Study: Switch from manual to electronic transactions could save healthcare $8B

Transitioning from billions of manual to fully electronic business transactions between healthcare providers and health plans can potentially result in significant cost savings and efficiencies.

But how much progress has been made? How much remains? 

That's what nonprofit alliance CAQH examined in its newly-released 2014 CAQH Index research report. The report reflects 2013 data from participating health plans representing 112 million enrollees — almost 45 percent of the privately insured U.S. population — on more than four billion transactions.

Jeff Lemieux, director of research for CAQH; Gwendolyn Lohse, deputy director of CAQH and managing director of the Committee on Operating Rules for Information Exchange; and Andrew Naugle, principal and healthcare management consultant with Milliman, which collected data from providers, broke down findings from the report during a webinar March 17.

The report ultimately found that U.S. healthcare could save $8 billion annually by transitioning six routine business transactions —claim submission, eligibility and benefit verification, prior authorization, claim status inquiry, claim payment and remittance advice — from manual to electronic, the speakers said.

Webinar speakers attributed the significant potential for cost savings to the large volume of transactions, as well as the dramatic cost difference between manual and electronic transactions.

In 2013, the volume of fully electronic standardized transactions grew by double-digit rates on a year-over-year basis for eligibility and benefit verifications (+14 percent), claim status inquiries (+23 percent) and claim payments (+14 percent). The largest declines in the volume of manual transactions were for claim submission (-15 percent), claim payments (-15 percent) and remittance advice (-16 percent), the study found.Nearly 8 billion transactions were performed electronically by commercial health plans and about 6.5 billion were handled electronically by healthcare providers.

Despite the increase in electronic transactions, approximately 1 billion transactions were handled manually (telephone, fax, mail, etc.) by health plans in 2013, and more than 2.4 billion transactions were handled manually by healthcare providers, the webinar speakers said. They noted that counts are based on an extrapolation from the plans reporting for the 2014 CAQH Index research report (112 million enrollees) to the whole commercially covered population (approximately 245 million enrollees).

For health plans, costs for each manual transaction averaged $2 for the six transactions studied, while electronic transaction costs ranged from only 5 to 10 cents, the study showed. Healthcare providers' estimated costs averaged more than $5 for manual versus $1.60 per electronic transaction.

After presenting findings from the report, webinar speakers encouraged health plans and healthcare providers to learn how they compare with the industry at-large, how much time and effort their staff spends on manual versus electronic transactions and the potential for efficiency gains by switching to electronic transactions.

"The CAQH Index shows that additional progress to realize the full potential of electronic transactions requires an ongoing commitment by all healthcare stakeholders, including health plans, providers, vendors and government," CAQH Executive Director Robin Thomashauer said in a news release.

Healthcare providers and health plans may measure their potential cost savings by entering transaction volumes into the CAQH Index Savings Calculator, found here. CAQH is also looking for participates for the 2015 Index. More information on that is available here.


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