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Senate HELP Committee Focuses on Decreasing Administrative Spending to Lower Healthcare Costs

On Tuesday, the Senate Committee on Health, Education, Labor, and Pensions (HELP) held a hearing— Reducing Health Care Costs: Decreasing Administrative Spending—to explore ways to curb costs associated with the administrative tasks in the healthcare system.

In his opening remarks, HELP Committee Chairman Lamar Alexander (R-TN) noted that the cost of administrative tasks, which include everything from time spent filling out insurance claims to buying software for an electronic health records (EHR) system, are “much higher in the U.S. than in other countries.” He also reminded the committee an estimated 30% to 50% of all healthcare spending is waste.

During this week’s hearing, the third in a series to examine the causes of rising healthcare costs, witnesses included Becky Hultberg, president and CEO of the Alaska State Hospital and Nursing Home Association; Matt Eyles, president and CEO of America’s Health Insurance Plans; David M. Cutler, PhD, Harvard College Professor and Otto Eckstein Professor of Applied Economics; and Robert A. Book, PhD, healthcare and economic expert advisor to the American Action Forum.

Topics discussed during the hearing included standardizing insurance prior authorization processes, simplifying coding for services, and improving the integration of EHR. Mr. Eyles said that while the majority of premium dollars are being spent on better care for patients, there is still too much money being funneled into administrative fees. He also noted that 3 billion manual transactions occur each year between healthcare providers and insurers, and if more of these transactions occurred electronically, the costs associated with administrative burdens would decrease. Dr. Cutler attributed a large portion of administrative costs to the complexity of a patient’s bill. He suggested simplifying how a patient is coded when he or she walks into a hospital would save on costs. He also discussed how difficult it is to document preauthorization and how it simply costs too much, especially since each insurer has its own policies.

To read witness testimony or watch the hearing in its entirety, visit the committee’s website. We will keep you updated.