Friday, January 6, 2012

HHS Issues Rules Streamlining Electronic Fund Transfers

The Department of Health and Human Services (HHS) has released an interim final rule that requires the adoption of new standards for electronic funds transfers (EFT), as required under the Patient Protection and Affordable Care Act (ACA) and the Health Insurance Portability and Accountability Act (HIPAA). The HHS estimates that these new standards will decrease administrative costs up to $4.5 billion for doctors, hospitals, private health plans, states, and other government health plans. The interim final rule is scheduled to be published in the January 10 Federal Register.

The standards in the interim final rule build upon regulations published in July 2011 that set industry-wide standards for how health providers use electronic systems to quickly and easily determine a patient’s eligibility for health coverage and check on the status of a health claim. This interim final rule and the regulations published in July 2011 implement the Administrative Simplification provisions of the ACA (Sec. 1104(b)(2)(A)) and the HIPAA (Sec. 1173(a)), and are projected to save the health care industry more than $16 billion over the next ten years. These savings come from the adoption of electronic standards that will help eliminate inefficient manual processes and reduce costs.

The interim final rule adopts streamlined standards for the format and data content of the transmission a health plan sends to its bank when it wants to pay a claim to a provider electronically (through an electronic funds transfer) and to issue a Remittance Advice notice. Remittance Advice is a notice of payment sent to providers that may or may not accompany the payment the provider receives. For example, currently when a provider submits a claim electronically for payment, a health plan often sends a Remittance Advice separately from the Electronic Funds Transfers payment. The disconnect between the two makes it difficult or sometimes impossible for the provider to match up the bill and the corresponding payment. The interim final rule addresses this by requiring the use of a trace number that automatically matches the two. The new tracking system will allow health care providers to eliminate costly manual reconciliation that must currently be done.

The health care EFT standards adopted in this interim final rule apply to transactions that originate with health plans. The interim final rule is effective Jan. 1, 2012. All health plans covered under HIPAA must comply by Jan. 1, 2014.

Comments must be received within 60 days of publication in the Federal Register. When commenting, refer to CMS-0024-IFC. Comments may be submitted electronically, via; or by mail to the Centers for Medicare and Medicaid Services, HHS, Attn: CMS-0024-IFC, P.O. Box 8013, Baltimore, MD, 21244-8013.

For more information, contact Matthew Albright at (401) 786-2546.

For a comprehensive analysis of the ACA, and additional information on health reform and other developments in employee benefits, just click here.


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