doctor, talking, conversation,

Going digital: how electronic payments reduce health care costs

Jun 26 2014

Consumers are ahead of the health care system in using electronic currency. You can buy a Coke from a vending machine with a credit card or smartphone. Even the IRS lets people get their tax refunds electronically. But in health care, many payments are still done with paper. When insurers use paper checks to pay doctors, the cost for printing and postage becomes part of the cost of delivering care, explains Jay Eisenstock, Aetna’s head of Provider eSolutions. “These extra expenses don’t lead to better health; they only inflate prices and create waste in the system.”

According to the New York Times, these expenses contribute to about $190 billion dollars of waste every year. That figure doesn’t take into account time spent waiting for checks to arrive in the mail.

Trimming the waste

Many health plans give doctors the option of getting paid electronically. In 2012, the Center for Medicare and Medicaid Services issued a rule that requires all private insurers to offer electronic payments to providers.

Aetna is committed to a complete move to electronic fund transfers over the next several years.

If doctors switched from paper (for 5,000 claims, remittance advice and payments) to an electronic system, they would save 3,545 pounds of paper. That’s 2,578 square feet of forest.

Simplifying the process

Switching from paper payments to electronic payments may be time consuming and costly. Every insurance company uses its own payment system, which doesn’t make things easy for doctors and other health care providers.

Some groups are trying to help. The Council for Affordable Quality Healthcare® (CAQH), for example, has a tool that makes it easier for providers to sign up for electronic transfers with insurers. Recently they announced that more insurers are using the system to help more providers move to electronic payments.

What’s the impact?

By signing up for electronic payments, doctors reap the same benefits consumers already enjoy from going electronic. Because they won’t wait for standard mail, providers get paid faster. And there will be less paperwork, which cuts down on costly administration. Faster payment also means better cash flow. That’s important to individual doctors and for offices with a small number of doctors. According to the American Medical Association, providers who go electronic will save about $2,000 per doctor each year.