New federal regulations aim to accelerate the use of electronic payments to health care providers while reducing administrative costs and saving resources.
The interim final regulations – part of a series of regulations coming from the Department of Health and Human Services – standardize the format and content of the transmissions that health plans send to banks when paying claims via electronic funds transfer (EFT) and will require plans to use a trace number to matches the EFT with the remittance advice sent to providers. Currently the EFT and the remittance documents are sent to providers separately, and matching them is difficult.
The new standards took effect on Jan. 1; full compliance will be required by Jan. 1, 2014, according to the agency.
Under the new rules, "health care professionals will spend less time filling out paperwork and more time focusing on delivering the best care for patients," HHS Secretary Kathleen Sebelius said in a statement.
Further, the rules will cost physicians, hospitals, and other providers little or nothing, since "providers are the receivers of the standardized transactions and not the senders," according to HHS.
The agency also estimated that widespread use of EFT should save physician practices and hospitals between $3 billion and $4.5 billion over the next 10 years. The most common savings from implementation of electronic fund transfers are in paper, printing, and postage, as well as staff time for processing paper payments and depositing checks.
The cost to implement the new standards across all commercial health plans is estimated at between $18 million and $28 million. Implementation in Medicaid, the Children’s Health Insurance Plan, and the Indian Health Service is estimated at $400,000-$600,000. Meanwhile, the savings for commercial health plans could be as much as $40 million over 10 years, and $31 million for Medicaid, CHIP, and IHS, according to an HHS fact sheet.
Use of EFT, while widespread in many industries – has been slow in health care, partly due to lack of standardization of transactions, HHS officials said.
The new standards are required by the Affordable Care Act, and fall under the Health Insurance Portability and Accountability Act (HIPAA). They are second in a series of regulations that aim to streamline health care administrative transactions within the next 5 years. Future efforts are slated to include a standard unique identifier for health plans and standardized claim attachments.