A Denial a Day Keeps the Doctor Away

69 Pages Posted: 12 Jul 2021 Last revised: 8 Apr 2023

See all articles by Abe Dunn

Abe Dunn

Government of the United States of America - Bureau of Economic Analysis (BEA)

Joshua D. Gottlieb

National Bureau of Economic Research (NBER); University of Chicago

Adam Hale Shapiro

Federal Reserve Bank of San Francisco

Daniel Sonnenstuhl

University of Chicago

Pietro Tebaldi

Columbia University

Date Written: July 2021

Abstract

Who bears the consequences of administrative problems in healthcare? We use data on repeated interactions between a large sample of U.S. physicians and many different insurers to document the complexity of healthcare billing, and estimate its economic costs for doctors and consequences for patients. Observing the back-and-forth sequences of claim denials and resubmissions for past visits, we can estimate physicians’ costs of haggling with insurers to collect payments. Combining these costs with the revenue never collected, we estimate that physicians lose 18% of Medicaid revenue to billing problems, compared with 4.7% for Medicare and 2.4% for commercial insurers. Identifying off of physician movers and practices that span state boundaries, we find that physicians respond to billing problems by refusing to accept Medicaid patients in states with more severe billing hurdles. These hurdles are quantitatively just as important as payment rates for explaining variation in physicians’ willingness to treat Medicaid patients. We conclude that administrative frictions have first-order costs for doctors, patients, and equality of access to healthcare. We quantify the potential economic gains—in terms of reduced public spending or increased access to physicians—if these frictions could be reduced, and find them to be sizable.

Suggested Citation

Dunn, Abe and Gottlieb, Joshua D. and Gottlieb, Joshua D. and Shapiro, Adam Hale and Sonnenstuhl, Daniel and Tebaldi, Pietro, A Denial a Day Keeps the Doctor Away (July 2021). NBER Working Paper No. w29010, Available at SSRN: https://ssrn.com/abstract=3884704

Abe Dunn (Contact Author)

Government of the United States of America - Bureau of Economic Analysis (BEA) ( email )

1441 L Street NW
Washington, DC 20910
United States

Joshua D. Gottlieb

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://papers.nber.org/authors/joshua_gottlieb

University of Chicago ( email )

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Chicago, IL 60637
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HOME PAGE: http://www.gottlieb.ca/

Adam Hale Shapiro

Federal Reserve Bank of San Francisco ( email )

101 Market Street
San Francisco, CA 94105
United States

Daniel Sonnenstuhl

University of Chicago

1101 East 58th Street
Chicago, IL 60637
United States

Pietro Tebaldi

Columbia University

3022 Broadway
New York, NY 10027
United States

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