Converting From Manual to Electronic Transactions Could Save Healthcare Industry Billions

A report issued by the Council for Affordable Quality Healthcare (CAQH) suggests that if providers and health plans converted fully from manual to electronic transactions, it could result in an additional estimated savings of $8.1 billion for the healthcare industry. The savings would be on top of the tens of billions saved by making paper-based administrative processes electronic. The report says providers could save $6.7 billion and health plans could save $1.4 billion.

The costs of basic business transactions — such as claims and billing, and benefit verification and authorizations–remain high. While some administrative costs are inescapable, many routine processes can be automated, saving time and money for healthcare providers and insurers, the report says. Over the last two decades, healthcare industry led initiatives, combined with legislation and regulatory mandates, have provided a new framework for improving the efficiency of these processes.

CAQH surveyed health plans representing over 100 million covered lives for the report and the dataset included information from over 1 billion claims and 3 billion transactions. The group also partnered with Milliman, Inc., who surveyed healthcare providers and health plans on the costs of manual and automated transactions, based on publicly available information and proprietary Milliman cost data.

The group identified six types of transactions that could be converted and could contribute to savings:

• Claim submission

• Eligibility verification

• Prior authorization

• Claim status

• Claim payment

• Remittance advice

Transactions that deal with eligibility verification holds the most promise to reduce costs, according to the report. On the whole, transactions that involve eligibility verifications could reduce the current manual cost of $6.83 per transaction by $0.22, if full electronic processing were adopted. This translates to $4 billion annually.

CAHQ suggests there is more to do, including consistent use of electronic processes by health plans, eliminating redundant manual paper and telephone-based legacy processes, expand nding the six transaction types to others that could be fully automated.

“On balance, we have probably underestimated potential industry savings in some areas and overestimated it in others. We believe the 2013 total national savings estimates should be taken as a benchmark for 2012 industry results, and ongoing refinements in data specification and collection will improve the precision of our future estimates,” the CAQH concludes.

Source:

Council for Affordable Quality Healthcare. “ 2013 U.S. Healthcare Efficiency Index Electronic Administrative Transaction Adoption and Savings.” Revised May 5, 2014.