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Private Practice Administrative Costs Influenced by Insurance Payer Mix

Mailman School of Public Health, Columbia University, New York, NY; University of South Alabama, Mobile, AL; and Medical Oncology Branch, National Cancer Institute, National Institutes of Health, Bethesda, MD

Corresponding author: William D. Figg Sr, PharmD, MBA, Center for Cancer Research, National Cancer Institute, National Institutes of Health, Bldg 10, Room 5A01, MSC1910, 9000 Rockville Pike, Bethesda, MD 20892; e-mail: wdfigg{at}helix.nih.gov

Background: Increased staffing and oncology drug costs per physician, combined with decreased drug revenue, have made private hematology-oncology practices susceptible to increased financial risk. We hypothesized that practices with a higher combined commercial insurance (CCI) mix would experience greater inefficiencies in insurance billing (IB) processes and higher IB administrative costs.

Methods: A cross-sectional survey was administered to a national pool of private hematology-oncology practices. Practices were identified through the ASCO online registry. Participants self-reported insurance information. T and Wilcoxon rank sum tests were used to compare high (50% or more) Medicare payer mix groups and high (50% or more) CCI payer mix groups for practice operation indicators. These tests were also used to compare denial processing cost per Medicare patient and CCI patient.

Results: Among the 33 practices that responded to the survey, the mean total IB administrative cost for high Medicare payer mix groups was $191,646.25 (standard deviation [SD], $173,031.63), significantly lower (P = .0454) than the mean for high CCI groups at $476,280.00 (SD, $475,408.57). The mean annual cost per IB support staff member was significantly higher (P = .0453) in the high CCI group at $49,778.67 (SD = $14,896.32) compared with the mean cost in the high Medicare group, which was $39,413.08 (SD, $12,068.17). Medicare patient denial processing cost was significantly lower (P = .0237) than that for CCI patients.

Conclusion: Practices with a high Medicare payer mix experience both lower mean cost per FTE IB support staff member and total overall IB administrative cost. Processing denials for reimbursement for Medicare patients requires fewer practice resources than does processing for CCI patients.

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