Phase 1 Data Collection and Methodology

The data used to populate the U.S. Healthcare Efficiency Index® (USHEI) in Phase 1 was compiled from a variety of trusted industry sources. For each transaction type, a list of sources is provided below, followed by an explanation of our calculations of estimated savings. Going forward, the independent Advisory Council and outside auditor will assist in establishing a methodology for gathering specific data from participating payers, providers and others.

Data Sources

* Unless otherwise noted, all figures are for medical claims-related transactions only. In later phases of the USHEI, we plan to expand the USHEI to include dental, vision, Worker�s Compensation and clinical transactions like e-prescribing.

Claims
Source: Claims Attachments Regulation: Federal Register 45 CFR Part 162, Published: September 23, 2005
Source: 2006 AHIP Report: An Updated Survey of Health Care Claims Receipt and Processing Times, May 2006
Provider cost savings electronic vs. paper: $3.73
Source: Electronic Transaction Savings Opportunities for Physician Practices, Milliman, January 2006
Payer cost savings electronic vs. paper: $0.73
Source: 2006 AHIP Report: An Updated Survey of Health Care Claims Receipt and Processing Times, May 2006

Eligibility
Source: Overhauling the US Healthcare Payment System, The McKinsey Quarterly, June 2007
Provider cost savings electronic vs. paper: $2.95
Source: Electronic Transaction Savings Opportunities for Physician Practices, Milliman, January 2006
Payer cost savings electronic vs. paper: $1.38
Source: CAQH CORE Study Shows Health Plans, Providers Could Cut Labor Costs Through Automated Insurance Verification, CAQH, April 18, 2007

Claim Status
Source: Overhauling the US Healthcare Payment System, The McKinsey Quarterly, June 2007
Provider cost savings electronic vs. paper: $3.33
Source: Electronic Transaction Savings Opportunities for Physician Practices, Milliman, January 2006
Payer cost savings electronic vs. paper: $2.56
Source: Version 5010 Regulatory Impact Analysis � Supplement September, 2008, Gartner, Inc.

Claim Payment
Cumulative Provider and Payer cost savings electronic vs. paper: $4.80
Source: Overhauling the US Healthcare Payment System, The McKinsey Quarterly, June 2007
Source: Overhauling the US Healthcare Payment System, The McKinsey Quarterly, June 2007
Source: Ingenix Press Release, �Ingenix Launches Exante Electronic Payments and Statements to Spur Health Care to go Electronic�, Wednesday, June 20, 2007
Source: Survey of public domain literature. Current estimates of electronic payment utilization vary widely and are not well substantiated. CMS is working to increase adoption of electronic payment, but updated numbers are not yet available. Thus, for Phase 1 of the USHEI, we are assuming a utilization rate of 10% because that figure is cited more frequently and is consistent with a known sample of Emdeon payer data on electronic payment utilization rates (October 2008 Emdeon Customer Advisory Council). Greater industry participation and data collection are needed to establish more precise measure of these trends.

Claim Remittance
Source: Emdeon internal analysis of electronic claims and matched ERA data, October 2008 Due to difficulties in securing ERA utilization data across the industry, we are seeking industry participation and contribution to validate these estimates.
Provider cost savings electronic vs. paper: $1.49
Source: Electronic Transaction Savings Opportunities for Physician Practices, Milliman, January 2006
Payer cost savings electronic vs. paper: data not available. Input from industry sources welcomed.

Index Calculations

Electronic Transactions
Electronic Transaction Volumes were computed using the following equation:
Total Transaction Type x Electronic Submission Rate = Total Electronic Transactions

Annual Potential Savings
Annual Potential Savings represents the total possible amount of savings if 100% of a given transaction type were electronic. It is calculated by multiplying the total volume of a transaction type by the cumulative payer and provider cost savings associated with the electronic transaction.

Industry Electronic Savings

Industry Electronic Savings were calculated by multiplying the electronic volume of a transaction type by the cumulative payer and provider cost savings associated with the electronic transaction.

Unrealized Industry Cost Savings
Unrealized Industry Cost Savings was calculated by subtracting the cumulative Industry Electronic Savings for all transaction types from the cumulative Annual Potential Savings for all transaction types. The difference represents the amount of money that remains to be saved should the entire healthcare industry achieve a 100% electronic transaction rate for the transaction types included in the US Healthcare Efficiency Index.

Calculation: $53,323,890,000 - $ 23,605,387,500 = $29,718,502,500

Trees Saved
Trees Saved was calculated by multiplying the total number of electronic claims, electronic payments and electronic remittance advice transactions per year by the sheets of paper each manual transaction type consumes.  A conservative assumption was made that each manual transaction type consumed one sheet of paper.  The total number of sheets saved divided by the number of sheets of paper an average tree produces gives the total number of trees saved as a result of the electronic transactions being processed.

Calculation: 3,901,625,000 sheets/ 8,333 sheets per tree = 468,214 trees
Source of sheets of paper per tree: www.printgreener.com

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