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Healthcare Can Save $8 Billion Each Year by Eliminating Manual Processes

Posted on April 8th, 2016

Healthcare Can Save 8 Billion A Year

The healthcare system in the U.S. is unnecessarily spending billions per year by continuing to use manual administrative processes for basic transactions, according to the 2015 CAQH Index.

Despite steady increases in the industry adoption of HIPAA electronic administrative transactions, CAQH, a nonprofit dedicated to streamlining the business end of healthcare, highlights the opportunity to save an additional $8 billion each year.

The CAQH Index is based on data submitted by healthcare providers and commercial health plans, which represented over 118 million covered patients and more than 4 billion transactions in 2014. This index measures adoption rates, cost and savings associated with the change from manual to electronic HIPAA transactions between health plans and healthcare providers. As defined by the organization, manual transactions include resource-heavy processes such as phone calls to verify patient coverage or mailing claims and paper checks.

The most recent report shows that the average rate of adoption of electronic transactions varies significantly among the areas measured.

  • Claim submission: 94.0 percent
  • Eligibility/benefit verification: 70.6 percent
  • Claim payment: 61.4 percent
  • Claim status inquiry: 56.5 percent
  • Remittance advice: 49.6 percent
  • Benefit claims: 48.7 percent
  • Prior authorization: 10.2 percent
  • Referral certification: 6.2 percent

John Bialowicz, manager of the Electronic Business Interchange Group at Blue Cross Blue Shield of Michigan, said in a statement that such findings provide the industry with an opportunity to improve operations by sharing best practices.

“The Index clearly illustrates the value of transitioning to fully electronic transactions,” he said.

For example, despite the increased use of electronic transactions for eligibility and benefit verifications and claim status inquiries, the industry continues to handle high volumes of these transactions manually. Healthcare providers alone could save more than $5 billion annually by using automated processes to check patients’ eligibility and benefits, according to CAQH.

On average, the group found each manual transaction costs providers and plans $2 more than automated electronic transactions.

For the first time, the index now includes data about dental plans and providers, representing more than 92 million patients and 440 million transactions. It found that adoption of electronic transactions is 30 percent lower for the dental industry compared to the broader medical healthcare industry.

Although more healthcare businesses adopt electronic processes every year, CAQH suggests companies to take action by spreading awareness through sharing and expanding best practices through industry and government-led outreach and education. More information can be found on CAQH.

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