Automating Claims Management Processes May Reduce Costs for Providers

Automating claims management processes could help healthcare providers curb the high spending on administrative transactions they saw in 2021, according to the 2022 Index report from the Council for Affordable Quality Healthcare, Inc. (CAQH).

The CAQH Index collects data from medical and dental providers and plans to track the adoption of electronic administrative transactions. The latest report includes data from the 2021 calendar year on transaction volume, spending, and saving opportunities.

“Over the past 10 years, despite a rapidly changing healthcare landscape, payers and providers have made dramatic gains automating transactions and reducing the cost of business processes,” April Todd, chief policy and research officer of CAQH, said in a press release. “Our latest report shows that this trend toward greater efficiency continued last year, even though post-pandemic factors increased total spending.”

In 2021, electronic adoption increased by an average of 5 percentage points across the medical and dental industry. Acknowledgments and claims submissions had the highest automation adoption rates for both sectors.

Attachments had the lowest electronic adoption in the medical industry, with 24 percent of providers automating the tasks. Among dental providers, claim payments had the lowest adoption rate of 17 percent.

Administrative transaction volume grew in 2021 for medical and dental providers after declining in 2020. The volume of transactions increased by 28 percent in the medical industry and 9 percent in the dental industry.

Electronic volumes accounted for the greatest share of total volume for both industries, the report noted. Electronic volume rose by 30 percent for medical providers and 18 percent for dental providers.

Annual spending on administrative transactions grew as well. The US healthcare system spent $60 billion conducting nine common administrative transactions in 2021. This indicated an $18 billion increase from 2020.

In the medical industry, spending rose by 47 percent, from $37.4 billion in 2020 to $55 billion in 2021. Claims submission spending saw the highest increase of 83 percent. Spending grew by 23 percent in the dental industry, rising from $4.4 billion in 2020 to $5.4 billion in 2021. The highest spending increase was for remittance advice, which grew by 43 percent.

Higher volumes drove increased spending on eligibility and prior authorization transactions for medical providers. More than half of the spending increase was due to a 15 percent boost in the time it took for medical providers to complete transactions.

Overall, the spending increase in both industries was due to higher utilization resulting from people receiving care they deferred during the pandemic. Additionally, facilities paid more to recruit and retain workers, which increased spending.

Transitioning to electronic transactions could help the healthcare industry achieve significant cost savings, according to CAQH. Of the $60 billion in annual spending, the healthcare industry could save almost $25 billion, or 41 percent, by fully automating administrative transactions.

These savings are in addition to the $187 billion that providers and health plans are currently saving due to previous automation efforts, the report noted.

The potential cost savings for the medical industry increased to $22.3 billion in 2021, while the cost savings for dental providers remained stable at $2.6 billion.

“During an exceptionally challenging time in healthcare, these results are encouraging,” Todd added. “Healthcare business processes continue to become more automated and efficient, the opportunity for continued progress is great and the areas where further investment is needed are clear.”