Automation concept collage In themedical area, the greatest opportunities for savings were in theareas of eligibility and benefit verification. (Photo:Shutterstock)

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The U.S. health care system could save $13.3 billion annually byincreasing the use of automation of business transactions, a newanalysis finds.

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The study was published by CAQH, a nonprofit alliance ofinsurers advocating more efficient business practices in healthcare, and is the group's seventh annual look at progress in streamliningadministrative functions.

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Related: 4 recommendations for combating health care's highadministrative costs

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The CAQH Index said that of the $350 billion dollars spentannually on administration in U.S. health care, $40.6 billion isspent on eight administrative transactions. The report added thatthe health care industry could save $13.3 billion, or 33 percentwhat is spent currently, by moving to fully electronicprocesses.

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"While a greater percentage of business transactions are nowconducted electronically, the U.S. continues to spend more onhealth care administration than any other nation," said KristineBurnaska, Director of Research and Measurement at CAQH. "The Indexoffers a roadmap for those areas where further automation can drivedown costs and burdens for both providers and plans."

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Widely acknowledged waste

The study echoes some of the findings of a major report fromJAMA last October, which said that up to 25 percent of health carespending in the U.S. is wasteful. "The estimated waste is at least$760 billion per year," said a New York Times analysis of the JAMA study."That's comparable to government spending on Medicare and exceedsnational military spending, as well as total primary and secondaryeducation spending." That study also identified administrativecosts as a major area of wasteful spending.

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The CAQH Index tracks electronic administrative transactions,including verifying insurance coverage; obtaining paymentauthorization for care; submitting a claim and supplementalinformation; and sending and receiving payments. The report alsoestimated the annual volume of these transactions, their cost, andstaff time needed to complete the work.

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The study analyzed levels of automation, spending and savingsopportunities for eight administrative transactions: eligibilityand benefit verification, prior authorization, claim submission,attachments (documentation included in medical records),coordination of benefits, claim status inquiry, claim payment andremittance advice.

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In the medical area, the greatest opportunities for savings werein the areas of eligibility and benefit verification (the reportestimated the industry could save more than $4 billion), claimstatus inquiry ($2 billion), and remittance advice ($1.8billion).

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For the dental industry, the report found that the greatestsavings were possible in the areas of eligibility and benefitverification ($978 million), remittance advice ($800 million), andclaim payment ($780 million).

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Report recommendations

The CAQH report takes an in-depth look at each of the categoriesmentioned above, and comes up with a list of recommendations forthe industry:

  • Focus efforts to reduce provider burden—thereport says providers could save time and money by fully automatingadministrative functions.
  • Accelerate standards and operating ruledevelopment—the report recommends standardizing rules andenabling greater administrative and clinical interoperability.
  • Expand research related to the administrativeworkflow–including additional research on the challengesof adopting more efficient practices.

"While the industry has reduced administrative complexity byautomating fee-for-service processes, our health care system isevolving," said April Todd, Senior Vice President, CORE andExplorations at CAQH. "As the industry transitions to value-basedpayment models, and the need for interoperable administrative andclinical systems becomes more acute, we need to adapt in order tomaintain and improve upon the progress made to date."

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