The tedious administration of health care — the paperwork, the phone calls, the clunky computer systems — costs billions of dollars annually in Massachusetts alone.
That complexity is now the focus of a state watchdog agency. The Massachusetts Health Policy Commission is studying the state’s labyrinthine system of doctors, hospitals, government agencies, and insurance companies to devise recommendations for slashing costs.
The repercussions extend far beyond the back office: In addition to raising costs, administrative complexity can contribute to workplace burnout and frustrate or even disrupt care for patients.
“We’re really focused on the administrative processes . . . that ultimately do not provide value to the patients,” said David Seltz, executive director of the commission, which monitors health care spending.
“The goal in trying to reduce this administrative expense is that we free up resources at these institutions so that they can reinvest into better patient care,” he said.
The effort — expected to continue for at least several months — is not without controversy. Not all factions of the state’s big health care industry agree on what counts as administrative complexity or waste, and even when they acknowledge problems, change can be slow.
The commission plans to concentrate on several pain points. One is the lengthy credentialing process: New doctors must receive credentials from government agencies, hospitals, and insurers before they can get paid for practicing medicine. This can take up to a year, the commission said.
Another focus is prior authorization: the requirement that doctors seek approval from insurance companies before patients receive certain tests, services, and medications. Doctors say the requirements exhaust much of their time and can delay or harm care for patients.
“From the physician perspective, administrative complexities, specifically prior authorization, are a patient safety concern,” Dr. Maryanne C. Bombaugh, president of the Massachusetts Medical Society, said in a statement. “We strongly support the Health Policy Commission’s focus on administrative complexities.”
But Lora Pellegrini, chief executive of the Massachusetts Association of Health Plans, an insurance industry lobbying group, said the commission should dwell not on administrative expenses but on the high costs of hospitals and prescription drugs.
Policies such as prior authorization, Pellegrini said, help to contain costs by preventing overuse of medical services. “It’s really a key management tool to ensure people are getting the right care at the right time in the right setting,” she said.
The United States spends more on health care than any other high-income nation. One reason for this, according to a 2018 study in the medical journal JAMA, is this country’s high cost of health care administration.
American hospitals, for example, employ large numbers of coding and billing staffers who submit information to insurers so hospitals can get paid.
“We’ve come up with a unique and special way to run our health care system,” said Dr. Ashish Jha, a professor at the Harvard T.H. Chan School of Public Health and author of the JAMA study. “We have this hodgepodge system of public and private, and every insurance company wants to do things its own way.”
The Health Policy Commission cannot force hospitals and insurers to change. But Jha said it has the political clout to push for administrative cost savings.
“I bet no one is going to be completely thrilled with it, but it will move the ball forward,” he said. “We should be lowering spending.”
Another focus for the commission is the wide variation in benefits and out-of-pocket costs in different health insurance plans. These myriad coverage options can cause confusion — but employers and consumers like having choices. Commission members acknowledged this conflict.
“I don’t know how much we want to muck around here,” commissioner David Cutler, an economist at Harvard College, said at a public meeting last week. “It’s going to be very, very hard to agree on something here.”
Some efforts to simplify are already underway.
Blue Cross Blue Shield of Massachusetts recently whittled the number of plans it offers small businesses and individuals to about 40, from about 70. It was a challenge, because government mandates require regular changes to health plans, and employers constantly want new options, said Michael Caljouw, vice president of state government and regulatory affairs at Blue Cross.
“We all need to do more to root out the needless administrative complexity in the health care system,” Caljouw said. “There’s a role for everyone involved: There’s a role for government, there’s a role for providers, there’s a role for health plans.”
The Health Policy Commission plans to study other complex areas of health care, including the processing of medical claims and the sharing of patient records across different electronic systems.
Attorney General Maura Healey has also highlighted these issues, saying in a 2018 report that the health care payment system generates heavy administrative costs that “do not appear to add value to patient care.”
“Is there a need for simplification? I think there is,” said Steve Walsh, chief executive of the Massachusetts Health & Hospital Association. “To have the Health Policy Commission help push the industry is really important.”