The $935 Billion Problem
Administrative Waste, Billing Errors, and the Massive Cost of Inefficiency in US Healthcare.
The Scale of Waste
Recent studies indicate that up to 25% of all US healthcare spending is considered wasteful. While this includes issues like overtreatment, the single largest driver is Administrative Complexity.
Total Annual Waste
Upper Estimate (JAMA)
Administrative Cost
Largest Waste Category
Preventable Denials
Industry estimates
Claims Abandoned
Never Resubmitted
Days Added to A/R
Per Denial Event
Deconstructing the $935 Billion
Where does nearly a trillion dollars go? The breakdown reveals that Administrative Complexity is the leading source of waste.
Interactive Chart
The Landscape of Waste (Annual Est.)
Root Causes of Failure
Within that $266B of administrative waste, Denials are a primary symptom. While registration errors remain the volume leader, Coding and Medical Necessity errors represent the most expensive and difficult-to-cure denials.
Insight: Preventable technical errors (missing info, duplicate claims) account for over 30% of all denials.
The Cash Flow Trap
A denial does not just mean no payment; it means delayed payment. For complex claims, this delay can stretch to over 100 days, severely impacting operating cash.
The Modifier 22 Trap
Hospitals use Modifier 22 to ask for more payment for unusually difficult procedures. However, this is a red flag for payers, triggering a complex manual review process.
Lifecycle of a Complex Claim
Procedure
Unusual difficulty.
Documentation
Op notes detail why.
Submission
Manual Review.
Denial / Underpayment
Approval
Why Appeals are Expensive
It costs approximately 5x more to rework a claim than to file it correctly the first time. For complex Modifier 22 appeals, this cost skyrockets to over $100 per claim.
This high cost of recovery is the primary driver behind the Abandonment Rate.
Surprisingly, the majority of denied claims are simply written off because the recovery cost exceeds the claim value.
Commercial payers impose a significantly higher administrative burden compared to Medicare.