Claims Management Automation Progresses, But Opportunities Remain

Claims Management Automation Progress

Providers and payers are increasingly adopting electronic claims management transactions, but remittance advice and prior authorizations are still largely manual.

Electronic claims management adoption by plans and providers is at or above 80 percent for three of the seven transactions analyzed in the most recent CAQH Index.

The CAQH 2018 Index showed adoption of fully electronic eligibility and benefit verification increased six percentage points in the past year, reaching 85 percent of transactions in 2018.

Meanwhile, full electronic adoption of claim submission and coordination of benefit transactions reached 96 percent and 80 percent, respectively.

However, the healthcare industry still has room to improve their adoption of fully electronic administrative transactions. For the remaining transactions CAQH reported:

  • Fully electronic prior authorization adoption continued to lag behind other transactions, increasing to 12 percent, while the proportion of prior authorizations conducted manually increased from 35 to 51 percent
  • Adoption of fully electronic claim status inquiry transactions increased from 69 percent to 71 percent between 2017 and 2018, with fully manual transactions remaining at seven percent
  • Fully electronic claim payment adoption increased three percentage points since last year, reaching 63 percent, while the proportion of fully manual claim payment transactions decreased three percentage points to 37 percent
  • Remittance advice was the only transaction tracked for which fully electronic adoption decreased, falling six percentage points to 48 percent from 2017 to 2018 while fully manual transactions remained around nine percent

“The results highlighted in the 2018 Index are encouraging,” Kristine Burnaska, Director of Research and Measurement at CAQH, stated in a press release. “Both providers and health plans are saving time and reducing administrative costs, but more effort is needed to significantly reduce the volume of expensive, time consuming manual processing.”

Providers and payers may have made some progress with electronic claims management from 2017 to 2018. However, CAQH found that the healthcare industry could still save an additional $9.8 billion annually through full adoption of electronic administrative transactions, especially on the provider side.

The data from health plans covering almost half of the insured population showed that providers could save $14.64 for a single patient encounter requiring six of the most common administrative transactions by adopting a fully electronic workflow.

CAQH omitted coordination of benefit transactions because the administrative task is required for just two to five percent of health plan members.

In total, providers could save $8.5 billion each year by doing away with their manual claims management processes.

The greatest per-transaction savings opportunity for providers is the adoption of fully electronic claim status inquiry transactions ($5.23 potential savings per transaction), followed by prior authorization ($3.81) and eligibility and benefit verification ($2.60).

CAQH intends for providers and other industry stakeholders to use the most recent CAQH Index to “identify and prioritize opportunities in their administrative workflow for improvement by considering both the cost of a transaction and the number of those transactions conducted annually,” the report stated.

However, the non-profit organization pointed out that stakeholders will need standards and operating rules to truly move forward with a completely electronic claims management workflow.

“Growing in parallel with transaction volume is industry complexity,” the report stated. “As these trends persist, the industry will benefit from standards, operating rules, infrastructure and functionality that can accommodate both the increase in volume and the growing complexity associated with varying plan and payment models designed to increase the value and quality of healthcare for consumers. There is a need for all stakeholders to support initiatives that lay the groundwork for the future.”

The need for standards and operating rules will become even more important as the industry transitions away from fee-for-service.

“The industry is making progress,” April Todd, Senior Vice President, CORE and Explorations at CAQH, stated in the press release. “But, we are at an inflection point where processes and technology must adapt to a healthcare system that is transitioning to value-based payment and becoming increasingly complex.”

To promote the development of claims management and administrative standards and operating rules, CAQH advised vendors to adopt standards.

“There is an opportunity for vendor systems to support the adoption of electronic transactions through more timely and comprehensive deployment of new and updated standards and operating rules,” the organization recommended in the report. “In particular, gaps exist in vendor support for prior authorization, attachments and the dental industry generally. The vendor community can accelerate the adoption and support the ongoing use of electronic transactions by prioritizing the development of solutions to address the gaps and cost savings opportunities identified in this report.”

CAQH also suggested that stakeholders identify the barriers to electronic adoption of administrative transactions. Cost, resistance to change, lack of vendor support, and other challenges push providers and payers away from the adoption of a fully electronic claims management workflow.

“Improving efficiency of the healthcare administrative workflow requires long-term commitment by all stakeholders. The strategies proposed here address the greatest opportunities and needs, and identify areas for top performers to help peers overcome barriers to automation,” CAQH concluded.

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