Healthcare providers and health plans are making progress transitioning from paper-based to electronic transactions, but are still manually processing some 3.4 billion transactions annually, according to a new report from CAQH, a non-profit alliance promoting initiatives to streamline the healthcare business.

If U.S. healthcare could transition those manual transactions to electronic, CAQH believes the industry could reap $8 billion in annual savings. That’s the takeaway from the group’s 2014 CAQH Index, published in March.

Electronic Transactions

The index tracks healthcare providers and health plans’ 2013 data on six types of transactions: claim submission, eligibility and benefits verification, prior authorization, claim status inquiries, claim payment and remittance advice.

CAQH researchers found that adoption rates of electronic transactions varied widely. For example, claim submissions and eligibility and benefit verifications had an adoption rate of 92% and 69%, respectively, while prior authorization transactions had an adoption rate of just 7%.

Overall, nearly 8 billion transactions were handled electronically by commercial health plans, and 6.5 billion handled electronically by healthcare providers. Still, health plans handled some 1 billion transactions manually (by phone, fax or mail), and providers handled 2.4 billion manually.

Because electronic transactions can be completed for much lower cost, those numbers of manual transactions hold a tremendous potential for savings every year. CAQH estimates that for health plans, the average cost of manually handling the six transactions studied is $2, compared to 5 to 10 cents for electronic transactions. For healthcare providers, the average cost for a manual transaction is $5, compared to $1.60 for electronic.

The researchers noted:

“In total, completing the transition from manual to electronic processes for the six main transactions studied could save health plans and healthcare providers approximately $8 billion annually. In addition, the 2014 Index studied claim attachments and prior authorization attachments for the first time, virtually all of which were handled manually. If those attachments were instead processed electronically, additional savings for both health plans and healthcare providers would be possible. The transaction type estimated to have the highest potential savings is eligibility and benefit verification ($4 billion).”

Health plans and providers interested in reducing paper transaction costs can use an online calculator available on the CAQH web site.

“The CAQH Index shows that additional progress to realize the full potential of electronic transactions requires an ongoing commitment by all healthcare stakeholders, including health plans, providers, vendors and government,” said CAQH Executive Director Robin Thomashauer. “Findings can inform industry initiatives such as CAQH CORE and CAQH Solutions that support the move towards greater use of electronic transactions.”

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