U.S. health care system could save $8 billion annually with more electronic business transactions

March 18, 2015
by Lauren Dubinsky, Senior Reporter
If the U.S. health care system performed a few routine business transactions electronically instead of manually it could save $8 billion annually, according to the new 2014 CAQH Index. Those transactions include claim submission, eligibility and benefit verification, prior authorization, claim status inquiries, claim payment and remittance advice transactions.

This second annual CAQH Index monitored the progress from manual phone, fax or email transactions to HIPAA electronic administrative transactions between health care providers and health plans. It used data from participating health plans from 112 million enrollees, which is almost 45 percent of the privately insured population in the U.S.

The analysis found that the adoption rates for fully electronic transactions automated for both health care providers and health plans only rose a little, but the volume of those transactions increased to double-digit rates for eligibility and benefit verifications, claim status inquiries, and claim payments.

But the rates vary considerably — 92 percent electronically transact claim submissions but only 7 percent electronically transact prior authorization. Additionally, just about half of the claim payments and remittance advice transactions are still done manually.

The significant potential cost savings are a result of both the bigger volume of transactions and the difference in cost between electronic and manual transactions. Each manual transaction can cost a health plan about $2, and a health care provider over $5 but each electronic transaction can cost health plans as little as 5 to 10 cents and providers $1.60.

But there’s a lot of work to be done — health care providers still process 2.4 billion transactions manually and health plans still process 1 billion. The findings of this analysis can fuel initiatives including CAQH CORE and CAQH Solutions that are making efforts to move the industry towards more electronic transactions.