A pre-approval may cost $10-20. An unnecessary procedure may cost $1000. If you cut admin costs by $100 at the expense of $1000 in unnecessary procedures, you will lower the percentage of overhead quite nicely. You will also be wasting $900.
Is there any reason to believe the (highly competitive) health insurance market is far from the optimum overhead/healthcare ratio? If you know better, why don't you build a startup to exploit this and get rich?
Insurance companies don't directly pay for the total costs of pre-approval so they optimize to minimize personal costs independent from the total cost to the system.
In other words doctor's offices don't bill them for the time a sectary spends filling out their forms. Which means doctors include that overhead cost as part of the cost of procedures. Also while each insurance company's internal system is streamlined each doctor's office needs to deal with several companies’ which increases their overhead costs even more.
PS: A doctor making 200k/year spending 5 minutes on a pre aproval cost's someone more than 10$. The patent needs to show up which costs them even more money etc.
How large is the cost of a secretary filling out a form compared to an MRI? You are talking about adding a few dollars to the cost of an a procedure priced at $400 or more (I don't need preapproval below $400).
A doctor only needs to get involved in the case that a preapproval is not granted, i.e. when the procedure appears unnecessary.
It costs the fully loaded headcount cost of all admin staff at the doctor's office divided by the number of transactions the office undertakes in a year. It's still probably not that high, but it's not as simple as saying "filling out a form only costs $1.20 in billable time".
FYI, the actual cost of the average MRI is ~200$. Everything else is just padding.
Let's take an example of how these low costs work. In Denver, where I live, if you get an MRI of your neck region it's $1,200, and the doctor we visited in Japan says he gets $98 for an MRI. So how do you do that?
Anyway, the idea it's just one person filling out a form is a mistake. It requires time from the patent, a doctor, the doctors admin staff, and the insurance company's staff.
Is there any reason to believe the (highly competitive) health insurance market is far from the optimum overhead/healthcare ratio? If you know better, why don't you build a startup to exploit this and get rich?