2015 CAQH Index Report

View the full  2015 CAQH Index report.

There is widespread consensus that administrative costs in healthcare are excessive. By some estimates, more than $31 billion each year is spent by healthcare providers alone conducting basic business transactions with health plans. A good portion of this expense can be attributed to resource-intensive manual processes, such as phone calls to verify patient coverage or mailing claims and paper checks.

An industry-wide transition to replace manual processes with electronic, real-time transactions is ongoing to reduce the cost of doing business in healthcare and meaningfully impact efficiency, productivity, and data quality. Several key industry-led initiatives, as well as legislative and regulatory actions, have propelled adoption of electronic claims-related transactions forward, with incremental progress occurring over recent decades and accelerating dramatically in recent years. Measuring the progress of this transition helps identify which electronic transactions are being adopted successfully and which are being adopted at a slower pace, highlighting a potential need for targeted support to further drive greater adoption.

The CAQH Index® is the industry source for monitoring this transition. This annual report presents trends in adoption rates and cost savings associated with the shift to electronic transactions, based on surveys of healthcare providers and health plans. Participating health plans represent over 118 million covered lives – nearly 45 percent of the commercially insured U.S. population – and more than 4 billion claims-related transactions conducted in 2014. The 2015 CAQH Index includes several notable enhancements. Specifically, the Index now analyzes adoption rates for coordination of benefits (COB) claims and referral certifications. It also includes data from the dental industry, representing over 92 million covered lives and 440 million transactions – over 40 percent of the U.S. population with commercial dental insurance.

Significant findings include:

  • Adoption of fully electronic transactions continues to vary significantly among transactions. In 2014, adoption rates for fully electronic transactions using standards adopted by the Health Insurance Portability & Accountability Act (HIPAA) were:
Claim submission 93.8%
Eligibility and benefit verification 70.5%
Claim payment 61.4%
Claim status inquiry 56.5%
Remittance advice 51.1%
Coordination of benefits (COB) claims 48.7%
Prior authorization 10.2%
Referral certification 6.2%

 

  • Three-year (2012-2014) trend shows a steady, but modest, increase in the adoption of fully electronic transactions. Accelerated adoption of some transactions is promising. Growth in adoption over the three-year period improved across the six transactions originally studied by the CAQH Index (claim submission, status inquiry, and payment; eligibility and benefit verification; prior authorization; and remittance advice). In 2014, the average increase in adoption across transactions was +4.5 percentage points, compared to +3.0 percentage points in 2013. Of note, the greatest increases in adoption in 2014 were for claim status inquiry (+6.9%) and eligibility and benefit verification (+5.2%), for which federally mandated compliance with operating rules for HIPAA standards became effective in 2013.
  • Despite increasing adoption of fully electronic transactions, the volume of telephonic inquiries has remained stable for eligibility and benefit verifications and claim status inquiries. Eligibility and benefit verifications and claim status inquiries are far less costly when conducted electronically, offering a huge savings opportunity for health plans and providers. As noted, the use of fully electronic transactions is increasing, but in 2014 responding health plans still reported over 120 million transactions in which representatives of the health plans and healthcare providers connected telephonically to complete the transaction. Several factors contributing to the stable volume of manual transactions, despite increasing volume of electronic transactions are discussed in this report.
  • Use of partially electronic methods, such as health plan-sponsored web portals and interactive voice response (IVR) systems, continues to increase for some transactions, but is declining for others. Use of partially electronic transactions continues to increase for some transactions and is the most common method for prior authorizations (58.2%) and referral certifications (82.1%). For other transactions, for example, eligibility and benefit verifications and claim status inquiries, the volume of partially electronic transactions continues to decline, while fully electronic is increasing.
  • For the dental industry, adoption of fully electronic transactions was lower overall and variable across transactions. In 2014, adoption of fully electronic transactions using HIPAA standards was significantly lower for the dental industry as compared to the broader healthcare industry, ranging from nearly 17 percentage points lower for eligibility and benefit verifications to 55 percentage points lower for claim payment. Adoption rates were: claim submission (69.5%), eligibility and benefit verification (56.2%), claim status inquiry (27.4%), and claim payment (6.4%). Similar to the broader healthcare industry, many transactions were conducted via web portals and IVR systems. A notably larger share of claim status inquiries were conducted using web portals and IVR systems, compared to broader healthcare (46.3% vs. 34.2%).
  • The direct labor cost per transaction continues to vary considerably across transactions and methods. Manual transactions are far more costly than electronic transactions, particularly for healthcare providers. On average, manual transactions each cost providers and health plans approximately $2 more than each electronic transaction. For health plans, direct costs averaged $2.30 per manual transaction and $0.04 per electronic transaction for the six originally tracked transactions (listed above and identified in Table 1). For healthcare providers, direct costs averaged $3.54 per manual transaction and $1.34 per electronic transaction. The industry (providers and health plans combined) cost averaged $5.87 per manual transaction and $1.34 per electronic transaction.
  • In total, 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. This analysis estimates 16 billion administrative transactions flowed between commercial health plans and healthcare providers in 2014. Of the 16 billion, health plans processed an estimated 900 million manually in 2014, and another 2.5 billion were conducted manually by healthcare providers. 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.

Industry Call to Action

These findings demonstrate the urgent need for further action. While the healthcare industry has made significant progress, the transformation is far from complete. To facilitate more rapid adoption of electronic transactions, specific actions are outlined in this report for industry consideration:

  1. Share and expand best practices to increase adoption of electronic transactions and reduce utilization of manual transactions among industry stakeholders by accelerating industry- and government-led outreach and education for health plans, healthcare providers, and their agents, including practice management system (PMS) vendors;
  2. Evaluate sufficiency of current government regulations and federal strategic plans to support broad adoption of fully electronic transactions for health plans, healthcare providers, and their agents;
  3. Increase targeted government- and industry-led efforts to reduce adoption barriers for health plans and healthcare providers, including consideration of financial incentives and contractual requirements;
  4. Continue systematic review of business processes for potential improvements of technical and policy requirements that can improve efficiency and reduce cost; and
  5. Improve uniform and systematic tracking and reporting of adoption – and related cost savings – by healthcare providers, health plans, and their agents.

The CAQH Index will continue to monitor industry progress to adopt electronic transactions. Through additional enhancements to the Index, CAQH will help address the need for robust industry data that can further inform efforts to drive this transition. A sustained effort by healthcare providers, health plans, related business partners, government agencies, and other key stakeholders is essential to propel the transition to electronic administrative transactions successfully forward.

 
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