Healthcare Industry Could Reduce Admin Waste by $13.3 Billion Annually

January 24, 2020

Of the $350 billion widely cited as the cost of administrative complexity, $40.6 billion is spent on eight business transactions.

CAQH recently released the seventh annual report measuring the progress made by the healthcare industry in reducing costs and burden associated with administrative transactions through automation.

The 2019 CAQH Index found of the $350 billion dollars widely cited as the cost of administrative complexity in the U.S. healthcare system, $40.6 billion is spent on eight administrative transactions, according to a news release.

Of that, the industry can save $13.3 billion, or 33% of existing annual spend, by transitioning to fully electronic processes. While the industry has already avoided $102 billion annually by automating administrative transactions, significant opportunities for additional savings remain for both the medical and dental industries.

“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,” says Kristine Burnaska, director of research and measurement at CAQH. “The Index offers a roadmap for those areas where further automation can drive down costs and burdens for both providers and plans.”

Related: The Administrative Benefits of Value-Based Care

The Index analyzes levels of automation, spending, and savings opportunities for eight administrative transactions related to verifying patient insurance coverage and cost sharing, obtaining authorization for care, submitting claims and supplemental information, and sending and receiving payments.

Of the $13.3 billion in potential savings through automation, $9.9 billion can be saved by the medical plans and providers, while $3.4 billion can be saved by the dental industry. In both industries, the greatest savings exist for providers as compared to plans, the release says.

The 2019 CAQH Index proposes actions that can most significantly reduce provider burden and support the automation needs of the medical and dental industries. It also includes a call to action for greater collaboration across industry stakeholders to accelerate approaches that can accommodate emerging market needs. For example, standards and operating rules must be updated more quickly 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,” says April Todd, senior vice president, CORE and Explorations at CAQH. “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.”