Saving money with electronic healthcare transactions

How can healthcare save $8 billion?

The non-profit CAQH (formerly the Council for Affordable Quality Healthcare) has released its annual CAQH Index, which measures the healthcare industry’s shift from manual to electronic claims processes. Now in its third year, the Index continues to highlight the dramatic cost savings that can be achieved in healthcare administration, with this year’s report finding an opportunity to achieve more than $8 billion in cost savings annually.

The report tracks adoption rates for electronic transactions, as well as the costs associated with processing transactions electronically versus manually. The figures for 2015 show that while claim submissions are now largely electronic, other types of transactions have plenty of room for improvement.

“In total,” the report states, “transitioning from fully manual to fully electronic processes for the six transactions studied alone could save commercial health plans and healthcare providers approximately $8.5 billion annually.”  

The report identifies the following cost savings per electronic transaction:

  • Claim submission: $1.54
  • Eligibility/benefit verification: $8.18
  • Prior authorization: $8.32
  • Claim status inquiry: $6.26
  • Claim payment: $1.04
  • Remittance advice: $1.56

“On average, manual transactions each cost providers and health plans approximately $2 more than each electronic transaction,” the Index finds.

The good news for providers is that the majority of the $8.5 billion in possible savings is on their side of the equation. According to CAQH, “If the industry were to adopt electronic processes for these manual transactions, the annual savings is estimated to be $1.7 billion for health plans and $6.8 billion for healthcare providers.”

In an industry that is continually being asked to identify cost-saving opportunities, the CAQH’s findings give providers a great place to look.