U.S. health system billing costs are much higher than in other countries, study finds

A new study has found that the U.S. health system has much higher costs for billing due in part to complexity of its medical coding. The researchers used a microlevel analysis of billing and insurance related (BIR) costs in five nations with similar economies and found the U.S. and Australia had much higher levels of costs, due to coding complexity.

The BIR costs ranged from a low of $6 for a surgical inpatient bill in Canada to $215 in the U.S. “Coding activities were the primary driver of high BIR costs in both Australia and the U.S.,” the study says. “Hospitals in Canada, Germany, Singapore, and the Netherlands incurred much lower burdens for both coding activities and overall BIR costs, which suggests that U.S. policymakers and industry leaders should explore simplifying and standardizing payment procedures.”

A range of health care approaches

The countries that the study looked at have a range of health care systems: private insurance systems in the U.S., Germany, and the Netherlands; a public system in Canada; a mix of public and private insurers in Australia, and Singapore’s system of government-subsidized providers and compulsory savings plans.

The analysis established some common BIR categories in all the countries studied: eligibility, coding, submission, and rework. When comparing this data, the researchers found what other studies have seen: that BIR costs are significantly higher in the U.S., when compared to other countries. Only Australia had anything like the higher costs in the U.S. And the numbers showed coding was by far the biggest factor in those higher costs.

“In the U.S., billing procedures often require providers to carefully document patient conditions and diagnoses to justify treatment and payment, and sophisticated coders then translate the diagnoses and service codes into billing codes (often manipulated to enhance revenue),” the report says.

By contrast, other countries have more standardized and simplified systems, which take less time, the analysis finds: “As a consequence, these countries’ billing systems either require fewer labor resources or require far less costly labor and physician time than the one in the U.S.”

Financial counseling — a better way?

The study identified one way that some countries reduced costs: in Germany and Singapore, health systems offer financial counseling prior to scheduled procedures such as surgeries.

“During financial counseling, a patient services team meets with the patient to explain their insurance coverage and expected charges. Management at both country sites believed that spending time on financial counseling lowered costs downstream in the billing process,” the researchers write. They added that this approach seems to cut down on “rework” — correcting billing or coding errors. The study finds that rework costs in Singapore are about one-fifth of those in the U.S., while those in Germany are less than one-tenth of U.S. costs.

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The study concludes that while the five countries studied have a variety of health insurance systems, most share lower BIR costs in part because of nation-wide structures that standardize how payers compensate providers.

“In contrast, each U.S. payer typically imposes its own forms and documentation requirements onto providers. The multiplicity of forms and systems creates significant administrative burdens on providers,” the study says.

The authors also note that much of the health reform debate in the U.S. has centered on who pays for services, rather than how it is paid for. “Knowledge of how billing processes burden health care providers with administrative costs, and knowledge of how they add costs in diverse settings across multiple countries, should inform discussions of any effort to economize the purchase of health care,” they write.