The healthcare industry continues to make progress automating business processes, but significant gaps remain, representing an opportunity for $12.4 billion in savings through further automation, according to new data from the 2018 CAQH Index.
Electronic adoption and transaction volume increased in 2018, with several common transactions reaching 80 percent electronic adoption across the sector, according to the latest CAQH Index. This progress resulted in a narrowing of the cost savings opportunity for the first time in CAQH Index history.
CAQH is a Washington, D.C.-based non-profit alliance of health plans and trade associations. The findings from the 2018 CAQH Index are based on voluntary nationwide surveys of providers, as well as commercial medical and dental health plans. Participating medical health plans represent over 160 million covered lives—nearly 49 percent of the commercially insured U.S. population—and 7.8 billion transactions conducted in 2018.
The sixth annual CAQH Index is an annual report tracking the adoption of HIPAA-mandated and other electronic administrative transactions between healthcare providers and health plans in the medical and dental industries. These transactions include verifying a patient’s insurance coverage, obtaining authorization for care, submitting a claim and supplemental medical information and sending and receiving payments. The CAQH Index also estimates the annual volume of these transactions, their cost and the time needed to complete them.
By benchmarking progress, industry and government can more easily identify barriers that may be preventing stakeholders from realizing the full benefit of electronic administrative transactions. These insights can prompt new initiatives to address and reduce barriers. For the report, data was submitted by medical and dental plans that cover roughly half of the insured population in the United States and providers representing a range of specialties.
After reporting modest progress over the past few years, the 2018 CAQH Index findings suggest more positive change is occurring in the industry overall. Healthcare industry stakeholders made progress on many fronts this year—in adoption of electronic transactions, reductions in the volume of manual transactions and reductions in the remaining savings opportunity.
“The results highlighted in the 2018 Index are encouraging,” Kristine Burnaska, director of research and measurement at CAQH, said in a statement. “Both providers and health plans are saving time and reducing administrative costs, but more effort is needed to significantly reduce the volume of expensive, time consuming manual processing.”
While the overall volume of transactions in the medical industry increased by 18 percent in the past year, the volume of manual transactions declined, falling 6 percent for health plans and 1 percent for providers, according to the CAQH Index.
Medical industry adoption of electronic eligibility and benefit verification increased six percentage points to 85 percent in 2018; adoption of electronic coordination of benefits rose to 80 percent in 2018, up from 75 percent in 2017. Adoption of electronic claim submission stands at 96 percent and 71 percent of healthcare organizations have adopted electronic claim status inquiries.
However, the healthcare industry made little progress in the adoption of other electronic administrative transactions—only 12 percent of organizations have adopted electronic prior authorization, although that is up from 8 percent the year before. Adoption of electronic claim payment stands at 63 percent and less than half of healthcare organizations (48 percent) have adopted electronic remittance advice processes.
However, continued efforts are needed to significantly reduce the volume of expensive, time-consuming manual transactions and adapt to the changing administrative needs of the healthcare system, according to the CAQH Index. The Index estimates that the medical and dental industries could save an additional $12.4 billion annually with full adoption of electronic administrative transactions, particularly through greater automation by providers, which could save an additional $8.5 billion.
During a period of rising transaction volume, the medical industry shaved $1.3 billion from its savings opportunity, bringing it to $9.8 billion.
The Index also highlights a substantial rise in overall transaction volume, growing in parallel with industry complexity. As these trends persist, the Index finds that the industry would benefit from updated standards, operating rules, infrastructure and functionality that can accommodate the increase in volume and growing complexity associated with the need to connect administrative and clinical data elements in value-based payment models.
“The industry is making progress,” April Todd, senior vice president, CORE and Explorations at CAQH, said in a statement. “But, we are at an inflection point where processes and technology must adapt to a healthcare system that is transitioning to value-based payment and becoming increasingly complex.”
The CAQH Index notes that industry complexity is growing in parallel with transaction volume. “As these trends persist, the industry will benefit from standards, operating rules, infrastructure and functionality that can accommodate both the increase in volume and the growing complexity associated with varying plan and payment models designed to increase the value and quality of healthcare for consumers. There is a need for all stakeholders to support initiatives that lay the groundwork for the future,” the report authors wrote.
The CAQH Index also issued a number calls to action for the healthcare industry, including focusing efforts to address cost savings opportunities. Several transactions offer the greatest potential for savings and should be the subject of attention—transactions include eligibility and benefit verification, claim status, remittance advice and prior authorization. The medical industry could save an additional $4 billion on eligibility and benefit verifications and $2.6 billion on claim status transactions by fully adopting electronic transactions, according to the CAQH Index.
CAQH also recommends accelerating standards and operating rule development and encouraging timely vendor adoption of standards and operating rules.
