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HHS Posts Health Claims EFT Regs

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Health plans may have to comply with new electronic funds transfer (EFT) and remittance advice standards by Jan. 1, 2014.

The U.S. Department of Health and Human Services (HHS) has released the new EFT and remittance advice standards in an interim final rule set to appear in the Federal Register Jan. 10.

Comments will be due 60 days after the official publication date.

“If we receive comments that compel us to change any of the policies we are finalizing in this interim final rule with comment period, we will seek to finalize any such changes to allow sufficient time for industry preparation for compliance,” HHS officials say in a preamble to the interim rule.

HHS officials warn plans against blaming problems with complying with the new standards on the banks or other financial institutions that help them with their EFT operations.

“The health care EFT standards adopted herein apply to health plans, and health plans are ultimately responsible for ensuring compliance with the standards regardless of whether a health plan puts the data into standard format itself or uses a financial institution to do so,” officials say. “We expect that some health plans will need to educate their financial institutions about the health care EFT standards adopted herein in order to ensure compliance.”

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) required regulators to develop standards that health care organizations could use to exchange information about transactions such as claim submissions.

Today, providers and health plans are exchanging more information through automated systems, but gaps remain. Private health insurers are still using paper checks to make most payments to doctors, officials say.

Officials cite estimates that U.S. businesses of all kinds are making an average of 43% of their payments to other businesses through the EFT system, and that health insurers are making only 15% of their payments to doctors, hospitals and other providers through EFTs.

Doctors who want to get payments from plans through the EFT system must fill out a long form for each insurer that will be paying them via EFTs, officials say.

Plans that use EFT systems to make payments typically send the payments electronically but still send the remittance advice – the document explaining why the amount the plan is paying is different from the amount the provider has billed – on paper, without use of any standard mechanism that makes it easy for providers to match the payments with the remittance advice notices.

Even when a health plan transmits electronic advice electronically, it usually uses a system separate from the EFT system to deliver the notice.

In part because of the clumsiness of the current health care EFT arrangements, receiving payments, making payments and posting transaction information are eating up about 1.4% to 2% of physicians’ revenue, officials estimate.

Section 1104 of the Patient Protection and Affordable Care Act of 2010 (PPACA) requires HHS to add health plan EFTs to the list of transactions in need of standards. PPACA Section 1104 authorizes the HHS secretary to establish an EFT standard through an interim final rule by Jan. 1, 2012, and to make the rule effective by Jan. 1, 2014.

Members of the National Committee on Vital and Health Statistics (NCVHS), an HHS advisory board, sought public comments, held a hearing, and developed a set of standardized recommendations that it delivered to HHS in February 2011.

The standards in the interim final rule are based on the NCVHS recommendations, the ASC X12 Standards for Electronic Data Interchange Technical Report Type 3, which was developed by the Accredited Standards Committee (ASC) X12, Falls Church, Va., and by the National Automated Clearing House Association (NACHA), Herndon Va.

The completed regulations would set standards for exchanges of EFTs and remittance advice, and they would require the use of trace numbers that health care providers can use to match remittance advice notices with the corresponding payments.

A health plan would have to use the standards to send payments to any health care provider that wants to receive claim payments through the Automated Clearinghouse system.

Officials are estimating the shift could save the U.S. health care system as a whole $3.1 billion to $4.5 billion over 10 years.

For physicians, officials say, the main regulatory burden will be the time spent signing up for the new, standardized EFT system.

Health plans could spend about $4,000 to $6,000 each, or $18 million to $27 million industrywide, on installing software and training the staff to use it, officials estimate.

The savings should be significant, because sending payments via EFT should be much cheaper for insurers then sending checks, officials say.

The officials note that the federal Financial Management Service spends $1.03 to issue a check but just 11 cents to issue an EFT payment.

Later, HHS will working on creating a standard unique identifier for each plan and a standard for claims attachments, officials say.