Digital transactions could save insurers, providers $8B

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 - health IT, Stimulus, money

Healthcare industry observers shouldn’t be surprised that fully electronic transactions have become more and more commonplace. What might raise an eyebrow, though, is the claim the industry could save as much as $8 billion a year by converting to fully digital process for transactions, according to a recent study.

The Council for Affordable Quality Healthcare (CAQH) estimates more than $31 billion a year is spent on business transactions with health plans. A significant portion of this expense relates to manual processes, such as phone calls and mailings.

The 2015 CAQH Index, which examined data for the 2014 fiscal year, estimated savings associated with six common transactions, including claim submissions, authorizations, inquiries and payments. Of these 16 billion transactions, health plans could save $1.7 billion and healthcare providers $6.8 billion if the industry adopted fully electronic processes.

The CAQH report reached a number of interesting conclusions, including:

  • Adoption of fully electronic transactions varies significantly, from 94 percent in claim submission to just 6 percent in referral certification;
  • From 2012 to 2014, adoption of fully electronic transactions increased steadily;
  • The volume of telephone inquiries has remained stable, despite the increasing adoption of fully electronic transactions;
  • Use of partially electronic methods, such as web portals and interactive voice response systems, continues to increase for some transactions, while declining for others;
  • The labor cost per transaction varies considerably across transaction methods. Direct costs for health plans average $2.30 per manual transaction and $0.04 per electronic transaction, while the averages for healthcare providers was $3.54 and $1.34.