Digital transactions can mean big savings for physicians

Electronic transactions can save the healthcare industry around $8 billion each year, according to the

, as well as save physicians precious time and money.

Reynard Washington, senior manager for research and measurement at The Council for Affordable Quality Healthcare (CAQH) told Medical Economics that of all the different entities involved in the revenue cycle of a typical episode of care, physicians stand to gain the greatest benefit from transitioning to digital transactions, because doing so will shorten the time to payment, as well as provide savings in labor costs. 

This year’s report includes an informative graph, titled “How Much Does the Healthcare Industry Spend on Claims-Related Business Transactions?” that shows the financial breakdown between processing certain transactions electronically versus digitally. The graph reveals some striking points, which support Washington’s assertion that digital processing really will save practices money. For instance, the average cost of a claims verification performed manually is $10.83, whereas electronically it is $2.51.

According to the Health Insurance Portability and Accountability Act (HIPAA), practices can choose to use either digital or manual processing, but health plans must offer an electronic option. For those providers who do choose to conduct business electronically, HIPAA includes standards. Washington encourages practices to make the switch. “Unlike some other processes that physicians may be hesitant to adopt, this one saves time and money. There is really is not a good reason to not adopt electronic processing,” he said.

The index report includes information regarding transactions for around 45% of the commercially insured U.S. population, and tracks numerous types of transactions, including claim submission, eligibility and benefit verification, claim payment, claim status inquiry, remittance advice coordination of benefits (COB) claims, prior authorization and referral certification. Along with showing trends in the adoption of electronic processes among healthcare providers and health plans, the report shows cost savings associated with the transition from manual to electronic transactions.

Some processes are already widely adopted. In 2012, the Centers for Medicare & Medicaid (CMS) mandated that claims had to be submitted digitally, then in 2013, they began requiring payments be made through electronic funds transfer (EFT). Washington said those requirements have allowed providers to see the benefits of digital transactions.

However, there are still billions of dollars on the table. Washington said the largest opportunities for savings are around eligibility and verification. Consider, for example, the amount of time used for benefit verification when it is completed by phone. A staff member at the provider’s office picks up the phone, dials a call center, and a person answers. The whole transaction takes time for which two people are being paid. Washington said the cost savings is really around eligibility rather than claims.

“Think about the number of patients per day for even the smallest practice. There’s a real cost savings,” he said, adding that in the case of a small provider the time spent verifying coverage takes away from providing care.

Another area where digital processing can make a big impact is through shortening the revenue cycle with electronic payments Washington said that currently the adoption rate for EFT is 60%, which means that 40% of providers are still being paid with paper checks, adding, “That creates a cycle of delays for payment and reimbursement,” he noted.

The most obvious question is: Why aren’t providers making a transition that so clearly benefits them? Washington said that CAQH only collects information regarding numbers of manual and digital transactions, but notes its CORE group, which works to maximize business efficiency and savings by developing and implementing national operating rules, has received some feedback regarding barriers to adoption from providers.

There are some behavioral aspects involved in the move away from manual transactions. Staff in providers’ offices may feel they are likely to get more information if they resort to a phone call, for example. Another barrier is related to practice management systems, which must support digital transactions. Washington said there is some debate as to whether the onus is on vendors to create those kinds of systems, or if practices should be buying those already on the market. One other factor is that of operating roles. Some organizations use clearinghouses, and the plan, the provider, and the clearinghouse all need to work together seamlessly, and sometimes that can be a barrier.

CAQH is a non-profit alliance dedicated to improving business processes, mostly related to revenue cycles, in the healthcare industry. CAQH is organized into three groups: CORE, where work is being done to improve operating roles and to make the transactions standards of HIPAA into operating rules and defining best practices in implementing standards; Solutions, which aims to improve the coordination of benefits processes among stakeholders; and Explorations, the research component, and arm that publishes the index report each year.