National Progress Report on healthcare efficiency: Introduction/ Executive Summary

The National Progress Report on Healthcare Efficiency is the first annual report on the findings from the primary research phase of the U.S. Healthcare Efficiency Index® (USHEI). The USHEI was launched in 2008 to raise awareness of the potential cost savings associated with adoption of basic electronic transactions in healthcare. In its first year, several important milestones were achieved including successful engagement with policy makers on the practical benefits of administrative simplification. The initial findings announced during the launch of the USHEI were based on a thorough analysis of available industry data. Phase 1 of the Index estimated total potential savings to be nearly $30 billion per year for medical claims-related transactions.

Over the course of the year that followed, the Advisory Council for the USHEI oversaw the development of a detailed methodology, a secure data collection infrastructure and a formal data collection process that is now yielding an initial set of data. This report places the findings in the context of the recently enacted healthcare reform legislation, as well as the HITECH Act, passed as part of the American Reinvestment and Recovery Act (ARRA). It assesses the landscape and suggests a set of trends likely to impact the healthcare industry in the months and years to come. Here is a summary of the key findings that will be discussed in this report:

1. The industry is making progress on adoption of electronic claims. The data shows a current rate of 85%, which represents a 10% increase over the Phase 1 findings.

2. Adoption of electronic remittance advice transactions is also higher. Data shows a current rate of 46% as compared to 26% in Phase 1.

3. Calculating the costs and potential savings associated with automation in healthcare has become increasingly complex, particularly as the lines get blurred between electronic and paper-driven offices.

4. Cost savings must be addressed at the system level. Approaching the problem as a systemic issue is critical to help avoid the continual cost shift that has plagued healthcare for so long.

5. Meaningful Use requirements are expected to drive further adoption of claims and eligibility transactions, assuming the requirements remain intact in the final rules. In general, the inclusion of revenue cycle transactions as a part of Meaningful Use illustrates the convergence of clinical and financial information which is an important trend in health information exchange.

6. The recent passage of landmark healthcare reform legislation brings significant gains in the area of administrative simplification by adding covered transactions like e-payment and requiring greater standardization and operating rules. This new policy will play an important role in eliminating many of the old barriers to adoption.

7. Implementation of healthcare reform will be a long and complex process. It will be important for all stakeholders to stay involved and ensure that their needs and concerns are reflected in the rules and regulations to be written in coming years.

8. Change is hard, but for the nation’s healthcare system, not changing will be much harder. With Medicare Trust Fund Reserves expected to be exhausted in less than 10 years (2017) and 41 states facing midyear budget shortfalls, it is critical to capture tangible savings today wherever possible.

Medicare
Based on its most recent report in 2009, Medicare's Hospital Insurance (HI) Trust Fund is expected to pay out more in hospital benefits and other expenditures than it received in taxes and other dedicated revenues. Growing annual deficits are projected to exhaust reserves in 2017.
(From the SUMMARY OF THE 2009 ANNUAL REPORTS, Social Security and Medicare Boards of Trustees)

Medicaid
Mid-way through state fiscal year 2010, the effects of the economic recession (rising unemployment, sharp declines in revenues, higher demands for public programs, including Medicaid) continue to plague states… 41 states are facing
mid-year budget shortfalls for fiscal year 2010 that could total $35 billion. Looking to 2011, states estimate a budget gap of $102 billion but could grow to $180 billion as revenues continue to decline.
(From the Kaiser Commission on Medicaid & the Uninsured, Feb. 2010)

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