The Yellow Brick Road to Savings $13B In Further Automated Healthcare Administrative Transactions

By Clive Riddle, January 24, 2020

CAQH has released their seventh annual report  - the 2019 CAQH Index - which measures "the progress made by the healthcare industry in reducing the costs and burden associated with administrative transactions through automation. Their 49-page report found that "of the $350 billion dollars widely cited as the cost of administrative complexity in the US healthcare system, $40.6 billion is spent on eight administrative transactions. Of that, the industry can save $13.3 billion, or 33 percent of existing annual spend, by transitioning to fully electronic processes." 

Regarding the $13.3 billion in potential savings through automation, the report tells us “$9.9 billion can be saved by the medical plans and providers, while $3.4 billion can be saved by the dental industry. In both industries, the greatest savings exist for providers as compared to plans.”

The Index report “analyzes levels of automation, spending and savings opportunities for eight administrative transactions related to verifying patient insurance coverage and cost sharing, obtaining authorization for care, submitting claims and supplemental information and sending and receiving payments.”

What are these eight transaction categories, and what were their corresponding rates of full electronic transaction processing in 2019 vs. 2015?

1. Eligibility and Benefit Verification:  84% 2019 | 71% 2015
2. Prior Authorization  13% 2019 | 10% 2015
3. Claim Submission  96% 2019 | 94% 2015
4. Attachments  20% 2019 | NA 2015
5. Coordination of Benefits  86% 2019 | 49% 2015
6. Claim Status Inquiry  70% 2019 | 57% 2015
7. Claim Payment  70% 2019 | 61% 2015
8. Remittance Advice  50% 2019 | 51% 2015

Of these eight transaction categories  - the term “Attachments” might be a little generic and require further definition. CAQH defines Attachments as "the exchange of patient-specific medical information or supplemental documentation needed to support administrative transactions and clinical decisions." They go on to say "serving as a bridge between clinical and administrative data, attachments are also critical to the success of value-based payment models" and that the majority of attachments are exchanges through mail and fax as opposed to electronically.

The largest remaining estimated savings opportunities from further automation are with:

• Eligibility and Benefit Verification:  $4.24 Billion
• Claim Status Inquiry: $2.16 Billion
• Remittance Advice: $1.85 Billion

CAQH’s call to action for the industry to achieve these savings centers around:

• Focusing efforts to reduce provider burden
• Accelerating standards and operating rule development to support harmonization of administrative and clinical data exchange
• Needing vendor adoption of all standards and operating rules; and
• Expanding research related to the administrative workflow