Leveraging Software Innovations to Reduce Healthcare Expenses in the U.S.

In the quest to lower healthcare costs in the United States, the role of software systems has come under scrutiny. Research indicates that enhancing software management could be a pivotal factor in addressing the financial burdens plaguing the healthcare system, particularly issues related to denied insurance claims that contribute to substantial unpaid medical bills.

Hilal Atasoy, an associate professor at Rutgers Business School, has conducted a study revealing that better software choices can lead to significant changes in healthcare billing processes. Her findings are detailed in the September edition of the journal MIS Quarterly. The research highlights that denied claims represent a major challenge for healthcare providers, often resulting in billions of dollars in uncompensated care.

Medical claims involve comprehensive data, including patient demographics, medications, medical histories, and procedures. Claims can face denial for various reasons, including incorrect information or services not covered by insurance. In an effort to improve the quality of health data collection, the U.S. enacted the Health Information Technology for Economic and Clinical Health Act (HITECH) in 2009, which promoted the adoption of electronic health record (EHR) systems. Initially celebrated, this initiative has had mixed results, as it led to a fragmented ecosystem of systems from numerous vendors, creating interoperability challenges that can increase the likelihood of claim denials.

According to Atasoy, between the years 2000 and 2020, approximately $745 billion worth of healthcare services went uncompensated, with claim denials playing a significant role. Her research aimed to investigate how EHR technology influences these rejections.

To explore the connection between unpaid claims and software interoperability, Atasoy and her colleagues from Temple University and the University of Wisconsin-Madison analyzed health records from over 19 million anonymized patient visits across 48 hospitals in Maryland. The study included data regarding the approval or rejection of initial claims, allowing the researchers to correlate software choices with claim outcomes.

The analysis revealed that reliance on multiple software vendors correlated with a higher rate of claim denials. Conversely, hospitals that adopted a standardized software system from a single vendor experienced a reduction in claim denials, decreasing from 1.18% to 1.03%. Although this percentage change may seem slight, it translates to substantial savings over millions of claims processed.

The research also examined the role of physicians' familiarity with different EHR systems. Findings suggested that when physicians worked within hospitals that utilized similar EHR platforms, claim denials decreased, as the increased familiarity led to greater accuracy in data reporting and compliance with payer requirements.

The researchers concluded that aligning EHR systems could enhance data collection and improve adherence to payer guidelines, thus minimizing claim denials. The implications of these findings are significant, indicating that addressing software interoperability could be an effective strategy for reducing healthcare costs in the U.S.

In light of these findings, Atasoy proposed that the federal government should enhance EHR certification processes and reduce variability among software vendors. By focusing on the usability and standardization of user interfaces, it is possible to improve the accuracy of data flow across various applications, potentially reducing errors in claim processing.

While technology alone cannot resolve the complex issues surrounding healthcare costs, the research underscores the potential of EHR coordination to mitigate unnecessary expenses. By effectively reducing claim denials, healthcare providers can alleviate some of the financial pressures that ultimately affect patients and taxpayers.