CAQH: Automating More Transactions Could Save $25 Billion

CAQH, a nonprofit multi-stakeholder healthcare organization, has released its tenth annual report measuring the progress made by healthcare payers and providers in automating administrative transactions. This year’s report found that, while automated workflows implemented during COVID-19 increased efficiency, staffing challenges and greater healthcare utilization contributed to overall higher year-over-year administrative spending.

CAQH describes itself as a venue where health plans, providers and other entities come together to solve industry-wide business challenges. For the past 10 years, the CAQH Index has tracked automation, spending and savings opportunities for administrative transactions related to verifying insurance coverage and cost sharing, obtaining authorization for care, submitting claims and supplemental information, and sending and receiving payments. The report categorizes transactions by whether they are fully automated, partially electronic or manual.

“Over the past 10 years, despite a rapidly changing healthcare landscape, payers and providers have made dramatic gains automating transactions and reducing the cost of business processes,” said April Todd, CAQH chief policy and research officer, in a statement. “Our latest report shows that this trend toward greater efficiency continued last year, even though post-pandemic factors increased total spending.”

The organization’s latest report found the U.S. healthcare system spent $60 billion conducting nine common administrative transactions — an increase of roughly $18 billion over the previous year. Of the $60 billion annual spend, the industry could save nearly $25 billion, or 41 percent, by transitioning to fully electronic transactions. This would be in addition to the $187 billion that health plans and providers are saving annually today due to previous automation efforts.   The increase in spending was driven by at least two factors: higher utilization as people obtained medical care that they deferred during the pandemic; and higher staffing costs as medical facilities paid more to attract and retain workers and were forced to hire inexperienced, less efficient staff to fill vacancies.

Among the other findings in the 2022 Index:

• Adoption of electronic processes increased, on average, by 5 percentage points across the medical and dental industries.
• Of the transactions studied, automation is highest among acknowledgements and claims submissions for both industries. Attachments (24 percent) has the lowest electronic adoption for the medical industry, while claim payments (17 percent) has the lowest electronic adoption in the dental industry.
• The volume of transactions increased 28 percent in the medical industry and 9 percent in the dental industry.
• During the second year of the pandemic, spending on administrative transactions increased by more than $17 billion in the medical industry and $1 billion in the dental industry compared to the first year of the pandemic.
• The opportunity for savings from further automation increased to $22.3 billion for the medical industry and remained stable at $2.6 billion for the dental industry.

 “During an exceptionally challenging time in healthcare, these results are encouraging,” continued Todd. “Healthcare business processes continue to become more automated and efficient, the opportunity for continued progress is great and the areas where further investment is needed are clear.”