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$8 Billion Annual Savings Opportunity for U.S. Healthcare With Adoption of Electronic Business Transactions

$8 Billion Annual Savings Opportunity for U.S. Healthcare With Adoption of Electronic Business Transactions | Healthcare and Technology news |

U.S. healthcare could save $8 billion annually by transitioning six routine business transactions from manual to electronic, according to the newly published 2014 CAQH Index™. The CAQH Index tracks progress from manual (e.g., via phone, fax or mail) to industry standardized (HIPAA) electronic administrative transactions between health plans and healthcare providers. This annual report, the second from CAQH, details adoption rates and potential savings.

“Hospitals should be focusing on patients, not paperwork. By expanding automated electronic communications between providers and health plans, we can reduce health care costs, ease administrative burdens, and ensure that key stakeholders in our health care system communicate with each other more effectively,” says Joel Perlman, Executive Vice President, Finance, and Chief Financial Officer, Montefiore Medical Center.

Based on data from 2013, the 2014 CAQH Index represents a collaboration between healthcare providers and health plans. Data submitted includes administrative transactions and cost estimates for analysis. The report reflects data from participating health plans representing 112 million enrollees – almost 45 percent of the privately insured U.S. population – on more than four billion transactions. In addition, a range of healthcare facilities and provider practices participated in a data collection process conducted on behalf of CAQH by Milliman, Inc.

Both this and the prior year’s CAQH Index studied six transactions — claim submission, eligibility and benefit verification, prior authorization, claim status inquiries, claim payment, and remittance advice transactions. This enabled year-over-year comparisons between health plans providing data counts for both reports. CAQH also measured two transactions for the first time: claims attachments and prior authorization attachments.

While overall adoption rates of fully electronic transactions (those automated for both health plans and healthcare providers) rose only slightly during this period, the volume of fully electronic transactions grew by double-digit rates for eligibility and benefit verifications, claim status inquiries and claim payments.

Average adoption rates of fully electronic transactions varied widely, from a high of 92 percent for claim submission to a low of 7 percent for prior authorization. About half of all claim payments and remittance advice transactions remain manual. Health plans continued to process about 1 billion transactions manually, and healthcare providers handled over 2.4 billion.

The potential for significant cost savings is due to the large volume of transactions, as well as the dramatic cost difference between manual and electronic transactions. For health plans, costs for each manual transaction averaged $2 for the six transactions studied, while electronic transaction costs ranged from only 5 to 10 cents. Healthcare providers’ estimated costs averaged more than $5 for manual versus $1.60 per electronic transaction.

“The CAQH Index shows that additional progress to realize the full potential of electronic transactions requires an ongoing commitment by all healthcare stakeholders, including health plans, providers, vendors and government,” says Robin Thomashauer, Executive Director, CAQH. “Findings can inform industry initiatives such as CAQH CORE and CAQH Solutions that support the move towards greater use of electronic transactions.”

Health plans and providers can estimate their potential cost savings by using an interactive savings calculator available at The complete 2014 CAQH Index report and highlights are also available for download.

The 2015 CAQH Index is underway, and is seeking additional participants. Health plans and providers that participate will receive a confidential, independent assessment of how they compare to their industry peers.

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Health Spending Rises Only Modestly

Health Spending Rises Only Modestly | Healthcare and Technology news |

Spending on health care in the United States grew in 2013 at the lowest rate since the federal government began tracking it in 1960, the Obama administration said Wednesday.

It was the fifth straight year of exceptionally small increases in the closely watched indicator. The data defied critics who had said such slow growth would not continue for long once the recession ended in mid-2009.

Health spending totaled $2.9 trillion last year, up 3.6 percent from 2012, the administration said. The share of the economy devoted to health care, which appeared to be growing inexorably for decades, has been the same since 2009.

“The 3.6 percent increase in 2013 is the lowest increase on record in the national health expenditures going back to 1960,” said Micah B. Hartman, a statistician at the Centers for Medicare and Medicaid Services and lead author of the report, published in the journal Health Affairs. “The next lowest increase was 3.8 percent in 2009. These rates are within the range of the recent low rates of growth in health care spending, between 3.6 and 4.1 percent from 2009 to 2013.”

Spending for health care in 2013 averaged $9,255 a person, government economists and statisticians reported. Health spending grew at about the same pace as the economy and accounted for 17.4 percent of the gross domestic product, which reflects the total output of goods and services.

Among factors restraining the growth of health spending, the administration pointed to new limits on Medicare payments to hospitals and health maintenance organizations; automatic across-the-board cuts in federal spending required by a 2011 law; and the proliferation of high-deductible health insurance plans, which tend to discourage the use of care by requiring consumers to pay more of the cost.

Faster growth in Medicaid spending offset some of the slowdown in spending by Medicare and private insurance in 2013, officials said. The 2013 figures did not show the effects of major expansions in coverage that took effect this year.

Moreover, the data did not answer a question hotly debated by health policy experts and economists: whether the recent slowdown in health spending was attributable to aftereffects of the recession or to cost-control features of the Affordable Care Act, signed by President Obama in 2010. The civil servants who wrote the report said some provisions of the law “exerted downward pressure” on health spending while others “exerted upward pressure.”

“The key question is whether health spending growth will accelerate once economic conditions improve significantly,” the report said. “Historical evidence suggests that it will.”

Marilyn B. Tavenner, the administrator of the Centers for Medicare and Medicaid Services, said the report was “another piece of evidence that our efforts to reform the health care delivery system are working.”

Retail sales of prescription drugs totaled $271 billion last year, accounting for 9.3 percent of all health spending. This proportion has not increased substantially in recent years, but it results from two divergent trends: an increase in the use of high-cost specialty drugs and greater use of low-cost generic medicines.

“Higher prices for specialty drugs were due in part to expensive new medicines — in particular, those used to treat multiple sclerosis and cancer — as well as more rapid price increases for existing specialty drugs,” Mr. Hartman said. “Although specialty drugs accounted for less than 1 percent of prescriptions dispensed, they represented almost 28 percent of total pharmacy-related prescription drug spending in 2013.”

At the same time, the report said, the share of prescriptions filled with generic drugs climbed to 80 percent in 2013, up from 73 percent in 2011.

Under the Affordable Care Act, federal and state officials review insurance rates to identify “unreasonable increases in premiums,” and the government requires insurers to spend at least 80 percent of premium revenue on medical care and quality improvement activities. These provisions helped hold down health spending, the report said.

The government reported lower use of inpatient and outpatient hospital services in 2013, coinciding with requirements for patients to share more of the cost under some types of insurance.

For example, the report said, “the average patient cost-sharing charge per day increased 19.5 percent in 2013, while the average cost-sharing for an outpatient surgery episode increased by 10 percent.”

Over all, the report said, medical prices increased just 1.3 percent in 2013, slightly less than prices in the general economy. Prices for doctors’ services increased less than one-tenth of 1 percent, the smallest change since 2002, and prices for home health care services declined. While Medicare spending for doctors’ services increased 2.5 percent last year, Medicaid payments to doctors increased 14.9 percent, mainly because of a temporary increase in payment rates for primary care doctors treating Medicaid beneficiaries.

Medicare, for older Americans and people with disabilities, and Medicaid, for low-income people, accounted for more than one-third of all health spending.

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Smarter healthcare through business intelligence

Smarter healthcare through business intelligence | Healthcare and Technology news |

In case you missed my posts on our Microsoft in Health Facebook page, I recently went on a road trip across Europe to talk with our healthcare industry clients about how they're using Microsoft business intelligence (BI) tools and analytics to improve health services for their customers.

Tools like Power BI for Office 365 and Microsoft Azure offer a variety of benefits for healthcare organizations and providers. Power BI for Office 365 provides a self-service business-intelligence infrastructure for all of their information, enabling them to visualize data, share discoveries, and collaborate in intuitive new ways. With Microsoft Azure, organizations can stream massive amounts of data, perform real-time analytics, and gain key insights to make faster and more reliable decisions about critical issues.

During my 16-day journey, I visited Norway, Sweden, Croatia, Belgium, France, and England. At each stop I was amazed to see the many ways healthcare organizations are using business intelligence and analytics enabled by Microsoft products to increase healthcare efficiency and improve patient care.

Helse Vest, for example, is a regional health authority that operates 50 healthcare facilities throughout Norway. To meet the requirements for a government-sponsored national patient safety program, Helse Vest needed to create analytical reports based on surgery trends and other medical data, and to do so much more quickly. Using Power BI for Office 365, Helse Vest employees can now visualize combined data from multiple facilities and create dynamic analytical reports in less than one day—a 93 percent improvement over the 14 days it previously took to build a report.

In Sweden, I had the opportunity to meet with representatives from Aerocrine, a company that makes medical devices used by physicians and clinics worldwide to monitor, diagnose, and treat asthma. Nearly 10 percent of the world’s population suffers from asthma—a potentially deadly disease that has no cure. Medications and inhalers offer relief that help asthma patients live healthy lives, but only if they routinely monitor their condition and follow their prescribed treatments.

Using a Microsoft Azure solution, Aerocrine can collect near-real-time telemetry data from all of its devices worldwide. With that data, the company can monitor the equipment remotely, keeping track of where devices are located, how they’re performing, and which ones need to be replaced before dangerous downtime occurs and leaves patients unmonitored for days at a time. The Aerocrine devices precisely measure airway inflammation, for example, but the machines are very sensitive and easily disrupted by environmental factors such as dry weather or humidity. With the analytics that Microsoft Azure provides, Aerocrine can check remotely to see whether a device has a humidity level that is too high or too low. Microsoft Azure also enables Aerocrine to see when devices are nearing the end of their allotted number of tests and then deploy new resources proactively.

These are just two examples of the innovative ways in which healthcare organizations worldwide are putting Microsoft BI tools and analytics to work to provide more efficient services and better patient care. In the end, it all adds up to smarter healthcare.

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Get help: Most physicians are not good at business

Get help: Most physicians are not good at business | Healthcare and Technology news |

We’ve all heard or used the phrase, “Leave it to the professionals.” It certainly applies to me as the only tools that I can use with competence are the scopes that I pass through either end of the digestive tunnel. Yeah, I have a toolbox at home, but it is stocked similarly to the first aid kit that your new car is equipped with. It contains a few Band-Aids, adhesive tape and, hopefully, the phone number of a local doctor. My home tool box has an item that can practically fix anything — the phone number of a handyman.

It is essential to know one’s limitations, regardless of one’s profession.

Politicians shouldn’t speak authoritatively as if they are climatologists.

Gastroenterologists should not prescribe chemotherapy, even though we are permitted to do so.

Bloviating blowhards on cable news shows are likely not military experts.

The guy who fixed your toilet might not be a top flight kitchen remodeler even though his business card includes home remodeler, along with railroad engineer, IT professional, seamstress and stand up comic.

Some of us are good at a lot of stuff. Some of us have a narrower, but deeper range of competence. Yes, we’re all good at something, as our moms and teachers taught us during our early years. Without doubt, most of us are not good at lots of stuff, and it’s important to know where our comfort zone approaches the chaos zone. In my own profession, it is absolutely critical that physicians readily solicit assistance from a colleague when additional knowledge, experience or judgment is needed. Asking for help to help a patient is evidence that the physician is focused on his patient’s welfare. Every doctor has witnessed circumstances when a physician is reaching too far beyond his toolbox, and it’s not pretty.

Should a surgeon perform a complex operation that he only seldom performs?

Should a local oncologist treat a patient’s rare cancer or refer the patient to the expert downtown?

How long should an internist struggle with a patient’s hypertension before recruiting an expert?

If an allergist’s patient keeps losing weight, is it time to consider a cause beyond the scourge of gluten?

Last year, our practice needed some restructuring. We met with our accountants for advice on streamlining and managing our practice. I was impressed how quickly these pros looked over our financial statements and readily understood the state of our practice. Of course, these guys see the world through Excel spread sheets, just like we GI physicians do through our colonoscopes. To us physician clods, these reams of number filled pages containing every permutation of various financial reports were encrypted codes that would require NSA cryptographers to decipher. Most physicians are not good businessmen, although many feel otherwise.

Luckily, my partner and I know the truth about ourselves. We didn’t ask the accountants for a second opinion. We came to them first, and we’re glad we did. I presume that when they need a colonoscopy, they won’t try it themselves.

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