Administrative costs in the U.S. healthcare system consume well over $300 billion annually, or nearly 15 percent of all healthcare expenditures by some estimates. A portion of this expense is related to use of resource-intensive manual processes to conduct business transactions between providers and health plans, such as phone calls to verify patient insurance coverage or mailing claim payments.
Voluntary industry-led initiatives, as well as regulatory actions, have established standards and requirements to facilitate an industry-wide transition from these costly manual processes to electronic, real-time transactions. 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 opportunities for further industry action.
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 providers as well as medical and dental health plans. Participating medical health plans represent over 140 million covered lives—nearly 46 percent of the commercially insured U.S. population—and 5.4 billion transactions conducted in 2015. Participating dental health plans represent 112 million covered lives—about 46 percent of commercially insured U.S. population—and 564 million transactions conducted in 2015. Some estimates contained in this report focus on specific subsets of transactions types, based on the availability of data from participating health plans.
As the national benchmark, CAQH is committed to evolving the CAQH Index each year to address the need for robust data that can further inform industry efforts to increase adoption. New data reported for the first time this year include:
- Estimates of potential industry cost savings for dental health plans and providers
- Adoption and cost of healthcare claim attachments
- Average amount of time providers spend per transaction
Key 2016 findings include:
- The healthcare industry, including medical and dental, continues to make modest progress toward full adoption of electronic transactions. Increases in adoption of electronic transactions varied across transactions and ranged from one to eight percent. Fully electronic prior authorizations submitted to commercial medical health plans had the most accelerated growth in adoption (eight percent increase).
- On average, adoption of electronic transactions with commercial dental health plans was 30 percent lower than with commercial medical health plans. This lag in adoption for dental health plans and providers continues to be a significant opportunity for industry action.
- For eligibility and benefit verifications and claim status inquiries, the use of electronic transactions is increasing rapidly, but use of manual transactions, particularly telephone calls, is not declining as rapidly. Participating medical and dental health plans alone fielded over 106 million telephone calls for these types of inquiries in 2015, necessitating costly call center operations. For other transactions, growth in adoption of electronic transactions represents comparable costs savings because manual transactions are declining and electronic transactions are increasing at a similar pace.
- Only six percent of healthcare claim attachments are submitted to medical health plans electronically (using the ASC X12N 275 transaction standard), with the remaining sent via fax, mail or email. Adoption and cost of healthcare claim attachments are reported in the CAQH Index for the first time this year. Adoption is isolated, as many participating health plans report 100 percent of claim attachments are submitted manually. Every manual claim attachment costs nearly $6 more to send and receive than an electronic claim attachment.
- Health plans often offer web portals and interactive voice response systems as an alternative to using fully manual processes. These partially electronic methods remain the most common way providers submit referral requests (84 percent) and prior authorizations (47 percent).
Cost and Potential Savings
- On average, each manual transaction costs providers and health plans approximately $3 more than each electronic transaction. This cost difference represents an incredible savings opportunity, given the more than three billion manual transactions conducted annually between commercial medical health plans and providers.
- Transitioning from manual to electronic processes for the transactions studied could save medical health plans and providers an estimated $9.4 billion in direct cost each year. This is even greater than previous CAQH Index estimates, due to the addition of claim attachments to the estimates and more precise per transaction cost savings estimates for providers.
- For dental health plans and providers, full adoption of electronic transactions for the transactions studied could save over $1.9 billion annually. While dental health plans and providers conduct fewer transactions overall compared to medical, the low adoption of fully electronic transactions equates to a large potential savings opportunity for just a subset of transactions types.
- Healthcare providers spend on average eight, and up to nearly 30, more minutes processing each manual transaction, compared to the time required for an electronic transaction. In 2015, a minimum of 1.1 million labor hours per week could have been more efficiently used providing patient care or doing other clinical tasks by achieving full adoption of the transactions studied. These estimates clearly show the potential for greater efficiency and improved workflow for providers by adopting electronic business processes.
The 2016 CAQH Index demonstrates that a significant opportunity remains and more efforts are needed to drive adoption further to maximize cost savings and increase efficiency. While the healthcare industry has made significant progress, the transformation is far from complete. It is essential that stakeholders share and expand best practices to increase adoption of electronic administrative transactions and reduce use of manual transactions through industry- and government-led outreach and education for health plans, providers, and their trading partners. Additionally, increased efforts to reduce adoption barriers for health plans and providers must remain a priority. A sustained effort by providers, health plans, related business partners, government agencies, and other key stakeholders is essential to propel the transition to electronic administrative transactions successfully forward.