My father spent his career as an investigator at the Government Accountability Office, so I was listening to diatribes about the wasteful habits of government agencies while getting my diapers changed. He wasn’t the first or last to say that it will be a sad day indeed if the private sector ever gets lapped by the feds in terms of efficiency.

Now, after electronically thumbing through an executive summary of the IVANS 2012 Healthcare Provider Survey, I’m a little frightened we’ve arrived at that dark and dreary place. Ninety three percent of provider respondents—the vast majority business/administrative managers—said that Medicare was “fair” either all or most of the time with claims reimbursements, while 65 percent deemed Medicaid to be fair all/most of the time.

Bringing up the rear? Commercial payers, the bastion of free enterprise, which only 62 percent of respondents felt are fair all or most of the time when reimbursing claims.

Well, OK then. “Fairness” is a somewhat nebulous measure, and it’s hard to know exactly how people defined it. But to hold the business practices of a government agency in such high esteem compared with the private sector is almost un-American. And this coming from a group that has taken to the streets on a nearly annual basis to stave off big cuts in Medicare reimbursements, and even now is sweating out a scheduled 27.4 percent reduction called for under the Medicare Sustainable Growth Rate legislation. And no health care executive has ever told me that Medicaid reimbursements come anywhere near covering the costs of services provided.

The working definition of “fair” in this case seems to be pretty straightforward: being paid for a service at an agreed upon rate in a timely manner, and having coherent communication about those services and the resulting claims. Not asking much really—in my mind that’s basically setting the bar an inch off the floor. But even that’s apparently too high for many commercial payers.

Consider this--a whopping 39 percent of providers to the IVANS survey said they’re still using paper to submit claims to commercial payers, while less than 1 percent use paper for Medicare claims and only 11 percent for Medicaid claims.

Medicare’s superior performance is supported by other industry research. The American Medical Association’s Annual National Health Insurer Report Card found that Medicare paid 95.16 percent of its claims within 15 days, a rate bettered by only one commercial payer analyzed—Humana, at 95.32 percent—in the study.

According to the report card, CMS also paid its claims more accurately— 98.91 percent of the time, measured by the contracted fee schedule match rate—than any commercial payer (UnitedHealthcare was closest, at 92.26 percent). And Medicare also had the highest rate of electronic funds transfer adoption, at 95 percent, with the closest private insurer, Aetna, at 94 percent, and some commercial payers wallowing in the 70 percent range. Likewise, Medicare’s rate of accuracy with its first electronic remittance advice to providers, at 96.19 percent, was ahead of the pack.

How far that efficiency gap goes between Medicare and the private sector—whether the agency actually has lower overall administrative costs--is a matter of intense debate, and I’ll leave it to more talented bean counters than I to unravel that issue. (Here’s some commentary on both sides of the issue, yes  Medicare is more cost-efficient, and oh hell no it isn’t.)

Regardless, one underlying theme of the public and political uprising against health reform is the deep-rooted fear that we’re getting many steps closer to having a universal health system run by the federal government, a model that goes against the grain of many deeply-held convictions about the role of government in our lives, and triggers an instinctive recoil from the idea of eliminating the free market from a large segment of the U.S. economy, with the assumption that the result will be a cost and efficiency quagmire.

But what if it’s the other way around?  If commercial payers can’t do a better job than the CMS at connecting electronically with providers to process claims, and can’t pay their bills on time, and can’t figure out how to reimburse more sensibly than a federal agency answerable to the indecisive teenagers in Congress, well, that’s blowing the idea of private sector efficiency right out the window.

I’ve listened to numerous presentations about how payers are bolstering their I.T. infrastructures and services to take quality to the next level and reduce costs. I’d love to see some evidence behind those road shows. Because from what I’m seeing, the 800-pound gorilla is as nimble as a ballerina, and it’s the private sector bogged down by bureaucracy and inefficiency. Really, what’s this country coming to?


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