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Electronic Transactions

By March 30, 2015Commentary

As providers, and payers, are under continuing reimbursement pressures, lowering administrative expenses can allow them to keep more of their revenue as net income.  One of the chief ways they can do is through greater automation of the thousands of daily claim, authorization, eligibility and payment transactions.  The Council for Affordable Quality Healthcare releases a regular report on adoption of electronic transactions.  (CAQH Report)   The data was gathered from health plans representing 112 million insured people and covers over 4 billion transactions in 2013.  For six common types of transactions, rates of electronic status for health plans and providers were given.  A transaction could be electronic for a health plan, but not for a provider, and vice versa, because, for example, a health plan’s electronic prior authorization system might require a provider to use a web portal to manually enter data.  Claim submission has achieved very high electronic usage, with 92% of them being submitted electronically.  For eligibility, the rate is 95% for health plans and 69% for providers.  For prior authorization the rate is 64% for plans and 7% for providers; for claim status inquiries, 90% for health plans and 54% for providers; for claim payment, 58% for each; and for remittance advices, 55% for plans and 47% for providers.  For each category, there were slight rises in electronic use percent from the prior year, but in some cases there were dramatic jumps in actual transaction numbers. There also can be wide variation among health plans in their percent usage of electronic transactions.  It can easily be seen that the burden of non-automation falls most heavily on providers and that is also where the greatest opportunity for future savings lies.  On average across all the six transaction categories, manual processes cost $2 and electronic ones 5 to 10 cents.  The biggest gap is for prior authorization, whose use is increasing, where plans could save $4 and providers $9 per transaction by switching to automated processes.  In total, CAQH estimates that $8.3 billion annually could be saved by full automation, with $7.2 billion of that accruing to providers.  Compared to even a decade ago, however, tremendous progress has been made in making these common transactions more efficient.

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