Skip to main content

Manual Revenue Cycle Transactions are Costlier than Ever

Analysis  |  By Alexandra Wilson Pecci  
   February 04, 2021

The healthcare industry is leaving $16.3 billion in potential automation savings on the table, finds the 2020 CAQH Index.

Automating common healthcare administrative transactions, such as prior authorization, has reduced annual costs by $122 billion, finds the 2020 CAQH Index. However, the industry is still leaving $16.3 billion in potential savings on the table.

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

The eighth annual report tracks automation, spending, and savings opportunities for revenue cycle transactions relating to verifying patient insurance coverage and cost sharing; obtaining authorization for care; submitting claims and supplemental information; and sending and receiving payments. It categorizes these transactions by whether they are fully automated, partially electronic, or manual.

Not only has automation increased since last year's report, but so has the opportunity for savings. The report estimates that the savings potential has risen by $3 billion annually, thanks in part to a drop in costs for automated processes.

In addition, the costs associated with some manual and partially electronic portal transactions are increasing.

Although prior authorization achieved the greatest year-over-year progress in moving toward automation, it's still conducted manually more often than any other transaction. Electronic adoption of prior authorization transactions rose eight percentage points, saving the industry $9.64 per transaction.

The 2020 Index also highlights other areas that are rife with savings opportunities. For example:

  • Each fully automated claims-status inquiry costs $11.71 less than the same manual transaction for the medical industry, and $10.92 less for the dental industry.
  • Each eligibility and benefit verification converted from manual to electronic saves the medical industry $8.64 and the dental industry $8.75.
  • Eligibility and benefit verification accounts for most of the total industry savings opportunity (51%).
  • Remittance advice accounts for 19% of savings opportunities.
  • Claim status inquiries account for 17% of the total savings potential.

The 2020 Index only includes data from health plans and providers through the 2019 calendar year and doesn't consider the impact of COVID-19. But CAQH says based on initial survey responses, they're seeing that the volume of administrative transactions changed significantly in 2020, in some cases decreasing by more than 20% compared to the same timeframe in 2019.

Alexandra Wilson Pecci is an editor for HealthLeaders.

Get the latest on healthcare leadership in your inbox.