E-transactions could save providers, plans $8B per year

Providers and health plans potentially could save $8 billion each year if they fully adopted electronic information transactions, according to a report from the Council for Affordable Quality Healthcare (CAQH). Most of the benefit would go to providers.

The findings were based on submissions from health plans representing 112 million enrollees and more than 4 billion transactions in 2013. The adoption rates for fully electronic transactions increased slightly from 2012 to 2013.

The estimated cost savings were based on six main areas: claim submission, eligibility and benefit verification, prior authorization, claim status inquiry, claim payment and remittance advice.

The researchers mentioned that although more providers and health plans are using EHRs and transitioning to electronic information transactions, a large number of transactions are still performed via telephone, fax or mail.

They also evaluated the economic effect of electronic transactions. For health plans, manual transactions averaged approximately $2 per transaction, while the costs of electronic transactions ranged from 5 cents to 10 cents per transaction. For providers, manual transactions cost more than $5 per transaction, while electronic transactions averaged approximately $1.60 per transaction.

That translated into $8.3 billion in potential annual savings, with almost $7.2 billion for providers alone.

Milliman collected the cost data for CAQH by conducting interviews with healthcare facilities and practices. Health plans provided their own cost data.

The report noted that the costs did not include the effort required to prepare the information or work with the results of a transaction response.

“Of course, we cannot be sure the adoption rates and costs per transaction for the rest of the industry are similar to those of the 2014 Index respondents,” they wrote. “However, the sheer size of the 2014 Index response and our belief that some 2014 Index respondents may be industry leaders or ‘first movers’ in the transition from manual to electronic business transactions give us reason to believe that our estimates for the industry are reasonable, and may even be somewhat conservative.”

Researchers found that 72 percent of claims status transactions, 58 percent of claim payments, 82 percent of eligibility and benefit verification inquiries and responses and 51 percent of remittance advice transactions were submitted electronically.

CAQH, a nonprofit alliance of health plans and trade associations, defined electronic as automated standardized transactions that meet the standard and operating rules under HIPAA. Health plans had higher adoption rates than providers in some cases, particularly for eligibility and benefit verification, prior authorization and claims status. For instance, the researchers noted that providers input data into health plan web portals or interactive voice response systems.

For health plans, the adoption rate varied widely. For instance, electronic transaction adoption for eligibility verification ranged from 55 percent to 98 percent, the use of electronic funds transfer for claim payments ranged from 15 percent to 78 percent and claims status inquiries ranged from 0 percent to 97 percent.

CAQH released its 2014 Index report in March.