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Analysis

Report IDs $40.6B in Potential Savings on Healthcare Admin Transactions

By Alexandra Wilson Pecci  
   January 24, 2020

Huge amounts of money could be saved by transitioning from manual and partially electronic processing to fully electronic processing.

Spending on healthcare administrative transactions, like prior authorizations, claim submissions, and claim status inquiries, can be staggering, racking up costs to the tune of $40.6 billion per year, according to the new CAQH Index.

CAQH is a non-profit alliance of health plans and trade associations focused on the business of healthcare.

It shows that of the $350 billion spent on administrative complexity, $40.6 billion or 12% of it, is associated with conducting administrative transactions.

However, huge amounts of money could be saved by transitioning from manual and partially electronic processing to fully electronic processing. In fact, the CAQH Index says that doing so would save $13.3 billion or 33% of the existing annual spending on administrative transactions.

The report outlined potential savings for the medical industry, in both time and money, for a number of transaction types if they were to transition fully to electronic transactions.

Specifically, it identified potential annual savings for:

  • Prior authorizations: $454 million and 17 minutes per transaction
  • Electronic claim submission: $635 million and four minutes per transaction
  • Electronic coordination of benefits: $16 million
  • Electronic claim status inquiry: $2.2 billion and eight minutes per transaction
  • Electronic claim payment: $135 million and two minutes per transaction
  • Electronic remittance advice: $1.9 billion and five minutes per transaction

The report also outlined time and money savings for transactions in the dental industry.

Alexandra Wilson Pecci is an editor for HealthLeaders.


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