Claim Automation Up, But $16.3B Remains in Potential Savings

February 08, 2021 - Levels of claim automation have risen in healthcare over the past year, but so has the opportunity for further savings through technology, the Council for Affordable Quality Healthcare, Inc. (CAQH) reports.

Released last week, the 2020 CAQH Index showed that the healthcare and dental industry has avoided $122 billion in costs by streamlining administrative processes, such as obtaining prior authorizations, submitting claims and supplemental information, and receiving payments electronically.

Despite the savings from increased automation of these functions, payers and providers could still save $16.3 billion by fully automating nine common transactions, an increase of $3 billion in potential savings annually.

“This year’s report found that adoption of electronic processes generally increased across the medical and dental industries,” Kristine Burnaska, director of research and measurement at CAQH, said in an announcement. “The data also indicates that future efforts to automate could yield even greater returns.”

The industry, for example, could avoid $6.7 billion annually by fully automating eligibility and benefit verification, including $2.7 billion in savings by switching from partially to fully automated transactions, according to the report.

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Payers and providers have already saved $85.6 billion on eligibility and benefit checks through automation. Yet automation of the transaction has remained around 84 percent of all checks in 2019, with the partially automated and manual transactions also remaining at about 15 percent and one percent, respectively.

This puts eligibility and benefit verification at the top for savings opportunities for medical plans and providers yet again, CAQH stated.

The savings opportunity for switching to fully automated eligibility and benefit verification is especially open to medical providers who represented an overwhelming majority (96 percent) of the total spending on these checks compared to medical plans in 2019.

The largest single per transactions savings opportunity for medical plans and providers was associated with prior authorizations, the Index also showed.

Providers have cited prior authorizations as one of the most complex and burdensome transactions, and that burden continues to increase each year, impacting both provider time and patient care, according to a survey conducted by the American Medical Association (AMA).

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Though adoption of electronic prior authorization increased the most compared to other administrative transactions, rising from eight percentages points to 21 percent in 2019, the industry could save $417 million annually if plans and providers convert the remaining manual and partially electronic transactions to fully electronic.

The majority of the savings is also tied to medical providers, who have the potential to reduce prior authorization costs by $322 million annually while also savings 12 minutes per transaction.

Other potential annual savings opportunities the Index found included $2.5 billion for electronic remittance advice, $2.3 billion for electronic claim status inquiry, $522 million for electronic claim submissions, $426 million for electronic claim payment, $377 million for electronic attachments, and $19 million for electronic coordination of benefits.

The increase in overall cost savings in the healthcare and dental industry has increased because of higher costs reported for most manual and partially automated transactions. That is also on top on lower reported costs for most automated administrative transactions.

“Compared to the previous report, there is a larger gap between the cost for electronic transactions and the cost for partially electronic and manual transactions, leading to a greater opportunity for savings as electronic transactions have become more efficient and partially electronic and manual processing methods have become more expensive,” the Index stated.

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CAQH suggests that standards and operating rules be updated more frequently to adapt to changing administrative needs.

“When a standard does not adequately address a business need, manual methods or multiple non-standard technology approaches are deployed resulting in higher costs and more staff time, particularly for providers,” the non-profit organization explained. “As business needs change and technology advances, the industry must work together to align on common expectations for data exchange to keep administrative expenses in check.”

The business of healthcare is rapidly changing in light of the COVID-19 pandemic.

While the 2020 CAQH Index collected data from payers and providers through 2019, these stakeholders are already reporting a significant impact on their 2020 administrative processes. For example, transaction volume has decreased by over 20 percent in some cases.

Additionally, ongoing trends such as the transition to value-based reimbursement call for updated standards and operating rules that align with innovation, the CAQH stated.

CAQH plans to launch an effort to address value-based standards and rules in 2021 and government-led efforts are also addressing key issues like interoperability in the coming year, but more progress can be made, the organization asserted.

“Industry stakeholders, healthcare leaders and policy makers should build on existing progress made across the administrative workflow when implementing updates and new standards to address emerging needs. It is important to keep the momentum moving forward and not lose ground on the achievements that have been made as business needs change and technology advances,” the Index concluded.