How Electronic Administrative Transactions Are Decreasing Costs and Administrative Burdens For Health Plans

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Health plans could save billions each year by accelerating administrative efficiencies for themselves and providers. A new CAQH report breaks down the opportunities and showcases the value of a clearinghouse partner as electronic data interchange (EDI) becomes the norm. Working with a trusted clearinghouse partner – one who knows the complexities of today and tomorrow – will help you navigate the future.

A Decade of Success Reporting on a Digitally Enabled Administrative Environment

Administrative transactions, including benefit and eligibility checks, prior authorizations, and claim processing, form the backbone of the entire healthcare system. Health plans and providers must be able to conduct these EDI transactions in a swift, secure, and standardized manner to enable delivery of timely and informed care.

CAQH, a non-profit alliance of health plans and their partners, has tracked adoption of electronic transactions every year since 2013. The most recent edition chronicles a decade of commitment to digitizing administrative processes and strengthening EDI connections between disparate systems in the payer and provider environments. The adoption of many electronic transactions has increased, such as claims submissions, eligibility and benefit verification, and acknowledgements. 

Automation is the key to getting it right. Throughout the past decade, the use of EDI has skyrocketed by 25 percent, according to the latest edition of the CAQH Index Report. Now, nine out of every ten transactions take place digitally, reducing industry-wide operating costs by approximately $187 billion every year.

Despite this progress, there are still opportunities for health plans to control costs, maximize resources, and trim the time it takes to conduct the business of healthcare. Certain critical processes have a long way to go, like prior authorization and attachments.

Currently, only 28 percent of PAs are being exchanged digitally while the electronic submission of attachments that support medical claims is similarly low, starting at 6 percent in 2016 and only rising to 24 percent by 2022.  

During the coming years, health plans will need to reexamine their current workflows to boost the use of digital strategies for sharing documents and data with their provider partners, particularly as transaction volumes have risen 28 percent since the COVID-19 pandemic, paired with a 47 percent increase in overall medical spending.

Experienced and trusted clearinghouses will be central to success. Clearinghouses make it simple for plans and providers to share information and collaborate around patient care, creating the right environment for the smooth and seamless exchange of vital administrative data.

Uncovering Opportunities to Reduce Burdens in Key Administrative Areas

The positive results so far have saved hundreds of billions for health plans, as well as an average of 14 minutes per transaction for medical care providers. But addressing these notable areas of opportunity and transitioning fully to EDI could produce a further $25 billion in cost reductions, representing 41 percent of the current spend.

Specifically, health plans can focus on the following areas to trim their budgets and provide relief to payer and provider staff members:

  • Eligibility and benefit verification: Representing the highest proportion of annual spend, health plans could save up to $12.8 billion if they work with providers to digitize the 10 percent of transactions that remain manual. Closing the gap will be crucial for sustainability as the volume of transactions continues to increase.
  • Prior authorizations (PAs): A well-known pain point across the industry, PAs are time consuming and complicated to submit manually.  The medical industry could save close to $450 million per year by creating more automated and streamlined PA processes, not to mention trimming 11 minutes per transaction off of a provider’s daily calendar.
  • Claims submissions: As the volume of medical services increases, so too will the claims for reimbursement, adding to the $11.1 billion industry spend. CAQH points out that training staff to conduct electronic claims submissions can take time and money, so beginning the adoption and education process now, before volumes exceed current norms, will be important for achieving savings and maximizing staff productivity.
  • Attachments: Supporting information for reimbursements is rarely sent electronically, creating a $213 million annual savings opportunity. CMS recently proposed standards for these transactions to help guide adoption and simplify data exchange.
  • Claims status inquiry: Payers and providers are spending 50 percent more on claims check ups as margins remain slim following the pandemic. Broadening the automation of claims status updates could help the industry save $3.6 billion a year, plus 15 minutes per transaction for providers. A clearinghouse solution with automated features can help to achieve this goal for plans and their partners.
  • Remittance advice: Similar to claims status inquiry, automating the delivery of remittance advice could save medical care stakeholders up to $2 billion a year by increasing efficiency and reducing time spent on phone calls and follow-ups.

Capitalizing on these  transactions to reduce spending and staff burdens will be important for health plans as the volume of medical transactions is expected to continue to increase.

While there are small spending increases associated with adopting digital transaction tools, the savings far outweigh the required investment, CAQH states. Automating these processes can produce further cost reductions by avoiding the need to attract and retain larger workforces, especially as qualified staff are now in short supply.

Leveraging Clearinghouses to Achieve Administrative Efficiency

Clearinghouses make all of these transactions possible, so health plans will need to evaluate their existing capabilities, and find the right partner, if necessary, that offers a tested and sophisticated approach to automation if they wish to take advantage of these savings opportunities.  

Plans should look for clearinghouse solutions that have deep experience and an exceptional reputation for reliability, agility, and standards-based collaboration between disparate trading partners. 

Health plan leaders should also conduct thorough internal reviews of their established workflows – and work closely with their contracted providers to understand their processes and frequent problems, too – in order to identify potential areas of improvement. Next, they should seek out a clearinghouse partner with capabilities to fill in those gaps and accelerate savings in time, staffing, and operational spending. 

By adopting more modernized digital clearinghouse solutions with the capacity to streamline communications and complete tasks in a quick and trustworthy manner, health plans can begin to take advantage of everything that EDI has to offer.

Preparing for the Future of EDI

In just a few years, plans that proactively embrace electronic transactions at scale can position themselves for significant cost reductions, fewer burdens for staff, and better administrative experiences across the entirety of the care continuum.

The right clearinghouse partner will proactively work with plans to develop a tailored roadmap to greater EDI adoption, help staff to maximize their productivity in this new ecosystem, and stay on top of evolving federal regulations guiding the evolution of electronic transactions.

With a 30-year history of helping health plans accelerate the adoption of electronic transactions, UHIN has been instrumental in creating a more cost effective, less burdensome future for critical information exchange. Our experts meticulously evaluate the needs of each of our partners and work with leaders to create a customized plan for expanding EDI activities with an eye toward improving efficiency across the enterprise.

As more and more administrative transactions go digital, health plans can’t afford to be left behind. Get started today with a consultation with our experienced team.