How To: Save money by streamlining costs

The United States spends twice as much on healthcare than other comparable high-income nations, but we still have some of the worst healthcare outcomes. When it comes to improving costs, we need to start having conversations that go beyond changing models of care delivery. It’s time to address excess healthcare spending throughout our system, from administration to billing. Two areas that must be looked at closely are the use of prior authorizations, and quality reporting.

Use of prior authorizations

Researchers have found that prior authorizations are some of the most costly, time-consuming administrative transactions for providers, which may explain why Medicare rarely uses it. Manual prior authorization can cost an average of $11 per transaction for providers, while an automated solution can cost $1.88 per transaction. It’s easy to see how these savings can rapidly add up.

The Centers for Medicare and Medicaid Services released a proposed rule for prior authorization standards in December. The rule aims to improve the electronic exchange of health care data, and streamline processes related to prior authorization to reduce burden on providers and patients. By both increasing data flow, and reducing burden, this proposed rule would give providers more time to focus on their patients and provide better quality care.

The rule would require payers in Medicaid, and other government run programs to build APIs to support data exchange and prior authorization. APIs allow two systems, or a payer’s system and a third-party app, to communicate and share data electronically. Payers would be required to implement and maintain these APIs using the HL7 FHIR standard. Though this rule only applies to public payers right now, the opportunity for innovation is endless.

Quality reporting

Another area worth taking a closer look at is quality reporting. Quality reporting must strike a balance between delivering high-quality care while not paying astronomically for the data necessary to ensure quality. All business people know, if you can’t measure something and know the results, you can’t possibly get better at it. But there is so much noise in our current metrics that actually measuring quality is secondary to the labor and cost of generating the data.

Healthcare would do well to employ lessons learned at other industries about automated data collection, harmonized quality metrics, and automated reporting and flagging of data outside the norm. We need transparency in the costs associated with gathering quality metrics and the return on this investment. Employing tools here will likely streamline the metrics we gather while maximizing our learnings from those data.

Room for efficiency

While our nation’s health care delivery model has room for improvement in many areas, targeting waste and excess in the administration of the system is truly low-hanging fruit. Here, automated technology solutions, paired with effective public-sector guide rails, will be able to achieve a great deal of cost savings as well as introduce much-needed efficiencies.

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