Thursday, 01 August 2019 18:18

The healthcare claims adjudication process in the United States—A picture is worth a thousand words

Written by Henry Broeska
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Health economists analyzing a single payer system don't account for enough of the savings derived from the elimination of our chaotic claims processing methods. These comparative images, one from the US and one from Canada, give us something to think about.

We already know that Canada’s healthcare costs across the board are cheaper by half. And we know that Canadians don’t pay personal premiums, co-pays, or anything out of pocket for their basic medical care, and that includes hospitalizations. So how can Canada cover everyone and do it for less than we pay in the United States?

US-based opponents of government-enabled health insurance schemes would have us believe that countries like Canada do it by rationing access to medical care with long wait lines because inept governments can't manage anything. But that's just 'boiler plate' rhetoric from an ongoing industrial propaganda campaign against the concept of universal healthcare. For over 50 years the American health insurance industry has been using misinformation to keep Americans in the dark. The last thing they want is more concerned citizens understanding how well other nations’ universal healthcare systems work.

Whether single payer or multi-payer, all universal healthcare plans world-wide really practice the same conventions. Successful national healthcare systems have been able to expand coverage to everyone and control costs for five main reasons: 1) They’ve created one comprehensive plan for everyone, 2) they’ve reduced the number of payers allowing everyone to run on a common, secure electronic platform, 3) they’ve reduced medical and administrative costs through rate regulations, 4) they’ve adopted global budgeting for purposes of running hospitals, and 5) they negotiate formula pricing with all drug manufacturers and fiercely guard against the manipulation of generic pharmaceutical supply and pricing. An ancillary benefit of these controls, is that they’ve eliminated the possibility of healthcare fraud, an element that shouldn’t exist in a well-managed system.

But none of those imperatives are features of the US healthcare system. In this article, I'll make comparisons between the US and the Canadian healthcare systems' claims adjudication process to provide evidence that it’s possible to derive far more efficiencies from a single payer system at far less cost.

For no socially beneficial reason...

From World War II on, where all other wealthy countries positioned healthcare as a human right, Americans were persuaded to see healthcare as a market-based commodity. To bolster the concept, insurance companies differentiated their insurance contract offerings with changeable compensations. Nowadays when industrial spokespeople and their political surrogates talk about the importance of 'choices' in health insurance, what they are really reinforcing is the commodity perspective that's been carefully planted in the subconscious of every American over decades.

I often hear my American friends say, “I have good healthcare,” referring to their all-inclusive personal health insurance policy. It’s a statement that’s difficult to understand for someone who didn’t grow up in America. Why do they put the word “good” in front of "healthcare?" In reality, there is only "healthcare," based on best practices. As an American reader, that last sentence may be just as foreign to you as the concept of “good healthcare” is to a non-American. It simply means that other countries have left patient treatment decisions to their doctors, not insurance companies. * But it's that distinction ― the idea that 'healthcare' can be of high quality or inferior quality, or variations in-between ― that's the underlying reason for America’s dysfunctional healthcare system. When it comes to healthcare, Americans are essentially speaking a different language than the rest of the world.

“I just interviewed the German Minister of Health, and it was an exhilarating experience, because it was a totally different language. It was obviously important that everyone should have the same deal in healthcare.” ― Uwe Reinhardt

One of the most powerful visual aids I can imagine to illustrate the administrative difference between Canada and the US is in the area of health insurance 'claims processing.' Claims processing is the receipt and adjudication of a claim filed by the insured against a third-party insurer, often through a Clearinghouse. Claims are accepted or rejected based on the member’s insurance policy. In the US, there are over 4000 health insurance carriers contracting with millions of employers, each offering perhaps hundreds of differently structured health insurance policies. 1

The commercialization of health insurance creates an almost endless number of different contractual terms and conditions adjudicated by thousands of different companies ― each processing claims in their own unique way. Millions of claims are transacted daily in the US. Each claim can trigger hundreds of actions based on strict rules and regulations. Clearinghouses designed to help manage claims, process many trillions of these actions each year.

This ponderous variability across multiple stakeholders makes the US claims payment infrastructure the most complex, the most expensive, and the least efficient claims processing system anywhere in the world. It’s also the reason why the US consumes at least twice as much healthcare administration as any other comparable industrialized country.

Fig 1. (below) depicts the Rube Goldberg-esque processing method we've developed to adjudicate healthcare claims. This image isn't meant entirely to be a lampoon of the system ― it's a true representation of the actual system we use. In fact, the illustration doesn't include nearly enough features; there are layers upon layers of processes and rules that sit below what is shown on top.

Fig 1. US Healthcare Claim System Payment Infrastructure


The main features of the claims adjudication process are: the transmission and receipt of claims, rounds of review, re-submission of denied claims, payment processing, distribution of Explanations of Benefits (EOBs), claims data recording and claims archiving. Every activity and feature seen in the above flow chart fulfills one of those 7 functions in what we call 'the US healthcare system,' even though it is not one, but many systems that interact at some point with everyone in the US including the uninsured. But if it only fulfills 7 functions, why should it be as insanely complex as the flow chart?

To get a clearer picture, let’s go to a second chart. The pie chart below accounts for all 329 million Americans by how they interact with the many parts of the US healthcare system. Everyone on American soil is in some way included. Even the uninsured have the right to be treated through the Emergency Medical Treatment And Labor Act (EMTALA). 2 For many who walk into a hospital in medical distress, it's their only and last chance at being treated for acute conditions through a hospital emergency department.

Fig. 2. Total US Healthcare Coverage (millions of ppl) by insurance type (April 2019)

Fig 2. The 8 major segments can be further broken down into many more smaller segments. For example the Employer Segment can be broken down by 4000 different insurance carriers of various sizes, all performing a different claims adjudication process on a perplexing number of proprietary software adaptations.

No matter how someone is insured, or not insured, once they enter the system their data must be accounted for somehow, and that’s all reflected in the claims process. Every claims processing software system on the market must attempt to accommodate every possible claims scenario. Most Providers (physicians, clinics, hospitals, etc,) need to be able to claim against each Payer in each segment. Each of those segments has different rules and different public and private funding sources. The Payers within those segments all have different claims formats. Providers who send in claims on behalf of their insured patients, must format each claim differently depending on their contract with that Payer, the patient's insurance and the applicable state laws.

Incredibly, in the US, there is no universal, standard claims format. Some are still even paper-based. Payers struggle with providing the correct contracts to each Provider, and Providers struggle with each different claims format. Mistakes with the first claims submission in some systems are as common as 'clean claims.' Some unethical Payers deliberately make their claims process as difficult as possible, further complicating the process. A mistake at any level kicks the claim out and the process starts over again. Oftentimes, valid claims, once rejected, are not re-submitted for a variety of reasons. Days, weeks, and months may be added to the revenue cycle for Providers due to delayed payments (and unpaid debt has ballooned across every Provider sector in the past 5 years). In many cases, up to 80% of premium costs are spent dealing with claims, not medical care. It's really the convolution of so many variables that makes claims processing in the US an administrative nightmare and very close to the chaos it appears to be.

Henry J. Aaron, the noted American health economist described the system: “I look at the US healthcare system and see an administration monstrosity, a truly bizarre mélange of thousands of payers with payment systems that differ for no socially beneficial reason, as well as staggeringly complex public systems with mind-boggling administered prices and other rules expressing distinctions that can only be regarded as weird.3

“Every healthcare system is perfectly designed to get the results it gets.” ― Don Berwick

Obviously anyone designing a healthcare system wouldn't plan it like this. As Henry Aaron suggests, it’s an inherited legacy of bizarre circumstances that we’ve been building on for decades. Nothing about this healthcare system happened through strategic planning; it all happened by accident. 4 Employer-based healthcare was invoked as an ad hoc emergency war measure during World War II. Its enactment as temporary tax relief against employer health spending was a desperate act by the federal government to keep domestic workers from the real possibility of going on strike in the middle of a war effort. It was not meant to last and it certainly wasn't meant to be the cornerstone of enlightened nation-building. But the private insurance companies, who profited mightily from the business of healthcare based on the method, lobbied heavily for it to remain in place after the war, so it stayed.

The Digital Revolution

The acceleration of administrative complications within our fragmented healthcare system started with the massive expansion into electronic health records in the 1990s. To get rid of paper, data had to be stored and transferred electronically for the system to work. Similarly, all healthcare-related financial transactions became automated. Computerization meant that insurance companies could expand and offer more differentiated products to a broader market. But computerization also attracted more government scrutiny and more regulations to safeguard private health information and to fight an increasing amount of fraud. The heavy regulation of electronic health data started in 1996 with the passage of the Health Insurance Portability and Accountability Act (HIPAA) into federal law, locking down data privacy and security provisions for the protection of medical information. 5

New rounds of regulations and rules were written up every time new programs like the Children's Health Insurance Program (CHIP) and the Affordable Care Act (ACA or 'Obamacare') were enacted. New privacy legislation applying newly adopted standards came into effect. 6 Health Information Technology (HIT) became its own sector of the economy. Growing communications, data-handling and security challenges in turn spawned the emergence of many more third-party specialty technology suppliers, all needing to be profitable as businesses. The burgeoning trend towards more and better HIT that started in the 1990s has only gathered momentum since.

What we've discovered about the American healthcare system intersecting with the digital revolution was that we could rid ourselves much of the paper burden, but not the endless need for more non-clinical workers

The original thinking of all healthcare stakeholders, was that automated claims processing would make life easier. The insurers went all in. They believed that "auto-adjudication," that is, the processing of a claim as soon as it came in ("in real time"), could be achieved electronically. To help expedite the claims process, insurance companies expanded their administrative divisions and technological capacities by building in-house solutions and/or by contracting with third-parties like Cerner, Epic, or McKesson among others. Insurers believed it was just a matter of time before billions of dollars in technology investment would pay off with more competitive health insurance products and savings for consumers. At least, that’s what they told us.

As the fragmented administrative processes became more complex across the industry, they also became institutionalized. By institutionalized, I mean that each one of those small way-points, or boxes in Fig. 1 connected by an arrow to some other function in the process represents an entire area of industry where dozens of technology companies, each with thousands of employees compete for dominance only within that silo of specialized function. ***

For example, in Fig 1. I've circled one of those little boxes in red. It's an acronym that most of us have never heard of. Electronic Data Interchange, or EDI, became a government-regulated necessity for the secure transfer of health data between multiple organizations. 7 IBM, SAP, Microsoft, and a hundred other smaller companies offer their own proprietary EDI solutions for healthcare utilizing a national set of coding and format standards for all electronic transactions related to healthcare. A coalition called "The Workgroup for Electronic Data Interchange" or WEDI, comprises of thousands of individuals and organizations that represent a cross-section of the American healthcare industry.

It’s impossible to do without EDI in US healthcare, but similarly, it’s impossible to do without all of the other complex, rules-based functions as well. They all must connect to make the system work. Over 100,000 rules apply to any healthcare-related insurance transaction performed in the United States. If I picked any of the other way-points, I could point you to third-party activity on a massive industrial scale, where like EDI, scores of companies and thousands of technicians and coders are diligently working to drive efficiencies into the process. In American healthcare the need for HIT innovation never ends, because the administrative burden never stops growing.

Today there are many millions more Americans than just those who work for the insurance companies whose livelihoods depend on the unrestrained growth of our current healthcare system and few of them have anything to do with the field of medicine. As one might have guessed, the massive expansion of technology companies saturating the market with software focused on better patient scheduling, automated intake, improved record-keeping, better claims processing, and streamlined billing has not been successful in lowering costs.

Unfortunately, there is no magic bullet that will improve the system's performance. Gains in efficiency, if they can be found at all, are going to be insignificant to the overall cost of the burgeoning administration process. In the current scenario, none are large enough to change the growth rate of healthcare inflation, which far outstrips the growth in American workers' wages.

Comparable industrialized nations have far less complicated health insurance systems. Typically, governments rigorously regulate national health insurance plans that cover most or all citizens with unchanging rules and uniform fee schedules. Such systems cannot help but keep administration costs lower. Compared to countries like Canada, the US healthcare system is more complex by several orders of magnitude. Given the out-of-control administrative costs that the US is experiencing, it’s little wonder that health policy has been a reform target for decades.

“If the rule you followed brought you to this, of what use was the rule?” ― Cormac McCarthy

For those incrementalist reformers who assume that tinkering with the current system will lead to lower costs, the Affordable Care Act proves that isn’t true. We hear that adding "the public option" 8 will cover the rest of Americans with insurance and make everything better. But they are missing the point. The complexity of the US system makes incremental or piecemeal health reform impossible. Unless the current system is abandoned altogether, changing the rules in one part of the system will have enormous effects on every other part of the system. In most cases, there are unintended and costly consequences of changing rules, even when the change is made for noble reasons, like attempting to cover more people with affordable healthcare. The introduction of the Affordable Care Act reduced some direct costs significantly, but increased others, further complicating the picture. Ultimately, the ACA has done nothing to reduce our claims processing problem and has only created more of those little flow chart boxes.

Victimizing the powerless

American consumers deserve much more for their healthcare dollar. Chief among consumer complaints are: dangerous delays in treatments, erroneous denials of care, incorrect bills, surprise charges, and costs not covered by their plans. Bill corrections often take so long to fix that outstanding balances for money not owed, mind you have already been handed off to collection agencies and members’ credit ratings have been damaged as a result. Sometimes patients don’t even know they are in debt collection until they search their credit score. Unpaid bills lead to other problems that can impact health. Patients requiring care often don’t get seen by their doctors for reasons related to unpaid bills. Another troubling reason for claim denial is the fact that some insurance companies deliberately engage in obstructing the claims process to delay or block payment obligations. This unethical business practice expands profits by using the system's natural convolution. Every legitimate payment denied or delayed goes right to the bottom line of the insurance company. For those insurers who favor their shareholders over their clients, it's relatively easy to game the system on an industrial scale.

A basic question that Americans must ask themselves is: Why am I willing to accept this kind of shoddy treatment from my insurer and from no other vendor?

The US stands alone in this Dystopic model of administrative inefficiency, which is reflected in almost any healthcare-related statistic you care to name. A growing number of Americans – over 40% - have medical debt problems. Close to 31 million Americans have no health insurance at all. About a third of each dollar spent on healthcare in the US goes to supporting the waste, fraud and abuse in the system over a trillion dollars each year. **** Incremental changes are not enough. Unless there is a profound change in the way our healthcare system works, our nation, and each of us, are locked into a nearby date with a bleak and uncertain healthcare destiny.

“Masters in our own house we must be, but our house is the whole of Canada.” — Pierre E. Trudeau

For comparison, I’ve created the same claim adjudication flow for a healthcare system like Canada’s, where every citizen is covered (Fig 3) and every physician, clinic and hospital is considered “in network.” Keep in mind that claims for exactly the same medical tests and procedures occur in Canada as the US. But there is no use for all of those 3-letter acronyms that have become regulated institutional fixtures in the United States. Canadians don’t know what EDI, HRAs, HSAs, HMOs, PPOs, MCOs or ACOs are. In each Canadian province, there's only need for one secure interface between 2 computers for the adjudication process to work. To put it into simple terms that Americans understand, Canadians are all members of the same plan with the same coverage.

To make a claim for a service provided to a patient, a doctor or his office staff simply enter the provincial tariff codes into a database hosted by the Payer. For Providers, there is only one set of prices for each province based on a fee-for-service payment structure. These prices are maintained for years with an annual inflation factor added. For patients, there is nothing to do; no plans to choose, no paperwork, no bills. Less work and fewer rules means administrative costs are lower.

Fig. 3 Healthcare Claim Payment Infrastructure in Single Payer System


Depending on area of practice, 95-100% of physicians’ claims are paid by the provincial Payer every 15 days. That’s the length of the revenue cycle in Canada two weeks. Physicians never worry about collections or bad debt. The flow chart for the Canadian healthcare system in Fig. 3 shows why. It's clean, simple, and precise, with no need for any of the billion dollar technology features and onerous government regulations that must be applied to the same adjudication process in the US. And fraud? The system is so simple and transparent that fraud in the Canadian healthcare system is rare and nearly unheard of.

In the case of Canadian hospitals, global budgets are used as a cost-containment method to control expenditures. Global hospital budgets set caps on spending and are highly effective for controlling medical inflation. Virtually all healthcare services in the hospital are covered and paid for by the public Payer. Since the hospital managers know what it cost to run the hospital in the previous year, and they know the rate of medical inflation, they can predict with some accuracy how much they will need to run the hospital in the following year. Except for a relatively few 'hospitalists,' physicians work independently in the hospitals and submit bills to the public Payer, just as if they were submitting them from their clinics, which they operate as small businesses. Here again, like clinics, the hospital system is invisible to patients who receive no bills or paperwork of any kind.

It should tell us something that none of the complex claims adjudication software systems that are sold in the US are even offered for sale outside of the United States. And the standardized software used across the healthcare system in each Canadian province takes a small fraction of the labor force needed in the US to enter the data.

"Change the rule and you will get a new number.” ― W. Edwards Deming

The administrative comparisons between Canada and the US are stark. It takes about 8 billing clerks to enter billing data for a large ~900-bed Canadian hospital. Contrast that to Duke University where their 957-bed hospital requires the employment of 1,600 billing clerks and an additional unknown number of billing consultants. 9

In a well-known comparative study, administrative overhead accounted for 11.7% of private plan healthcare expenditures in the US, compared to 1.9% for provincially administered plans in Canada. 10 Hospital administration costs in Canada are around 11% of total operational costs while in the US they are closer to 26%. And medical inflation rates in the US are running at over twice the inflation rate of Canada and other OECD countries.

In the topsy-turvy scenario that's playing out, healthcare stakeholders have placed higher value on a good revenue cycle strategy than the delivery of healthcare itself.

Meanwhile, back here in America, all healthcare stakeholders are hiring more low-level clerks and administrators to manage the choke-points. ***** In this scenario there is no need for more physicians who would only generate more paperwork best to curtail the care to lessen the admin burden, and raise prices to pay for the new hires. In the topsy-turvy scenario that's playing out, healthcare stakeholders have placed higher value on a good revenue cycle strategy than the delivery of healthcare itself. The result? Higher healthcare premiums, higher co-pays, more high-deductible plans, a high rate of inflation that guarantees significantly higher insurance plan costs each year, and far less coverage than ever before. The other result that’s perversely and indefensibly higher is insurance company profitability. It doesn't matter that the insurers have failed spectacularly in their mission to provide affordable plans to Americans. It only means that ‘whoever has the gold makes the rules.’

Fig. 4 Growth in Physicians and Administrators US Healthcare System 1970-2017


Cleaving the Gordian Knot

The Canadians have created a plan benefit design that is comprehensive and their laws have given provincial governments the regulatory teeth to make it work. They understand that the more players who are allowed to represent more variable and alterable plans, the more administrative problems it creates for Providers and patients alike. The more Payers and plans what we like to call ‘choice,’ in America the greater the reduction in cost-effectiveness. Although opponents of 'socialized medicine' typecast it as 'Americans under the thumb of Big Government,' it's impossible to conceive of a system that's more bureaucratic, wasteful and corrupt than what we have now.

According to a Harvard study, we put up with $60 billion in overpayments (Americans being charged and paying more than they should have been billed) Annual care for the uninsured and under-insured generates $85 billion in uncompensated costs covered by us, the taxpayers. 11 There is $272 billion in medical billing fraud each year. 12 That means the American system 'absorbs' more in unrecoverable costs due to fraud each year than the entire Canadian healthcare system costs to run! ('absorbs'=recovered out higher premiums we all pay) There are also $262 billion in medical claims that are denied, leaving patients to scramble to either get the denial decision reversed or find an alternate means of financing their care. 13 Physicians give away $125 billion in free services for rejected claims each year. 14 Uncompensated care provided by American hospitals is over $38 billion per year. 15

Attempts to reclaim these losses cost an additional untold billions in administrative costs, not to mention the millions of hours of unpaid time spent by patient families attempting to get the medical care they need. In fact, every pointless and unnecessary cost in the system is recovered on the backs of the American consumer – you and me. That’s because insurers don’t endure the cost; they simply recoup losses by increasing premiums, raising deductibles and decreasing coverage.

Through all of this, it's key to remember that the number of uninsured Canadians is zero, and the personal debt accumulated for insured medical care is zero. Because the provincial plan pays, no Canadian has ever been denied care or accumulated personal debt for a medical reason. Canada can offer this to everyone because they've wrestled their costs to the ground. Canada and Scotland have the lowest hospital administration costs in the world. 14 There is much to be said about the simplicity and practicality of viewing healthcare as a right, and not a commodity.

If we truly believe that the private sector can deliver cheaper healthcare more efficiently than the public sector, then all Americans deserve an explanation from both industry and lawmakers as to how private healthcare that costs twice as much as it does in countries with so-called ‘socialized medicine’ is benefiting us as taxpayers.

Lured by the insurance companies and the drug manufacturers with the assurance of re-election campaign funding (insurance companies are often the biggest single contributors to re-election campaigns in the US), American lawmakers still drone on about more market forces being the answer to the American healthcare system becoming more efficient. 16 Health economists, in trying to lay blame for high healthcare costs, will write tomes on the supply shift needed to balance the demand shift and the a shortage of doctors creating artificially high prices, but will never once mention the obvious claims processing problem.

The accelerating loss of health insurance coverage year-over-year portends a disastrous outcome for the health and welfare of tens of millions of Americans if we don’t act immediately. At this point, invoking ideologies is not useful to honest policy discussion. To eliminate bias, we must identify and marginalize lawmakers who take re-election campaign funding from private insurance and pharmaceutical companies. Every politician who does, is simply a shill for the industry. We must recognize that political self-interests have turned our healthcare system into both a public health risk, 17 and one of our greatest national security threats. 18

The Canadian healthcare system is not perfect. Compromises in the face of aging populations must be made until funding and capacities are realigned. Although Canadians worry about how to finance their healthcare system (news flash: every country does) ******, they do a good job of providing care to everyone who needs it for less than half of what we pay here. They do it by prioritizing care for those who need it most, prudently managing the claims process and making sure that expenditures are kept within budget forecasts.

If a picture is worth a thousand words, then the two comparative process diagrams I’ve illustrated surely provide an eloquent answer to our healthcare problems. But the gains found by eliminating the tortuous claims process only occurs by moving to a simpler system. It’s time to take a serious look at how other countries deliver healthcare for half of what we pay before the harm the current system inflicts upon the country becomes an unrecoverable condition.


1) In the context of American healthcare as it is today, the word "choice" is a doublespeak euphemism for barrier, denial, and unaffordable cost.

2) If everyone in a healthcare system was entitled to equal access to the same comprehensive services for a standard of healthcare based on best practices, there would be no reason for the convolution of the claims adjudication process we experience in the US. It would look like Canada's.

3) The administrative simplicity of the single payer model does not waste financial resources that are more appropriately used for patient care.

4) Health insurance companies contribute directly to high healthcare costs in the United States by driving up prices and by generating ever more administrative waste.

5) "Socialized medicine" is not a negative result of healthcare reform. Public healthcare systems exist only to provide the people they serve with the greatest value in health services. Insurance companies are in business to increase their revenues and are therefore in a conflict of interest with the public good.


* The greatest fear of the insurance companies is that they will be left out of risk assumption and therefore be denied the ability to restrict spending on the client's treatment in some way. For this reason they have made up the lie that under any government sponsored healthcare program, it will be the government who will make decisions about patient's care. In fact, in Canada and other countries, doctors are the only ones who make decisions about the patient's medical care. Unlike in the US today, private insurance companies (if they exist at all, i.e.: Germany) assume no risk in any countries with universal care and therefore play a much reduced role in the distribution of health insurance.
** An electronic medical billing clearinghouse acts as a middleman that takes medical claims information and then submits it electronically to insurance companies. They perform the functions of: eligibility verification, determining the patient portion to be paid, Electronic Remittance Advice (ERA), payment and adjustment updates, claim status reports, claim rejection analysis (error coding), editing and correcting of claims online, Printing out of claims, mail services, tracking and management of claims, patient statement services, and all support in real-time.
*** I know because I have considerable personal experience here. I was the lead patent-holder in a novel innovation that linked a dozen of those boxes together in an attempt at card-based "real-time adjudication." The 3-year initiative was a complex ordeal performed by a team of technicians (even a mathematician) that required over 1600 pages of written procedure, formulas, algorithms, and diagrams laying out the design and differentiating it from prior art.
**** The prices for all medical goods and services including drugs and physician’s fees continue to grow at over twice the rate of inflation. Hospital prices have increased almost four times in the past 4 decades. The recent hospital merger trend has significantly accelerated the costs of hospitalization. Overall, US healthcare spending has increased from 6% of the GDP in 1967 to around 18% ($3.5 trillion) in 2019. Canada’s healthcare spending was also at 6% in 1967 and remains stable at around 11% of GDP today.
***** The single electronic system by which healthcare claims are adjudicated in Canada is regarded as a tool. In the US, the claims adjudication process has turned into an industry on its own, employing millions of people. The complexity of the process with its multiplicity of plans and contracts, medical codes that may or may not be billable, rules that are different in each American state, different networks, different formularies, different medical Providers charging differently, different shares of public and private funding, multiple accounts to draw from for the same claim, different cost-sharing arrangements, inconsistent deductibles and reimbursement levels, even within the same plan and on and on and on make it impractical to apply algorithms. Algorithms are computations that deal with finite numbers of precisely defined successive states, eventually producing a final outcome. Algorithms have made consumer-facing companies like Amazon, Facebook, Snapchat, and Uber successful. But health insurance claims are more like snowflakes no two are exactly the same, making algorithms that depend on ‘sameness’ difficult to adapt. No matter how many feedback loops you build into the process, there continue to be so many computational failures along the algorithmic flow that real humans must intervene every so often to resolve problems and move the claim forward. Human touches are expensive and time consuming and make the fantasy of real-time adjudication a false choice.
****** Less than a decade ago, France was rated as the best healthcare system in the world, touted in Michael Moore's 'Sicko.' Now it's reeling from budget projections that weren't met and failure to plan for staffing needs. President Macron has vowed to fund it appropriately. In 2019, Britain's healthcare system is suffering under budget austerity. Similarly, first-class care but long queues are frustrating Swedes. Healthcare in the Netherlands is rated as the world's best but the Dutch are paying more in taxes for healthcare than ever before. Despite all of these problems, the healthcare systems in these countries are rated an order of magnitude higher by all measures than the US healthcare system, costing half as much and producing better outcomes and higher life expectancies. There are challenges facing all national healthcare systems, underscoring the fact that ongoing vigilance and preparation is paramount. A successful healthcare system is forever aspirational; it is a journey, not a destination.




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2) American College of Emergency Physicians. ACEP Fact Sheet, accessed June 11, 2019.

3) H.J. Aaron , “The Cost of Health Care Administration in the United States and Canada—Questionable Answers to a Questionable Question,” New England Journal of Medicine 349 , no. 8 ( 2003 ): 801 –303.

4) NPR Planet Money Series. Accidents Of History Created U.S. Health System. October 2009.

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10) Woolhandler, Steffie , Terry Campbell , and David U. Himmelstein, Costs of Health Care Administration in the United States and Canada, New England Journal of Medicine 349, June 2003.: 768, 775.

11) Andreason S. Medical practices facing woeful collection rates. Feb 2017. Bravado Health News.

12) Kesselheim AS, Studdert DM. Whistleblower-Initiated Enforcement Actions against Health Care Fraud and Abuse in the United States, 1996 to 2005. Ann Intern Med. 2008;149:342–349. doi: 10.7326/0003-4819-149-5-200809020-00009.

13) Change Healthcare. Change Healthcare Analysis: $262 Billion in Healthcare Claims Initially Denied in 2016. June, 2017.

14) Himmelstein D., A Comparison of Hospital Administrative Costs in Eight Nations: U.S. Costs Exceed All Others by Far. The Commonwealth Fund. Sept 2014.

15) America Hospital Association Uncompensated Care Fact Sheet. Dec 2017. American Hospital Association.

16) Open Secrets. Center for Responsive Politics. accessed June 11, 2019.

17) Institute of Medicine (US) Committee for the Study of the Future of Public Health. The Future of Public Health. Washington (DC): National Academies Press (US); 1988. 1, The Disarray of Public Health: A Threat to the Health of the Public. Available from:

18) Menon R. The United States Has a National-Security Problem—and It’s Not What You Think., July 16, 2018.


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