bal, B. (2015). Medical Malpractice Reform: The Role of Alternative Dispute Resolution. Clinical Orthopedics and Related Research®, 470(5), 1370-1378.
https://doi.org/10.1007/s11999-011-2206-2