Reducing Administrative Costs in U.S. Health Care

March 2020, Paper: "Administrative costs account for one-quarter to one-third of health-care spending in the United States. This share is far greater than in other countries and exceeds all estimates of the amount necessary to perform the functions of health-care administration. This paper considers how administrative costs in health care could be reduced. The particular focus is on administrative costs where coordination among parties is required to achieve savings: (a) claims submission and adjudication, (b) prior authorization determinations, and (c) quality measurement and reporting. Underlying each of these areas is the need for data exchange among and between payers and providers. Examples from other industries show the importance of three key actions in reducing administrative costs: (a) developing uniform rules about information exchange, (b) using technology instead of manual processes, and (c) having payers and providers pay the additional costs when they choose to use nonstandard processes."