Emdeon ( ) primarily regarded as a network provider, which facilitates electronic transactions among payers, providers and pharmacies, recently revealed that it has arrived at an agreement with CAQH to shift management and proprietorship of the U.S. Healthcare Efficiency Index (“USHEI”) to the latter.

Emdeon set up the USHEI, in 2008, as an industry mechanism for checking business efficiency in the medical industry. The index presents a nation-wide reference to monitor the usage of electronic medical transactions, in such areas as claims and payment.

Currently, about 40% of some 13 billion administrative transactions every year are implemented electronically. Universal adoption of electronic claims processing would save over $30 billion, in estimated expenses, on an annual basis.

The USHEI was intended to monitor the shift from a paper/phone-based healthcare system to an electronic modus operandi. An autonomous Advisory Council was set up to oversee the USHEI.

Data collected by USHEI is a vital tool for decision-makers as they gauge the effectiveness of various measures undertaken to reduce complications in the administration of care. The USHEI will remain the point of reference for monitoring improvement and savings related with electronic processing, including the transactions required by health care reform.

CAQH is an innovator in the formulation and adoption of solutions for simplifying healthcare administration for providers and health plans, thereby yielding improved quality of care for patients. It intends to add, to the USHEI, aggregated outcomes data from its current projects (especially those pertaining to the Committee on Operating Rules for Information Exchange, or “CORE”). CAQH will make every effort to ensure that the USHEI remains a relevant tool for industry participants.

Emdeon is a “middle man” in the healthcare business connecting payers with providers. The company is also a vendor of revenue and payment cycle management systems for healthcare payers and providers. Emdeon’s business model is mainly based on the paper-to-electronic conversion of claims, payments and prescriptions for providers, payers and pharmacies.

Emdeon’s products streamline administrative hassles for payers and providers and can lead to a more efficient healthcare system. The company, which was a pure play in network/claims processing in the 1990s, is today a $1 billion diversified provider of application (60% of sales), network (20%), services (15%) and analytics (5%).

Due to threat of direct claims processing, Emdeon must demonstrate value beyond simply routing claims, by curtailing abuse, fraud and waste; in which case payers would think twice before bypassing its clearinghouse. The company competes with McKesson Corporation ( MCK - Analyst Report ) and Unitedhealth Group, Inc. ( UNH - Analyst Report ) in certain lines of its business.