Federal standards to exchange information electronically could largely eliminate these costs, and the banking industry is eager to take on the task.
Anyone whos been in the hospital knows the letters keep coming for weeks.
These missives, packed full of gibberish, chronicle how hospitals, the government and health insurance arbitrate who pays what amount for everything from saline solution to lab tests to a surgeons time.
That stack of paper on the hospital side is many times higher.
Over 90 percent of hospital executives surveyed said they had to submit claims more than once to receive a payment.
Insurance executives estimated that claims go back to health care providers an average of six times before accumulating enough information for payment.
In a landmark study, researchers from Harvard Medical School found that health care paperwork cost $294.3 billion in 1999, and paperwork costs per capital were three times those in Canada.
Much of this paperwork goes through the mail. Though some 90 percent of providers said they use electronic means to receive or submit claims for some payers, only half of payers use EDI (electronic data interchange) and only a third use EFT (electronic funds transfer).
But hospital executives say they cannot automate claims processing because different insurance companies demand different information.
A single hospital may interact with hundreds of different health care payers.
Insurance executives were themselves leery of automating claims processing, or of helping hospitals automate claims, saying they have little financial incentive.
Seventy-nine percent of payers and 63 percent of providers felt that federal standards to develop a set of regulations and standards, regardless of electronic payment methodology, would eliminate extraneous costs.
But when asked whether the government should mandate standards, a PNC spokesperson backed away from the question, saying the survey was simply intended to reflect the opinions of health care executives.
John Casillas, head of the Medical Banking Project, a think tank, was more forthcoming: "I fear federal mandates," he said. "Its our contention that its the banking solution thats needed to move this industry forward."
Health IT advocates like to say that health care should be like the banking industry, where procedures are not only recorded electronically, but information about them is accessible from every ATM machine, bank branch, phone and Internet connection.
Casillas goes one step further, at least for claims processing. He doesnt think health care billing should be like the banking industry, he thinks health care billing should be the banking industry. In fact, he sees claims processing as a $35 billion opportunity.
To some extent, its already happening. United Healthcare created its own bank, Exante Bank, in 2002.
And four major banks are ready to comply with HIPAA, meaning that they can handle confidential health information, said Casillas.
But according to the survey, only half of health care payers knew that banks provide an integrated payment and remittance service for health care claims.
Casillas said that the government had started a mini-revolution by requiring electronic remittances for its own payments, and that the banking industry could help other payers move toward the same practice.
Even if payers arent ready to turn to electronic remittances, he said, the bank could still help deal with them using the same processes that scan paper checks.
Eliminating the paper, he said, wont eliminate disputes, but it would go a long way toward squeezing out health care inefficiencies.
"The health plan and provider can continue to bicker, but at least the process happens in an efficient, digital environment."