Physicians Losing Money by Not Using Electronic Transactions

Ken Terry

August 26, 2014

Physicians and other healthcare providers continue to underutilize electronic transactions that could save them billions of dollars, according to a recent report from the Coalition for Affordable Quality Healthcare (CAQH), a nonprofit organization that helps stakeholders streamline business processes. But observers say that the situation is starting to improve in some areas.

In 2012, the CAQH report indicates, 91% of healthcare claims were submitted electronically. In contrast, only 68% of requests for eligibility and benefits verification and 57% of claims status inquiries were electronic. Sixty percent of claims payments were sent electronically, and so were about half of remittance advice documents.

These figures were projected nationwide from information submitted by health plans that together covered 100 million people and did about 3 billion transactions with providers in 2012. The percentages in the survey sample were not very different from those in the national projection, which covered Medicare and Medicaid in addition to private plans.

The report also provides data on prior authorizations and referral certifications. Of the 130 million prior authorization "events" documented in 2012, 110 million were handled manually.

If providers and plans used these electronic transactions more extensively, they could save huge amounts of money, according to the researchers. CAQH projects that healthcare providers and facilities alone could save more than $3.5 billion from electronic eligibility verification and approximately $1.5 billion from electronic prior authorization transactions. The combined potential savings from increased electronic claim submission, claim payment, claim inquiry, and remittance advice totals $1.7 billion.

On a per-transaction basis, the report notes, the provider-facility cost is $1.56 lower for electronic than for manual claim submission, $3.39 lower for electronic eligibility and benefit verification, $2.02 lower for electronic claim status inquiries, $1.53 less for electronic funds transfer (EFT), and $1.53 less for electronic remittance advance (ERA).

The cost of doing prior authorizations on the phone or by fax is $18.53, versus $5.20 for electronic approvals. That's a savings of $13.33 per transaction.

There's some duplication between electronic and manual transactions, the report points out. More than 10% of electronic remittance advice received, for example, is duplicated by paper documents. And telephone follow-up accompanies many electronic eligibility transactions.

Transition Period

Eventually, providers will completely adopt electronic transaction methods, predicted Robert Wah, MD, vice president and chief medical officer in the government services division of Computer Sciences Corporation (CSC). But they're now going through a transition period where they have to maintain some use of paper and phone, as well, he told Medscape Medical News.

Regarding why physician practices and other providers have been relatively slow to catch onto electronic transactions, he offered several explanations. Regarding EFT, he noted, "Any time you deal with somebody's revenue stream, they get very careful and sensitive. That revenue stream is so vital to their survival that people are very hesitant to change things."

Dr. Wah linked the tardy uptake of ERA to that of EFT, "because they kind of go hand in hand." As for the very small amount of preauthorization and referral certification requests that go electronically, he surmised that it might be related to the complexity of preauthorization rules, which differ by payer. "Everyone's got a different menu or a different flavor or a different slant on this."

Since the CAQH survey was done, providers have increased their use of electronic transactions, partly because of new government rules that require health plans to use standardized operating rules for exchanging data with providers. While earlier Health Insurance Portability and Accountability Act (HIPAA) regulations specified the content and format of administrative transactions, these operating rules, formulated by the CAQH Committee on Operating Rules for Information Exchange (CORE) committee, make it easier for health plans and clearinghouses to send and receive those transactions. Operating rules for claims status and eligibility verification inquiries went into effect in 2013, and other rules for EFT and ERA became effective on January 1 of this year.

Denise Buenning, director of CAQH CORE, told Medscape Medical News that the operating rules have definitely had an effect on increasing the use of EFT. The volume of EFT payments to healthcare providers through the national clearinghouse for electronic payments increased 160% from 2013 to 2014, she said. Just in the first 5 months of this year, the monthly total of payments going through the clearinghouse grew from 8.2 million to 11.2 million.

There is no equivalent data for claims inquiry and eligibility verification transactions, Buenning noted. But anecdotal reports indicate they're also on the increase, and she believes that the operating rules have had an impact. They should have an even greater force next year, she says, when a US Department of Health & Human Services proposed regulation to punish health plans for noncompliance with the operating rules is expected to take effect.

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