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After 10 years of electronic administrative transactions, under a third of prior authorizations are digital

Prior authorizations remain largely analog, even though in the past decade other key reimbursement elements moved to electronic tasks.
By admin
Feb 28, 2023, 11:00 AM

For the healthcare industry, the flow of trillions of dollars in reimbursement is predicated on the successful exchange of key data elements. From eligibility checks and clinical claims to prior authorizations and acknowledgements throughout the process, health plans and providers are constantly conducting administrative transactions that ensure appropriate payment for specific services. 

For the past ten years, CAQH, a non-profit industry alliance, has published the CAQH Index Report to keep tabs on the ongoing transition to electronic administrative transactions: a process that has been accelerating quickly in some areas – but stalling in others. 

While automation has increased overall, certain transactions are still largely manual, leaving health plans and providers with significant administrative burdens that have yet to be relieved. 

For example, less than a third of prior authorizations (28 percent) were conducted electronically in 2022, the survey found. And only a quarter of plans and providers are able to exchange digital attachments of documents to support reimbursement claims. 

As current economic pressures provide strong incentives for providers and payers to further automate workflows, reducing friction around administrative data exchange will be crucial for improved financial sustainability. 

The current state of electronic administrative transactions  

CAQH has been tracking the industry’s progress since 2013, when the industry was entering its first flush of digitization.   

At the time, 65 percent of eligibility and benefit checks and 90 percent of claims submissions were conducted electronically. As of 2022, those numbers have increased to 90 percent and 97 percent, respectively. Eighty-three percent of remittance advice is now electronic, compared to 43 percent at the start of the decade. 

The index only started tracking process acknowledgements in 2020, but one hundred percent of those transactions are now digital, significantly reducing the time and effort required to check that information has been received.   

Prior authorizations continue to plague healthcare partners 

Unfortunately, there are still many challenges ahead in other areas of the reimbursement ecosystem. Prior authorizations (PAs) are a primary pain point, with only incremental improvement since the annual report began. 

CAQH notes that prior authorizations are a huge time sink for providers. Manually submitting a request for treatment coverage can take an average of 20 minutes.   

Meanwhile, complementary research from the American Medical Association (AMA) has found that providers submit an average of 41 prior authorizations per physician per week, adding up to around 14 hours of peoplepower per physician spent solely on completing these transactions. 

When completed electronically, providers can slash the time in half. The average electronic PA takes just 9 minutes, CAQH says.  

PA volumes are on the rise again, particularly as the COVID-19 public health emergency comes to an end and payers reinstate pre-pandemic requirements for service approvals. Shifting to electronic PAs at scale could result in up to $449 million in annual industry-wide cost savings opportunities. 

Additional opportunities to save time and cut spending on administrative transactions 

Despite much more widespread digitization of other payer-provider transactions, there are still savings to be had by modernizing the remaining portion of manual processes. 

Three percent of claims submissions remain paper-based, for example, which might not sound like a lot. However, the volume of claims increased by 20 percent between 2021 and 2022, resulting in tens of millions of new claims that are not fully optimized. 

Moving to a fully electronic environment could produce more than $2.3 billion in savings for the medical industry while shaving an average of five minutes off each claim submission.   

Providers and payers could also save a similar amount of time – and $213 million a year – by expanding the use of electronic attachments to support claims documentation, the report suggests. With new regulations around electronic attachments on the horizon, business partners will need to explore the most efficient ways to accomplish this task. 

Lastly, there is an opportunity to save $3.6 billion and 15 minutes per transaction by automating claims status inquiries. Only 72 percent of inquiries are currently digitized, CAQH says. With the continued rise in claim volumes and strong pressure on providers to gain enhanced visibility on their revenue cycles, automating status inquiries could be a promising area of investment for health systems operating on razor thin margins. 

Overall, continuing to make progress on electronic administrative data exchange will be a top priority for health plans and their provider partners. The industry has advanced steadily over the past decade, but focusing on specific transaction types, such as prior authorizations, attachments, and status inquiries could produce billions of dollars in savings and shave hours off of the overstuffed schedules of provider groups. 

Jennifer Bresnick is a journalist and freelance content creator with a decade of experience in the health IT industry.  Her work has focused on leveraging innovative technology tools to create value, improve health equity, and achieve the promises of the learning health system.  She can be reached at jennifer@inklesscreative.com.

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