Financial Institutions Pivotal in Federally Mandated Healthcare EFT Standard Adoption

by Vijay Palaparty

Healthcare entities transact only an estimated 30-40 percent of payments via EFT. However, in the face of federal year-end deadlines mandating support for a Healthcare EFT Standard as well as healthcare operating rules addressing use of EFT and electronic remittance advice (ERA), entities have an opportunity to maximize ROI in the face of an urgent need to adjust systems and workflows. Though many financial institutions are not HIPAA covered entities, they could play a pivotal role in helping healthcare entities in the migration process.

Compliance with the HIPAA-mandated Healthcare EFT Standards (NACHA CCD+ and X12 v5010 835 TR3 TRN Segment) and the CAQH CORE EFT & ERA Operating Rules is required by January 1, 2014. The CAQH CORE EFT & ERA Operating Rules are the second of three sets of rules mandated by the Affordable Care Act (ACA) for all HIPAA covered entities to implement—including health plans, healthcare providers and healthcare clearinghouses.

The first set of ACA-mandated operating rules outlined requirements for entities using the HIPAA-mandated eligibility and claims status transaction standards. The first set of ACA-mandated operating rules established infrastructure requirements for exchange of the transactions between providers and health plans, including connectivity and processing requirements, which are foundational to implementation of the second set.

Given the current lower adoption rate of EFT in the healthcare industry, many healthcare entities will need to adjust internal systems and workflows to accommodate the Healthcare EFT Standards. Additionally, for many healthcare entities payment and remittance data are processed by two distinct departments. The need to connect IT systems and departments in order to deliver and analyze detailed data to monitor compliance and ROI requires new working relationships both internally and externally.

“Healthcare entities, in particular providers, are challenged by resource limitations and competing priorities,” said Doug Downey, Assistant Vice President of Treasury at HCA Healthcare and CAQH CORE EFT & ERA Subgroup Co-Chair. “Specific to the rules, entities must consider both a business and information technology perspective,” he added.

One requirement within the CAQH CORE EFT & ERA Operating Rules specifies that providers must contact their financial institutions to request delivery of key CCD+ data elements that are necessary for successful reassociation of the CCD+ with the X12 v5010 835 ERA. These data elements, defined in the CAQH CORE Operating Rules as the CAQH CORE-required Minimum CCD+ Reassociation Data Elements, include the Effective Entry Date, Amount and Payment Related Information from the CCD+.

Health plans are also required to inform providers that they must make these requests to their financial institutions. The NACHA Operating Rules require the RDFI to provide the data contained in the Payment Related Information field of the CCD, if it is requested, by the opening of business on the 2nd banking day following settlement.

“Financial institutions should be prepared for an increase in requests and be proactive in offering to deliver reassociation data to provider clients,” said Erin Richter, CAQH CORE Senior Manager. “Furthermore, they have opportunities to support the expanded use of healthcare EFT by informing clients that health plans will be required to offer payments via the standard starting January 1, 2014.”

Because of the estimated 60-70 percent of healthcare payments that are still transacted by paper, financial institutions should also implement processes to minimize potential disruption for clients caused by the transition from paper to electronic payments.

CAQH CORE monitors the status of operating rule implementation by the healthcare industry via several sources including the CAQH CORE Industry Request Process, education events that include polling and Q&A sessions, and a voluntary CORE Certification program. Through these sources, CAQH CORE has observed that industry implementation efforts are underway to meet the January 1, 2014 compliance date. Education and outreach by other entities like NACHA should also help healthcare entities and financial institutions collaborate.

Regardless of federal mandates, more provider education is needed to demonstrate the negligible per transaction costs of using the CCD+ over the ACH Network in comparison to costs associated with other payment methods. Sharing a complete business case for migration may help such provider clients.

“Financial institutions and health plans need to work together to help providers understand the savings they would see through elimination of manual, paper processes,” said Merri-Lee Stine, Manager of Aetna Provider e.Solutions and Co-Chair of the CAQH CORE EFT & ERA Subgroup.