HHS Launches EFT Rule, Expects Doctors and Plans to Save Billions

On August 7, 2012, HHS announced the adoption of an Interim final rule with comment period (IFC) setting standard operating rules for electronic funds transfers (EFTs) and electronic remittance advice (ERA) transmissions between health plans and providers. The operating rules specify and standardize the data fields to be used and the format in which EFTs and ERAs are transmitted.

The IFC implements section 1104 of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148), as amended by the Health Care and Education Reconciliation Act (HCERA) (P.L. 111-152). The regulations will apply to health plans, health care clearinghouses and providers who transmit any health information electronically in connection with a transaction governed by the Health Insurance Portability and Accountability Act (HIPAA) (P.L. 104-191). Covered entities must comply with the standards January 1, 2014. This set of operating rules builds on earlier rules that adopted standards for transmission of eligibility and enrollment information and for payment of claims.

The standards are expected to slash the time that providers, practitioners and health plans spend making queries about information which still often is sent by mail. HHS estimates that physicians spend three weeks per year just on billing and insurance issues, and that currently the average practice must employ 2/3 of a full time employee for each physician to do the work. Physicians’ offices must submit claims to a variety of plans, and many claims are submitted by mail and paid with a paper check. When the plan pays an amount different from the bill, it sends a remittance advice with the reasons for the difference. The remittance advice and the payment are sent separately, often weeks apart, so that many hours are spent associating, or matching, payments to specific bills.

The IFC requires the use of reassociation codes, which will save weeks of work by physicians’ staff reconciling the remittance advice to payments received. It also will require transmission of the EFT within three days of the ERA. Each health plan must have a standard identifier, and there should be no variation among plans in the process to enroll in the plan’s EFT system.

HHS expects that implementation of the IFC will cost between $1 billion and $2.7 billion; health plans operated by both public and private entities and benefits administrators will bear the cost because they transmit the EFTs and ERAs. There should be little or no cost to providers and practitioners, according to HHS. The agency projects that over a ten-year period, the rules governing EFTs should save up to $9 billion.

The legislation required HHS to adopt consensus-based standards that allow automated reconciliation of electronic payment with the remittance advice, the document that explains the reasons for any differences between the payment and the amount the provider billed. The standards must reflect the business rules used by health plans and providers and the Secretary was required to consider the standards developed by a qualified nonprofit entity  The rules HHS adopted were developed by the Council for Affordable Quality Healthcare (CAQH) Committee on Operating Rules for Information Exchange (CORE), a nonprofit alliance of stakeholders in the healthcare system, for voluntary adoption and have been reviewed  National Committee on Vital and Health Statistics to assure consistency with existing standards for health information technology.

Specifically, HHS adopted the following items from CORE’s Phase III EFT and ERA Operating Rule Set: (1) the CORE 380 EFT Enrollment Data Rule; (2) the CORE 382 ERA Enrollment Data Rule; (3) the CORE 360, Uniform Use of Claims Adjustment Reason Codes (CARC) and Remittance Advice Remark Codes (RARC) (835) Rule, (4) Core-required Code Combinations for CORE-defined Business Scenarios for the use of the Uniform CARCs and RARCs (835) Rule, (5) CORE 370 EFT and RA Reassociation (CCD+/835) Rule, and (6) CORE 350 Health Care Claim Payment/Advice (835) Infrastructure Rule, including the format and flow for the entities’ companion guides in Requirement 4.4.1.

HHS did not adopt the CORE 350 Claim Payment/Advice Batch Acknowledgement requirements of section 4.2. Instead, the Secretary encourages further voluntary development of standards for acknowledgements. The requirement that users be CORE-certified also was not adopted.

The rule was published in the Federal Register on August 10, 2012.   The comment period will close October 9, 2012.