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Why the New EFT Rule Could Have Been Better

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Recently, the Centers for Medicare & Medicaid Services (CMS) announced a final rule adopting electronic funds transfer (EFT) standards, which are part of the Affordable Care Act (ACA) provisions that call for improved administrative efficiency. This rule is intended to reduce administrative costs for healthcare payers and providers by improving efficiency in the payer-to-provider payments process. However, a couple of serious flaws in the rule will hinder the industry’s focus and its progress toward realizing these benefits.

Overview of CCD+ and CTX Files

The rule describes two types of ACH files that health care payers can use to pay their provider networks: the Corporate Credit or Debit Entry (CCD+) and the Corporate Trade Exchange Entry (CTX).

The main difference between these files is that the CCD+ file transmits data associated with the EFT payment in an addenda record, which holds up to 80 characters. This is a very limited amount of data, allowing payers to efficiently and securely include a trace number, which enables providers to easily re-associate the electronic remittance advice (ERA) file with the EFT payment using the addenda record.

Meanwhile, the CTX file can hold a much larger amount of data, as it does for other industries. The thought here is that the existing health care ERA transaction, or the ANSI standard 835 transaction format (the format required by HIPAA) could fit into this CTX file convention. However, transmitting the ERA file inside of the CTX file is inefficient, unreliable and will add transaction costs, as banks charge fees for the CTX file service. Furthermore, existing health care IT systems would need to be significantly changed to work with the CTX file convention. These systems exist at both the health care payer and the health care provider sides, both of which have invested the last 10+ years to conform to the HIPAA standard for the use of the ANSI standard 835 transaction.

The programming and testing time required for the CTX file convention would be significant, and there are no clear benefits to justify this investment. Furthermore, there are clearly higher costs and higher risks to use CTX, as additional steps would be required from payers and providers to insert an 835 into a CTX and then to extract the 835 from the CTX.

For the new EFT rule to truly improve efficiency and deliver cost savings for health care payers and their provider networks, the following would need to be changed:

1. Add a Trace Number Requirement

The rule should require that the EFT and the ERA have a trace number. By including a trace number, payers can deliver ERA/EFT efficiently and providers can re-associate the ERA/EFT and reconcile their payments efficiently. Streamlining reconciliation will reduce call center volume for health care payers because there will be fewer questions regarding payments, and it will save time for their provider networks.

2. Remove the CTX File

The CTX file should not be included in the rule as a method for payer-to-provider EFT payments because the file creates high costs and data processing risks. To deliver ERA/EFT using the CTX file, payers first must create the ERA, output it from the payer’s system and manipulate it to create CTX records. Then, the file must be parsed on the provider’s system and reconstructed to create the 835. Basically, this means that large amounts of data are being deconstructed and then reconstructed in order for a payer to send ERA/EFT to a provider. This process is risky, unnecessary and serves no purpose other than to afford banks another reason to charge fees for CTX transactions.

Despite the flaws in the final EFT rule, healthcare payers need to pay attention to the best practices that will improve their bottom line. To reduce costs and improve efficiency, payers should only pay providers using the CCD+ file with the trace number to associate the ERA and the EFT. We ourselves have developed a list of best practices in integrating EFT payments with ERAs to achieve cost savings.


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