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The High Cost of Manual Claims Processing – and How to Fix It

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Manual claims processing is costly – both in terms of time and money. Manually processing a claim takes an average of 70 minutes, and that staff time costs valuable dollars. The time spent on a claim – and the cost associated with it – can climb even higher if a claim is complicated, missing vital information, or initially denied.

But with manual claims processing, providers lose more than time and money. They also lose the opportunity to leverage real-word data and staff resources in ways that bolster the patient experience and strengthen the organization.

The costly truth about manual claims processing

While a simple claim may cost providers around $10, more complex claims can total as much as $40 to process. It’s estimated that up to 90% of that expense comes from the labor involved. That means that to have a significant impact on the price of claims, providers have to address the amount of time staff spends processing transactions.

Additionally, the time it takes for a claim to be submitted has an impact on providers’ revenue streams. On average, a claim takes four to six weeks from initial processing to payment. While creating and submitting a claim generally takes one to two days, manual claims processing – particularly of a more complex claim – can add up to two weeks to the payment timeline. Experts say that implementing strategies to reduce manual claims processing and optimizing claims processing across the healthcare industry could save providers between $15 to $20 billion annually.

Manual claims processing also opens up a greater risk for denials. The leading cause of denials is incorrect, missing, or incomplete information in a claim, according to nearly 50% of providers, and often that missing or incomplete information is due to human error. While the majority of denials ultimately can be overturned on appeal, the cost of contesting a denial is $25 on average for physician practices and $118 for hospitals.

Why providers still use manual processes

With such high costs and clear drawbacks, it begs the question: Why is manual claims processing still the norm for so many healthcare organizations?

For many organizations, complex and ever-changing payer rules can make it seem impossible to implement a standardized or automated system that increases efficiency and reduces the burden on staff. Other providers fall victim to legacy systems – it can be difficult to find the time and resources to explore, select, and implement new technologies or processes across an organization. And often the departments and data that impact claims management are siloed, making it difficult to spot opportunities for increasing system efficiencies.

Automation triggers a turnaround

Paramount Healthcare was one provider that found itself being held back by its volume of manual claims processing. The organization, which owns multiple skilled nursing and rehabilitation facilities, split its claims between automated systems and paper submissions. In doing so, they struggled to simplify workflows while operating with different systems.

With Inovalon’s Claims Management Pro™, Paramount Healthcare moved from 60% to 90% electronic submissions. By modernizing and automating their claims across all payers to a single system, they reduced their claims processing time, alleviated the demand on staff, and completed payments faster.

Automating claims enables healthcare providers to reduce processing costs, simplify staff workflows, and minimize denials. When all claims can be managed in one place, teams spend less time on manual tasks. Built-in engines automatically scrub claims against the most recent rules, check for eligibility mismatches, and include step-by-step guidance to correct errors before claims are submitted.