Study: Hospitals Can Save $800M in Claims Costs by Open Adjudication Process

Health insurer Blue Shield of California and the Hospital Association of Southern California, which represents 175 acute-care hospitals in Southern California, announced they have collaborated on a program that could save hospitals nationwide $800 million on administrative costs for claims processing.

Blue Shield of California and HASC have worked together since 2010 to reduce claims operating costs through a program called the Partnership in Operational Excellence and Transparency. The initiative involves hospitals and health insurers sharing claims performance data and then using that data to develop process changes and other administration improvements in the revenue cycle.

Between 2008 and 2011, more than 180 Blue Shield-contracted hospitals participated in the program, and they saw their claim denials decrease from 22.8 percent to 17.4 percent. Mission Hospital Medical Center in Laguna Beach, Calif., saved almost $5 million between fiscal year 2009 and FY 2010 because denied Blue Shield accounts decreased by 40 percent while denied charges fell 52 percent.

Blue Shield of California and the HASC said the increased transparency between hospital and health insurer allows the two normally fragmented groups to work together to reduce administrative costs, which are some of largest and most avoidable excess costs in a hospital's revenue cycle.

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