CAQH

CAQH is a non-profit alliance of health plans and related associations working together to achieve the shared goal of streamlining the business of healthcare. The ongoing need to reduce healthcare costs—especially administrative expenses&mdash;while concurrently increasing information accuracy is at the heart of CAQH activities. In concert with a wide range of healthcare stakeholders, CAQH develops and implements shared, industry-wide initiatives to eliminate long-term business inefficiencies, producing meaningful, concrete benefits for healthcare providers, health plans and patients. CAQH initiatives are fundamentally changing the direction of healthcare: re-defining how the industry does business today and in the future.

This article was written by Kristine Burnaska, PhD, director of research and measurement at CAQH

The business of healthcare is becoming more complex and the number of administrative interactions between healthcare providers and health plans is growing as a result. Despite this, the CAQH Index, an annual study of progress to simplify healthcare administrative functions, found signs that the US healthcare system has become more efficient and the cost of doing business may be declining.

Since 2013, the CAQH Index has tracked adoption of electronic administrative transactions, including those mandated by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and other transactions, for conducting routine business between healthcare providers and health plans. These transactions include verifying a patient’s insurance coverage, obtaining prior authorization for care, submitting a claim, sending and receiving payments and more. The Index also began tracking progress of the dental industry beginning with its 2015 report.

Automation has been available for most fee-for-service business transactions between health plans and healthcare providers for many years. However, these streamlined processes were not designed to serve the administrative needs of new payment and care models that are transforming healthcare today. As a result, providers and plans are interacting more frequently—multiple times and often through multiple channels&mdash;to clarify information to support a patient’s access to care, facilitate payments, and more. Even as these trends emerged, the CAQH Index found marked improvements in several measures of administrative efficiency and cost.

The 2018 CAQH Index, which studied 2 billion administrative transactions between health plans and providers, found that the US healthcare industry reduced the remaining annual savings opportunity for the first time in Index history. By completing the transition to electronic transactions, medical health plans and providers could save $9.8 billion annually, a 12% drop from that reported in the 2017 Index report (

). Conversely, the Index found a $600 million year-over-year increase in dental industry savings opportunity, bringing it to $2.6 billion.

As in prior years, providers would most benefit from the transition from manual to electronic transactions. Of the $9.8 billion medical industry savings opportunity, $8.5 billion (87%) belongs to providers and $1.3 billion belongs to plans (

Adoption of Electronic Transactions Improved. 

The Index found improvements in adoption of most of the seven electronic administrative transactions tracked. The greatest increase in electronic adoption occurred for eligibility and benefit verification (+6 points) and coordination of benefits/crossover claim (+5 points). Adoption of the electronic transaction declined for only 1 transaction: remittance advice (-8 points) (

. The savings generated by increased adoption of electronic transactions outweighed the cost of more frequent administrative interactions between plans and providers. In prior years, administrative transaction volume increases have driven savings opportunity higher as adoption of electronic transactions rose. Even as plans and providers interacted more frequently, driving up the number of administrative transactions (by 18% overall), the volume of more costly, time-consuming manual transactions declined by 6% year-over-year for health plans and by 1% for providers (

Standards and Operating Rules in an Era of Complexity and Innovation

In addition to observing that benefit and payment complexity is affecting the use of administrative transactions, the 2018 CAQH Index found that industry standards and operating rules have not kept pace with market innovation and transformation. For instance, the number of eligibility and benefit verification transactions increased by 32%. Though the volume of electronic transactions increased, it is important to note that there was not a corresponding decline in the use of more costly and time-consuming manual phone transactions. These results suggest that, for a portion of patient encounters, a phone call is needed to fully understand patient eligibility, coverage or benefits.

Meanwhile, more than half (51%) of prior authorization transactions were conducted manually, and more than 1 in 3 (36%) were processed using a health plan portal or other non-HIPAA standard system. These results suggest that the current prior authorization standard transaction, which does not address electronic exchange of clinical attachments, is inadequate to support current market needs.

Finally, although electronic claim status inquiries have historically been used by providers and their vendors as a revenue cycle tool, the volume of claim status transactions declined in the 2018 Index report. The Index asserts that claim status inquiries may be less relevant as an increasing number of patient encounters are compensated under value-based payment arrangements.

Although the 2018 CAQH Index found that healthcare industry administrative transaction costs have begun to decline, even as overall transaction volume increased, it also concluded that challenges remain. First, greater adoption of electronic administrative transactions is needed. While 3 of the 7 transactions studied now have adoption levels at or above 80%, adoption of other electronic transactions lags. (Figure 3) For example, adoption of electronic prior authorization transactions stands at only 12%.

Second, the CAQH Index identified a need for standards, operating rules, infrastructure, and systems functionality to better accommodate growing transaction volume and to more closely align with evolving market needs, such as the transition to value-based payment. Increasingly complex benefit plans and payment arrangements often require data sharing that was not anticipated by existing standards and operating rules. Administration of benefits and payments for these arrangements more frequently lead to manual transaction processing or use of partially electronic online portals to transact information. (Visit CAQH’s website for more information on 

opportunities associated with value-based payments

.) In addition, the Index identified opportunities for vendor systems to facilitate provider adoption of electronic transactions through more timely and comprehensive deployment of new and updated standards and operating rules.

Findings from the 2018 CAQH Index suggest that positive change is occurring in the industry overall. Healthcare industry stakeholders have made progress on many fronts—reductions in the savings opportunity, improvements in adoption, and reductions in the volume of manual transactions. However, continued efforts are needed to ensure that all stakeholders realize the full benefit of conducting business electronically and that industry administrative systems adapt to the changing needs of the healthcare system.

. For more information about the Index or participating in the Index contact 

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The CAQH Index, an annual study of progress to simplify healthcare administrative functions, found signs that the US healthcare system has become more efficient and the cost of doing business may be declining.

CAQH Index: Cost of Doing Business Falls as Complexity, Volume Rise

Written by Erin Weber, director of CAQH CORE.

An incredible change in how care is measured, billed, and paid is slowly transforming large portions of the United States healthcare industry. Many believe value-based payment can change the trajectory of national health expenditures and improve the quality of care, yet its success remains uncertain.

Early adopters of value-based payment have encountered numerous challenges to operationalizing the new model. In many ways, fee-for-service administrative processes and systems simply do not align with the needs of value-based payment. For example, no single system supports exchange of all the necessary data for value-based payment. The claims system was designed to support fee-for-service reimbursement. Electronic health record (EHR) systems hold much of the clinical data needed for direct patient care, yet they were not intended to integrate financial and clinical data or to serve as analytics tools. Health plans also maintain siloed systems, in which there is no clean way to integrate clinical data from providers.

Innovation has delivered important advances, and it has also created an operational patchwork of work-arounds and proprietary approaches. The challenge is that some uniformity is needed to prevent administrative roadblocks that can keep new payment models from thriving. The success of value-based payment hinges on achieving a new level of collaboration and cooperation between stakeholders.

We’ve seen this happen before. CAQH CORE was founded to address a similar issue arising from the initial adoption of electronic fee-for-service transactions. Health plans, providers, vendors, clearinghouses, government entities, standards development organizations, and other stakeholders came together to hammer out common rules of the road to help the industry uniformly and more fully implement Health Insurance Portability and Accountability Act (HIPAA) standard transactions. Through ongoing collaboration, these stakeholders continue to create and promote rules that, in combination with other industry efforts, help health plans, providers, government entities, vendors, and clearinghouses conduct fee-for-service administrative transactions electronically and securely. Importantly, these rules help eliminate many manual phone, fax and mail transactions.

As our organization followed the advance of value-based payment, it became clear that the emerging system was at risk of repeating fee-for-service-era mistakes. After a 2-year study, CAQH CORE released a report, 

All Together Now: Applying the Lessons of Fee-for-Service to Streamline Adoption of Value-Based Payments

, which identifies 5 opportunity areas that, if improved, would streamline value-based payment operations. The report also details specific strategies to address each of these areas.

One of the opportunity areas identified in the report—data quality and uniformity&mdash;tackles the common problem of irregularities in data. That is, healthcare operational data often lacks the precision necessary to achieve the fluid interactions needed across stakeholders for success in value-based payment.

Discrepancies in the quality or uniformity of data can cause a host of issues in value-based payment. Missing, inaccurate, or obscure provider data can impact quality, cost, and patient experience. It may cause inaccurate risk-based payments when a provider’s specialty and relationship to the patient are unclear. Inaccurate provider data may cause unsuccessful provider-to-provider network referrals, affecting the overall amount of payment able to be made and potentially increasing patient out-of-pocket cost. Provider identity also plays a role in care accountability, which can affect quality measurement, system cost, and patient cost.

As an example, the lack of a single, universal standard for provider identification can be a source of confusion. Some commercial health plans use a proprietary identifier in lieu of the standard National Provider Identifier (NPI) on claims. Medicaid programs typically use both a Medicaid ID and NPI (when applicable based on the provider). CMS uses both the NPI and the tax identification number (TIN), which sometimes identify physicians at the group level.

Of course, data quality and uniformity are affected by many other issues. Even inconsistent use of seemingly common terms can be a source of trouble. When used inconsistently, terms to describe the date and time of an event, such as “discharge from an emergency department” or the nature of an event, such as “admission for observation,” can compromise the ability to measure timeliness of care and affect patients’ financial obligations.

Also, while standards exist for the use of many medical code sets in HIPAA-mandated transactions, EHR systems, quality measures, and so forth, there are no standards for the use of others. For example, a provider reporting the number of diabetics with an HbA1c level above 9.0% may encounter an error because “HbA1c” can be represented in more than 100 different ways.

 To improve data quality and uniformity, the CAQH CORE report recommends promotion and enforcement of existing data sets and data element standards, especially where such standards are federally mandated. We also recommend pursuing voluntary agreement on adoption of applicable uniform definitions.

In addition to data quality and uniformity, the report identifies 4 other opportunity areas. Each of these represent a substantial opportunity to prevent repeating the mistakes of fee-for-service data exchange and, ultimately, to streamline value-based payment operations.

 The scale and scope of collaboration needed for success in value-based payment magnifies the need for interoperability. Improvements are needed in semantic interoperability, as described above in the discussion on data quality, as well as in technical and process interoperability.

	Of course, numerous efforts are already pursuing improvements in technical interoperability. Our recommendation fully supports those efforts by encouraging use of existing and emerging standards and technologies.

	Process interoperability affects how information is exchanged and how actions are interpreted by other stakeholders. More carefully choreographed workflows, processes and policies would allow stakeholders to make more reliable comparisons and act on timelier insights, among other benefits. Our recommendation to promote process interoperability focuses on cataloging best practices.

 Characterizing patients’ risk and using that understanding to direct the focus of care coordination activities and adjust payment based on patient risk factors are hallmarks of value-based payment.

	In our research, however, it was clear that the multitude of risk stratification and risk adjustment methodologies used today are sources of confusion that erode trust. Also, despite the vast amounts of data available today, gaps still need to be filled before the full potential of patient risk stratification can be realized in value-based payment.

	Our recommendations seek to improve awareness of the threats caused by variability and data gaps and to promote collaboration and transparency in risk stratification and risk adjustment models.

In value-based payment models, providers take responsibility for the care of specific patients, yet many providers indicate that they do not understand attribution models when they engage in these arrangements and that they may not be informed about their attributed patients.

	We identified two underlying operational causes. First, providers frequently bill under multiple TINs or may bill under TINs that specify identification at the group or organization level. In these cases, reliance on the TIN for provider attribution is inadequate. Second, there is little uniformity in provider attribution methodologies. The large number of attribution methodologies is a source of provider frustration, as it can obscure the provider’s view of the patient’s true care coordination needs.

	To improve the accuracy of provider attribution, we recommend the promotion of more precise means of identifying providers at the individual level, including the use of standardized data. We also recommend a streamlined approach and more transparency in the use of provider attribution models, beginning with a catalog of models and a library of leading practices.

 Responding to the growing number of clinical quality measurement programs has become an operational burden for providers. In many cases, redundant information is collected and communicated inconsistently.

	CAQH CORE identified 3 specific operational challenges posed by quality measurement that provide opportunity for improvement: Over-proliferation of quality measures, the process to generate quality data for value-based payment initiatives, and the lack of quality measures that are truly useful for improving care and addressing consumer concerns.

	Many efforts to improve quality measurement, reporting and to promote harmonization are already underway. Our recommendation lends support to those efforts and proposes industry education on the quality measurement improvement goals, such as improved consistency in measures across programs, reductions in the data collection burden and a requirement that measures be actionable.

Industry collaboration is needed to address the operational challenges currently impeding value-based payment adoption. We are currently assembling a multi-stakeholder Advisory Group to prioritize report recommendations and identify those that will deliver the greatest benefit to healthcare providers, consumers and health plans. The group will then determine the appropriate role for CAQH CORE in pursuing each recommendation.

You can learn more about this effort and read the report 

Many believe value-based payment can change the trajectory of national health expenditures and improve the quality of care, yet its success remains uncertain.

CAQH

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CAQH Index: Cost of Doing Business Falls as Complexity, Volume Rise

Coming Together to Streamline Value-Based Payment