Sources of error in delayed payment of physician claims

Our objectives were to determine the distribution of errors and estimate the magnitude of the burden of delayed payments in a large physician group practice.

A 25% random sample (n=775) was taken from all billed records of a physician group practice in the Pacific Northwest that were delayed 6 months or more as of June 30, 2001. The source and specific reasons for payment delays, as well as the amount of each unpaid invoice, were determined by electronic documentation or telephone calls to the payor. Analysis of variance was used to determine whether the amount of the invoice was associated with the source and reason of error.

The source of delayed payments due to provider, payor, patient, and technical error were 36.1%, 28.1%, 14.5%, and 21.3%, respectively. The most-frequent reasons for delayed payment were that the provider incorrectly set up the account (15.2%), the provider did not follow up on denial (12.9%), and the payor incorrectly processed the invoice (11.6%). Analysis of variance suggested that the invoice amount was not significantly associated with the source but was significantly different across reasons for delayed payment. The potential financial impact of earlier recovery of payment was $262,270.

In these data, provider and payor errors accounted for almost two thirds of delayed payments. The most promising avenue for providers to reduce delayed payments is by reducing their own errors. Eliminating the two most common errors would result in a more timely recovery of nearly $70,000 in revenues.