8 Key Areas Representing $13.3 Billion in Cost Saving Opportunities for Healthcare Administration
Authored by Scott Overholt – Chief Business Officer, Vyne Medical for HIT Consultant — May 7, 2021
According to the 2020 CAQH Index report, an annual report published by the Council for Affordable Quality Healthcare, a study of eight key transactional areas revealed opportunities for cost savings totaling $13.3 billion for medical providers and plans willing to move to fully electronic administrative processes. The CAQH report examined eight key transactions: Eligibility and Benefit Verification, Prior Authorization, Claim Submission, Attachments, Coordination of Benefits, Claim Status Inquiry, Claim Payment, and Remittance Advice.
1. Eligibility and benefit verification
Of the 13.3-billion-dollar savings opportunity for medical organizations, the greatest area for cost savings – accounting for 51 percent of the total ($6.7 billion) – comes in the area of eligibility and benefit verification. With 84 percent of these transactions being fully electronic, it might seem odd that the opportunity for cost savings is so high. One explanation is that this opportunity includes $2.7 billion dollars of savings associated with medical providers and plans moving from partially to fully electronic transactions. At present, 15 percent of transactions are only partially electronic. As the number of fully electronic transactions increases and as processes improve, an estimated 11 minutes per transaction can be saved, translating to a significant cost savings opportunity.
2. Prior authorization
Portals are now playing a key role in many insurance-related transactions, but many processes are only partially electronic and they are often not integrated with other hospital systems. While certainly more productive than sitting on the phone with a payer, this approach is not overly cost-efficient. In fact, CAQH states that, for medical providers, the single largest per transaction savings opportunity associated with converting partially electronic transactions to fully electronic is for prior authorization with a cost reduction of $3.43 per transitioned transaction. Fully electronic automation of medical prior authorizations represents a potential savings of $417 million dollars annually.
3. Claim submission
For the past three years, the medical industry has consistently shown an impressive 96 percent adoption rate for fully electronic claim submissions; however, there is still room for improvement. With 421 million claims per year still being manually submitted, there’s time and money to be saved. CAQH estimates that providers and plans could save an average of three minutes per transaction and $522 million annually by adopting fully electronic claim submission processes.
Of the functional areas examined by CAQH, attachments consistently provide a sizable opportunity for improvement. Since there is no federally mandated standard for electronic attachments, a majority of medical attachments (78 percent) are still submitted using manual processes including mail and fax. The report states that moving to fully electronic attachments could save $4.09 per transaction or $377 million annually for the medical industry. Additionally, a time savings of eight minutes per transaction could be recognized by utilizing fully electronic attachments.
5. Coordination of benefits (COB)
Fully electronic COB adoption is a bright spot in the list of transactions reviewed, as 89 percent of medical plans have already made the move to automated processes. With only 11 percent lacking an electronic COB process, you’d think the opportunity for cost savings would be minimal. The reality is that there is potential to save another $19 million annually, and with medical revenues taking a hit during the pandemic, every penny counts.
6. Claim status inquiry
The breakdown of medical plan approaches to claim status inquiries for claim tracking is as follows: 72 percent are fully electronic, six percent use manual processes and 22 percent use partially electronic processes (web portals). This transactional area represents a potential annual savings opportunity of $2.3 billion with $2.1 billion of that savings opportunity being available for providers. A contributing factor to the financial advantages of the electronic adoption for claim status inquiry is the time savings potential – a whopping 17 minutes per transaction.
7. Claim payment
A consistent push for medical plans to adopt electronic claim payments has driven adoption to 74 percent, reducing the number of manual transactions year over year. With a potential annual savings of $426 million and estimated time savings of four minutes per transaction, there’s still work to be done and a significant cost savings opportunity to be recognized.
8. Remittance advice
Another area of opportunity relates to remittance advice, a process that is now fully electronic for 57 percent of medical plans. Thirty-nine percent of plans use partially electronic solutions like portals and interactive voice response (IVR), and only 4 percent rely strictly on manual processes. Improvements in this area represent a potential cost and time savings of $2.5 billion annually and six minutes per transaction for plans that go fully electronic for remittance advice.
With a potential savings of more than $13 billion dollars for medical providers and plans, it stands to reason that these eight key transactional areas warrant a closer look for most organizations. When you’re ready to refine your processes, contact Vyne Medical and learn how we can help automate administrative workflows for your organization as we’ve done for more than 800 hospitals and health systems across the U.S.
The original source of this article was published on HIT Consultant and can be accessed here.
Download our infographic on savings opportunities for healthcare administrators, here.