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February 22, 2021
David Burda
Economics Innovation System Dynamics

The Benefits of Using Technology to Automate Common Healthcare Transactions

I can’t think of another industry that’s more transactional than healthcare. The amount of money spent on revenue cycle management alone here in the U.S. would dwarf the economies of many countries. At the same time, I can’t think of another industry that struggles more with technology than healthcare. 

I think many others would agree with me that healthcare is overwhelmingly transactional and all thumbs when it comes to technology.

Enough about what I think. Here’s what CAQH thinks. CAQH is the Council for Affordable Quality Healthcare, and it just released its 2020 CAQH Index. You can download the 51-page index here.  

Essentially, the index tells you what administrative tasks payers and providers are doing manually and how much money they each could save if they automated those tasks using readily available technology. The new index is the eighth annual released by CAQH. 

In its latest report, CAQH said payers and providers could save $16.3 billion a year by fully automating just nine common healthcare transactions:

  • Eligibility and benefit verification
  • Prior authorization
  • Claim submission
  • Attachments (to claims, claim appeals or prior authorizations)
  • Acknowledgments (confirmation of receipt of information)
  • Coordination of benefits
  • Claim status inquiry
  • Claim payment
  • Remittance advice

Here are a few examples of how much a payer or provider could save on a few of these transactions if they used technology to do it rather than doing it the old-fashioned way: 

  • It costs a provider an average of $5.83 per transaction to manually verify a patient’s health insurance eligibility and benefits  versus $0.82 electronically—a savings of $5.01 per transaction
  • It costs a provider an average of $10.26 per transaction to manually seek prior authorization from a payer versus $3.64 electronically—a savings of $6.62 per transaction
  • Its costs a payer an average of $3.48 per transaction to manually handle a claim status inquiry from a provider versus $0.04 electronically—a savings of $3.44 per transaction
  • It costs a payer an average of $3.66 per transaction to manually verify a member’s health insurance eligibility and benefits versus $0.03 electronically—a saving of $3.63 per transaction

“The data shows that the opportunity to build on past progress – and achieve additional savings that payers and providers can invest in patient care, innovation and expanding access in communities across the country – is significant,” CAQH said in its press release announcing the report’s release. 

Wouldn’t that be nice!

I think the savings potential for automating transactions like these not only is real as CAQH says it is but also has the real potential of making the system work better for customers.  Less administrative friction for sick patients who need care is always a good thing. 

At the same time, I don’t think automating transactions like these will make care any more affordable for patients, unfortunately. Unless they figure out a way to do it themselves, payers and providers will have to pay a hefty sum to all the revenue cycle firms out there promising big savings with their AI- and machine learning-powered automation tools. If there is any money left over, it will drop to the bottom line, not freeze or lower prices for medical services.

Still, if any industry needs administrative simplification, it’s healthcare.

If you’d like to learn more about this topic, please read “How to Reduce Your Operating Costs When There’s No One Left to Furloughon 4sighthealth.com.

Thanks for reading.

Stay home. Stay safe. Stay alive. The vaccine is coming. Really. Eventually.

About the Author

David Burda

David Burda began covering healthcare in 1983 and hasn’t stopped since. Dave writes this monthly column “Burda on Healthcare,” contributes weekly blog posts, manages our weekly newsletter 4sight Friday, and hosts our weekly Roundup podcast. Dave believes that healthcare is a business like any other business, and customers — patients — are king. If you do what’s right for patients, good business results will follow.

Dave’s personnel experiences with the healthcare system both as a patient and family caregiver have shaped his point of view. It’s also been shaped by covering the industry for 40 years as a reporter and editor. He worked at Modern Healthcare for 25 years, the last 11 as editor.

Prior to Modern Healthcare, he did stints at the American Medical Record Association (now AHIMA) and the American Hospital Association. After Modern Healthcare, he wrote a monthly column for Twin Cities Business explaining healthcare trends to a business audience, and he developed and executed content marketing plans for leading healthcare corporations as the editorial director for healthcare strategies at MSP Communications.

When he’s not reading and writing about healthcare, Dave spends his time riding the trails of DuPage County, IL, on his bike, tending his vegetable garden and daydreaming about being a lobster fisherman in Maine. He lives in Wheaton, IL, with his lovely wife of 40 years and his three children, none of whom want to be journalists or lobster fishermen.

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