CAQH: Automating More Transactions Could Save $25 Billion

Jan. 31, 2023
Although automated workflows implemented during COVID-19 increased efficiency, staffing challenges and greater healthcare utilization contributed to overall higher administrative spending

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.”

Sponsored Recommendations

Shield your health system against cyber threats

You won't want to miss out on this imperative April 4th webinar about how you can protect your healthcare organization. Join us to learn how to fortify your health system against...

Healthcare Trends 2024: Trends & Strategies for Future Success

Explore the future of healthcare in 2024 with insights from the Healthcare Industry Trends Report. Stay ahead of the curve as we delve into the latest industry developments and...

Trailblazing Technologies: Looking at the Top Technologies for the Emerging U.S. Healthcare System

Register for the first session of the Healthcare Innovation Spotlight Series today to learn more about 'Healthcare's New Promise: Generative AI', the latest technology that is...

Data: The Bedrock of Digital Engagement

Join us on March 21st to discover how data serves as the cornerstone of digital engagement in healthcare. Learn from Frederick Health's transformative journey and gain practical...

Revenue cycle management solutions company CodaMetrix has closed a $40 million Series B funding round to create AI solutions that improve medical coding quality. Founded in 2019, CodaMetrix’s CMX platform was built in partnership with Mass General Brigham to provide real-time audit capabilities and seamless EHR integration, which are used as a feedback loop to continuously improve AI learning. The software-as-a-service platform uses machine learning, deep learning, and natural language processing to continuously learn from, and act upon, the clinical evidence stored in electronic health records (EHRs). As a multi-specialty platform that classifies codes across radiology, pathology, surgery, gastroenterology, and inpatient professional coding, Boston-based CodaMetrix said it is the first platform to have an impact across departments by alleviating administrative burdens from billing staff. On average, CodaMetrix said, providers using the CodaMetrix platform experience a 60 percent reduction in coding costs, 70 percent reduction in claims denials, a 5-week acceleration in time to cash, and improvements in provider satisfaction, quality and compliance. The company has partnered with several health systems – including Mass General Brigham, University of Colorado Medicine, Mount Sinai Health System, Yale Medicine, Henry Ford Health and the University of Miami Health System. “Medical coding is one of the most time-consuming, understaffed and inherently error-prone parts of the health system revenue cycle. Hospitals face a high demand on human and financial resources and clinicians must often work through tedious, administrative processes away from patient care,” said Hamid Tabatabaie, CodaMetrix president and CEO, in a statement. “Our game-changing AI platform delivers vital automation which not only addresses these pain points but, more significantly, changes claims data from notoriously unreliable to clinically valuable. We are proud to serve leading provider organizations with a comprehensive and transformative automation solution, setting the standard for coding quality as part of our vision to change healthcare through the use of AI.” The company’s Series A funding was led by SignalFire. Frist Cressey Ventures (FCV), Martin Ventures, Yale Medicine, University of Colorado Healthcare Innovation Fund, and Mass General Brigham physician organizations also participated in the round. The Series B was led by Transformation Capital with continued support from existing investors SignalFire, Series A lead, and Frist Cressey Ventures.