Health insurers, urged last year by the nation’s largest organization of doctors, have made strides in improving their claims processing systems.

The assessment from the American Medical Association takes on additional weight as the ability of national health insurers to handle claims efficiently and accurately has been one area Congress and President Barack Obama have sought to address in comprehensive health care reform legislation.

Last year, the AMA called for an overhaul of the insurance industry’s billing and collection process in its National Health Insurer Report Card, released through the AMA’s Heal the Claims Process campaign, which seeks to diagnose the strengths and weaknesses of the claims processing systems used by the nation’s largest health insurers.

William A. Dolan

“We are encouraged that health insurers took the AMA’s initial report card findings seriously and made improvements, but the new results from this year’s report card shows there is still work to do,” said AMA Board Member William A. Dolan in a statement.

“Each insurer uses different rules for processing and paying medical claims that results in confusion and inconsistency,” Dolan said. “Simplifying the administrative process through standardized processing and payment requirements is needed as part of comprehensive health reform legislation this year. It will reduce unnecessary costs in the health system and eliminate the variability that requires physicians to maintain a costly claims management system for each health insurer.”

The inefficient and inconsistent claims process adds as much as $200 billion annually to the health-care system, according to the AMA. One recent study cited by the AMA estimated physicians spend the equivalent of three weeks annually on health insurer “red tape.” To keep up with the administrative tasks required by health plans, physicians divert as much as 14% of their revenue to ensure accurate payments from insurers, the AMA said.

Those costs are passed on to policyholders, leading Obama and others to suggest the need for much greater use of electronic recordkeeping among insurers.