The annual CAQH Index tracks automation, spending and savings opportunities for common healthcare administrative transactions. Over the past decade, the Index has become the most widely used industry resource for measuring the pace of automation and identifying opportunities for future progress.
The findings in the recently released 2021 Index1 are particularly important because they reveal changes in trends due to the impact of COVID-19 on business processes conducted in 2020. While the total volume of transactions dropped 11% as non-essential care was postponed or canceled during the pandemic, on average, adoption of electronic transactions increased by 2.3 percentage points.
This jump was likely influenced by several factors, including that, as many employees began working from home due to COVID-19, staff members no longer had access to office faxes, call centers and mail facilities. As a result, they relied more on electronic processes to continue their work.
Although many changes in workflows were driven by urgent needs, they may continue once employees return to their offices.
A $20 billion savings opportunity.
Data from the 2021 CAQH Index found that, of the $391 billion spent on administrative complexity in the U.S. healthcare system,2 $42 billion, or 11%, is spent conducting administrative transactions tracked by the report. Of the $42 billion, the industry can save $20 billion, or 48%, by transitioning to fully electronic transactions.
While the industry has already avoided $166 billion annually through automation efforts, the Index found that the opportunity for future savings is 24% greater than in the previous report. This increase was likely driven by higher costs for manual transactions, due to new and changing requirements and policies related to COVID-19 and telehealth, which resulted in additional work outside the workflow, and lower costs for those same processes conducted electronically.
Automation of prior authorization lags
Although the percentage of administrative transactions that were conducted electronically increased overall, some business processes remain far more manual than others. Among the transactions studied in the report, claims submission remains the most automated transaction with an adoption rate of 97%. Prior authorizations, however, continue to have among the lowest adoption rate at 26% (up 5 percentage points from last year).
Often cited by providers as a major source of administrative burden, prior authorization has been one of the most costly and time-consuming transactions among those studied. To help reduce administrative burden on strained staff and to provide timelier patient care during the early months of the pandemic, requirements around prior authorization were suspended or waived. These suspensions and waivers, along with reductions in medical services and freezes on elective procedures, resulted in a 23% decrease in prior authorization volume.
Although the level of automation for prior authorizations continues to lag most other administrative transactions, there are opportunities for improvement.
Providers can save, on average, 16 minutes by conducting a prior authorization using the HIPAA mandated standard as opposed to manually. At a national level, this time savings adds up, creating an opportunity for the industry to save $437 million annually by switching from manual to electronic prior authorizations. This is an increase of $20 million from the previous report, as a result of more costly manual transactions. Of this savings opportunity, the majority is tied to providers who could reduce prior authorization costs by $350 million annually.
And, while adoption of electronic prior authorizations continues to increase, 35% of all prior authorizations are still conducted manually using mail, emails, faxes and phone calls — resulting in increased administrative burden and costs.
Automation in action
In 2019, CAQH CORE launched its Prior Authorization Pilot and Measurement Initiative and started working with the Cleveland Clinic and PriorAuthNow to observe the impacts of automation on this workflow.
Data collection began in 2020, and the initial results suggested that using an automated process could reduce time associated with conducting a prior authorization and improve staff satisfaction.3 Staff could save at least 12 minutes conducting a prior authorization using an automated process compared to a web portal, resulting in an 80% reduction in staff time.
In addition, a survey was conducted to understand staff satisfaction with the automated process and the impact on their workflow. Findings indicated that most staff saved time initiating a request, checking on status, waiting for next steps and receiving a final determination. Additionally, staff found it easier to determine next steps and documentation needs and reported reduced job stress.
A call to the industry
During the pandemic, the healthcare industry successfully automated more administrative tasks as health plans and providers navigated social distancing regulations, modified office conditions and worked to reduce staff burdens. This demonstrates how capable the industry is of evolving and streamlining its administrative transactions.
Automating healthcare administration and reducing burden is an urgent national issue, particularly for clinicians and staff. A recent survey found that 52% of healthcare workers have reported experiencing burnout, and nearly one quarter of respondents said that they were likely to leave the field in the near future.4
Now more than ever, it is critical that we not lose the momentum and learn from the advances made in automation during COVID-19. While this progress was driven by necessity, the solutions and infrastructure that were implemented have put the industry in a better position to move forward to a more efficient, streamlined future.
- CAQH. 2021 CAQH Index®. 2022. Available from: bit.ly/36PUKuU.
- Centers for Medicare & Medicaid Services. “Projected National Health Expenditure Data.” Office of the Actuary. Available from: https://go.cms.gov/3K9jtbS.
- CAQH CORE. “Part II: Prior Authorization Automation Case Study: Cleveland Clinic, PriorAuthNow & CAQH Core.” Oct. 14, 2021. Available from: https://bit.ly/3pCzPC2.
- Jackson C. “American Healthcare Workers Persevering, but Remain Stressed.” Ipsos. Feb. 22, 2022. Available from: https://bit.ly/3hBY7rK.