Automation could save US over $13 billion in healthcare admin expenses annually

Automation could save US over $13 billion in healthcare admin expenses annually

John R. Fischer, Senior Reporter | January 30, 2020
Health IT
The healthcare industry could save potentially $13.3 billion spent annually by automating transactions
The U.S. healthcare industry could stand to save significantly on administrative costs by transitioning to fully electronic processes — $13.3 billion to be exact.

That’s the estimate tallied in the 2019 CAQH Index, which found of $350 billion spent on administrative complexity in the U.S. healthcare system, $40.6 billion is spent on eight administrative tasks that could be automated for a savings of 33% annually.

“While a greater percentage of business transactions are now conducted electronically, the U.S. continues to spend more on healthcare administration than any other nation,” said Kristine Burnaska, director of research and measurement at CAQH, in a statement. “The Index offers a road map for those areas where further automation can drive down costs and burdens for both providers and plans.”

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The tasks in question were automation eligibility and benefits verification, prior authorization, claim submission, attachments, coordination of benefits, claim status inquiry, claim payment, and advice on remittance.

The index assessed levels of automation, spending and savings for all eight, and found that medical plans and providers stand to save $9.9 billion potentially if such activities were all carried out electronically. The other $3.4 billion would be retained by the dental industry. Providers would experience greater savings, compared to plans.

One piece of evidence that supports the switch to automation is the fact that the healthcare industry as a whole has already saved $102 billion annually by automating administrative transactions. To increase this sum, the report encourages industry stakeholders of different backgrounds in healthcare to work together to find common ground and fast-track methods for automating these tasks to accommodate emerging market needs. One suggestion is for them to update standards and operating rules faster to support changing technology, payment models and patient care delivery strategies.

“While the industry has reduced administrative complexity by automating fee-for-service processes, our healthcare system is evolving,” said April Todd, senior vice president of CORE and Explorations at CAQH, in a statement. “As the industry transitions to value-based payment models, and the need for interoperable administrative and clinical systems becomes more acute, we need to adapt in order to maintain and improve upon the progress made to date.”

Medical and dental provider participant surveys requested data on nine transactions, while medical and dental plans were asked for data on thirteen transactions. All medical and dental data were based on medical/surgical and related healthcare claims and inquiries, excluding pharmacy transactions.

Medical plans reported data relating to 154 million lives, an estimated 47% of individuals covered in the U.S. data submissions included information on nearly 1.7 billion claims and over 7.9 billion total transactions. Data from dental plans represented 111 million, or approximately 44% of covered dental patients in the country. Dental data submissions disclosed information on more than 726 million transactions.

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