CAQH Index shows potential $8 billion in savings linked to adoption of HIPAA electronic administrative transactions

The healthcare system in the United States is spending billions per year unnecessarily by continuing to use manual administrative processes for basic transactions, according to the 2015 CAQH Index released Wednesday.

Despite steady increases in the industry adoption of HIPAA electronic administrative transactions, CAQH -- a nonprofit dedicated to streamlining the business end of healthcare -- highlights the opportunity to save an additional $8 billion each year.

The CAQH Index measures adoption rates, cost, and savings associated with the shift from manual to electronic HIPAA transactions between health plans and healthcare providers. As defined by the organization, manual transactions include resource-intensive processes -- like phone calls to verify patient coverage, or mailing claims and paper checks.

The index is based on data submitted by healthcare providers and commercial health plans, which represented over 118 million covered patients (nearly half of the commercially insured U.S. population), and more than 4 billion transactions in 2014.

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The report shows that the average rate of adoption of fully electronic transactions varies significantly among the areas measured. Claim submission, for instance, adopted fully electronic transactions at a rate of almost 94 percent, while referral certification had an adoption rate at a scant 6.2 percent. Adoption rates for eligibility/benefit verification and claim payment was relatively high (70.5 and 61.4 percent, respectively), while that of prior authorization was low (10.2 percent).

Coordination of benefits claims, remittance advice and claim status inquiry experienced medium adoption rates (48.7, 49.6, and 56.5 percent, respectively), while claim status inquiry clocked in at slightly higher, at 61.4 percent.

John Bialowicz, manager of the Electronic Business Interchange Group at Blue Cross Blue Shield of Michigan, said in a statement that such findings provide the industry with an opportunity to improve operations by sharing best practices.

"The Index clearly illustrates the value of transitioning to fully electronic transactions," he said.

The 2015 CAQH Index is the third annual report of its kind, enabling an analysis of trends from 2012 through 2014. Three-year trends show that substantially more transactions were conducted electronically in 2014 than in previous years. As in previous reports, the 2015 Index found significant, unnecessary costs resulting from large volumes of manual transactions that could be handled electronically.

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For example: Despite increasing use of electronic transactions for eligibility and benefit verifications and claim status inquiries, the industry continues to handle high volumes of these transactions manually. Healthcare providers alone could save more than $5 billion annually by using automated processes to check patients' eligibility and benefits, according to CAQH.

On average, the group found each manual transaction cost providers and plans $2 more than automated electronic transactions.

For the first time, the Index now includes data about dental plans and providers, representing more than 92 million patients and 440 million transactions. The Index found that, on average, adoption of electronic transactions is 30 percent lower for the dental industry compared to the broader medical healthcare industry.

Specific recommendations for a speedier adoption of electronic transactions are suggested by the organization -- such as sharing and expanding best practices through industry and government-led outreach and education.

The report also called for an evaluation of federal regulations and strategic plans to assess their sufficiency; another recommendation urges targeted, industry-led efforts to reduce adoption barriers for health plans and healthcare providers, perhaps with financial incentives or contractual requirements.

Twitter: @JELagasse