APA Analysis Of Independent Review Process Is Fundamentally Flawed


August 16, 1999

CONTACT: Carrie B. Tydings

(202) 824-1786

e-mail: ctydings@hiaa.org

The following statement was released today by Chip Kahn, President of the Health Insurance Association of America (HIAA):

HIAA has found that an analysis released by the American Psychological Association (APA) of the independent review process contained in the Senate Patientsí Bill of Rights Act (S-1344) is fundamentally flawed in the data used, the assumptions made, and in the conclusions drawn. Based on an HIAA actuarial analysis of the APA findings, we urge the APA to retract the study.

The APA analysis is said to estimate "profit" that could be generated if the health insurance industry systematically denied legitimate medical expense claims in order to generate increased investment income. The analysis makes significant errors in the way it used certain data. These errors include using the wrong baseline for insured claim payments, as well as attributing payment delays to the insurance industry when, in fact, claimant delays in filing appeals account for 7 months of the time period that is attributed to insurers.

The study also fails to recognize the benefits to consumers when insurers review questionable claims. Estimates of fraudulent claims range from 3-10 percent. Claim reviews help reduce the cost of improper payments to providers. To completely eliminate claim denials would necessitate premium increases that could add up to $110 per person annually.

The APA study stands on shaky data and makes erroneous and misleading conclusions regarding claims review and denials. Further, it completely ignores the benefits of the process to consumers in reducing the number of fraudulent claims.



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