Administrative Fragmentation in Health Care

This paper examines the impact of reducing the administrative fragmentation of billing and payment, one commonly cited cause of inefficiency in US health care. We study a Medicare reform that consolidated billing processes across service types, using its staggered rollout and hospitals’ prior levels of administrative fragmentation for identification. The reform dramatically reduced fragmentation and modestly lowered claim denial rates but had no effect on spending, post-discharge care, or rehospitalizations. It also did not affect administrative costs or technology adoption. These findings suggest that addressing administrative fragmentation alone is unlikely to significantly improve health care efficiency.