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Automating claims would save healthcare more than $11 billion annually

This is the second year in a row in which the index has found an increase in the potential industry savings.

Jeff Lagasse, Associate Editor

Healthcare has made a modest amount of progress in automating claims-related business processes, but a significant opportunity to save $11.1 billion annually remains, according to new data in the fifth annual CAQH Index. 

The report shows increased use of some manual transactions -- primarily via web portals -- resulting in a reversal of gains made for some of those transactions in previous years. The result is an increase in potential savings.

The $11.1 billion savings opportunity is an increase of $1.8 billion over the previous year. This is the second year in a row in which the index has found an increase in the potential industry savings that could be achieved with full adoption of electronic transactions. The largest portion of the savings, $9.5 billion, would go to providers, including an estimated $2 billion for dental practices.

Some of the increase in potential savings is due to a rise in online portal use, which drove a 55 percent overall increase in the volume of manual transactions by providers as compared to the prior year. Transactions through web portals are considered fully electronic for health plans, but manual for providers. At the same time, the adoption of fully electronic transactions grew only slightly or declined for most of the transactions affected by portal use. For prior authorizations, a substantial increase in portal use was matched by a decline in adoption of fully electronic transactions.

Adoption of fully electronic transactions did rise for most of the transactions benchmarked in the report, but for all but two – coordination of benefits and claim status inquiry in the medical sector – the increases in adoption were only three percentage points or less. Among medical plans and providers, adoption levels of fully electronic transactions actually declined for claim payment and prior authorization, as did eligibility and benefit verification and claim status inquiry transactions by dental plans and providers.

Beyond adoption levels, the index estimates the cost and time associated with conducting administrative transactions. On average, each manual transaction costs the industry $4.40 more than each electronic transaction and requires five more minutes of provider time.

Use of electronic transactions for a single medical claim requiring all of the transactions benchmarked by the index could save a provider practice almost 40 minutes on average – plus more than $15 in direct cost savings. Similar use for a single dental claim requiring all five benchmarked transactions could save a dental practice nearly 30 minutes on average and nearly $11.75.

The relatively slow, incremental progress reported in recent years of the transition from manual to electronic administrative transactions is no longer sufficient, the report said. It proposes that industry participants strongly support provider access to robust electronic data interchange systems, expand the understanding for reasons behind increasing portal use, and embrace the transition to fully electronic transactions.

Twitter: @JELagasse
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