NRPM: Standard Health Care Provider Identifier. A. Executive Summary

05/07/1998

The costs of implementing the standards specified in the statute are primarily one-time or short-term costs related to conversion. These costs include system conversion/upgrade costs, start-up costs of automation, training costs, and costs associated with implementation problems. These costs will be incurred during the first three years of implementation. The benefits of EDI include reduction in manual data entry, elimination of postal service delays, elimination of the costs associated with the use of paper forms, and the enhanced ability of participants in the market to interact with each other.

In our analysis, we have used the most conservative figures available and have taken into account the effects of the existing trend toward electronic health care transactions. Based on this analysis, we have determined that the benefits attributable to the implementation of administrative simplification will accrue almost immediately but will not exceed costs for health care providers and health plans until after the third year of implementation. After the third year, the benefits will continue to accrue into fourth year and beyond. The total net savings for the period 1998-2002 will be $1.5 billion (a net savings of $1.7 billion for health plans, and a net cost of $.2 billion for health care providers). The single year net savings for the year 2002 will be $3.1 billion ($1.6 billion for plans and $1.5 billion for providers).