Payers see renewed urgency to tackle the high cost of paperwork

Administrative complexity is the biggest contributor to overall healthcare waste in the U.S., according to a new study published in the Journal of the American Medical Association.

Administrative complexity is the biggest contributor to overall healthcare waste in the U.S., according to a new study published in the Journal of the American Medical Association.

The study, entitled, “Waste in the US Health Care System,” found that administrative complexity is the leading cause of the estimated nearly $760 billion to $935 billion in total waste annually.

Through a search of 54 peer-reviewed studies, government reports and “gray” literature published from 2012 to 2019, authors of the study determined that administrative complexity was responsible for $265.6 billion in waste annually to the U.S. healthcare system. Payer-provider collaboration is the answer to reducing waste in this category, authors of the study say.

Other areas of waste included: pricing failure, $230 billion to $240 billion; failure of care delivery, $102 billion to $165 billion; overtreatment or low-value care, $75 billion to $101 billion; fraud and abuse, $58 billion to $83 billion; and failure of care coordination, $27 billion to $78 billion.

Jim Dougherty, CEO and co-founder at Madaket Health, says administrative/business transactions between payers and providers—including credentialing and privileging—definitely contribute to the waste behind administrative complexity.

Madaket’s platform accelerates EDI enrollment and credentialing processes by keeping an updated form library, providing enrollment status from payers, prompting updates on information, and making data entry easier through a provider portal, he says.

Ted Achtem, Madaket’s co-founder and chief innovation officer says the Madaket platform was built to address market inefficiencies. “Payers and providers using the same data for countless transactions should only have to share that data once,” Achtem says. “That’s what the platform provides. It provides the flexibility to store complex, hierarchical provider data and transform it to meet the needs of payers, providers, and intermediaries alike.”

Six years ago, Madaket Health conducted 120 interviews to discern the pain points in the industry for clinics and medical practices, Dougherty says. The Madaket team discovered that the most difficult areas included EDI enrollment; credentialing; privileging when doctors serve in multiple facilities; contracting (because every group has different contracts); and provider directories. “That was several billion dollars’ worth of waste, just on those five,” Dougherty says. “Each is done with separate software, databases and interfaces—with the same information, but entered differently.”

Madaket’s founders, who come from the financial sector, wanted to find a way to help healthcare in the same way they had helped at Intralinks, a provider of secure collaboration software, which eventually earned 80 percent of the market share, Dougherty says.

The first use case Madaket tackled was enrollment. “If doctors aren’t enrolled, they won’t get paid,” Dougherty says. “It’s not nice to have, it’s something a doctor absolutely has to have.” A typical doctor does business with 25 insurance companies, and each company has a 6-page form to fill out to renew. After filling out the renewal, doctors must fax a PDF back every time they make an update. Often this renewal PDF is sent to India for key-punching, where mistakes are made during the data entry, according to Dougherty.

By contrast, Madaket can do this process with one click. “We marry the data entered and send it to the insurance company for the doctors,” Dougherty says. An executive at one insurance company told Madaket that it takes an average of four months to complete the manual process of updating enrollment information for a doctor.

Many payers “are still using paper out there,” Dougherty says. Yet many are looking to speed the process. At the end of the second quarter, 54 percent all provider groups were signed on to Madaket’s platform on enrollment, and the company hopes to grow that to 65 percent by next year, Dougherty says.

Madaket does not sell directly to payers, but to intermediaries that serve “tens of thousands of doctors,” according to Dougherty. The benefit to payers is they are getting their enrollment through Madaket’s services in a rapidly consumable form.

The JAMA study can be found here.

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