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CAQH: Electronic transactions could save healthcare billions

By Kyle Murphy, PhD

The healthcare industry has the potential to save billions of dollars in administrative transactional costs by simply adopting electronic systems and automating processes, according to findings of a Council for Affordable Quality Healthcare (CAQH) 2013 report.

“We conclude that the healthcare industry could save billions by continuing the shift from manual to electronic transactions for the six processes studied,” the authors maintain. “We estimate that most of the potential savings from continued automation of routine processes would accrue to healthcare providers and facilities.

The non-profit alliance’s analysis of healthcare efficiency in 2013 indicates the health plans and healthcare providers could generate savings of $1.43 billion and $6.7 billion by digitizing six kinds of transactions with the revenue cycle:

• claim submission
• eligibility verification
• prior authorization
• claim status
• claim payment
• remittance advice

The second category of transactions — eligibility verification — holds the most promise to reduce healthcare costs on the whole by reducing the current manual cost of $6.83 per transaction down to $0.22 through electronic processing ($4 billion annually).

Comparatively, claims submissions are nearly entirely digital among those health plans and healthcare organizations covered in the report, with 91 percent of claims occurring electronically. Lagging behind electronically are electronic claim payments and remittance whose levels of adoption are used by the half of these respondents: 56 percent and 53 percent, respectively.


Credit: CAQH

Credit: CAQH

The authors of the report contend that the implementation of the Affordable Care Act (ACA) should only increase the potential for savings around these transactions:

To start, the number of insured individuals is expected to grow substantially over the coming decade under the ACA, simultaneously increasing the number of administrative transactions that are conducted daily and the amount that can be saved by conducting them electronically. In addition, the third set of ACA-mandated operating rules that go into effect January 1, 2016, and address healthcare claims, health plan enrollment/disenrollment, health plan premium payments, referral/certification/prior authorization, and claim attachments, provide new avenues for moving away from manual administrative processes.

To improve efficiency, CAHQ has three recommendations for the healthcare industry: adopting electronic administrative transactions and reducing manual and phone-based processes, benchmarking progress, and becoming a participating organization in its index.

The council is looking to several areas for improving the study of healthcare efficiency many of which involve compiling more specific data to improve the precision of its projections and have a richer picture of the resources required for each of the transactions covered.

“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.

Read the full report here.

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