EFT and ERA Healthcare Operating Rules Adoption

New legislation, intended to promote wide-scale adoption of electronic transactions, mandates the adoption of healthcare operating rules by January 1, 2014, and the identification of a healthcare EFT standard by January 1, 2012.

These developments mean that financial institutions should act now to ensure that they are ready to provide the remittance information in the Payment Information Field of the CCD+ if requested by the Receiver.Failure to provide the information upon request constitutes a NACHA Rules violation[1], potentially subjecting the RDFI to penalties for non-compliance through the National System of Fines.Here’s what you need to know to successfully navigate this change.       

The Timeline

Section 1104 of the Patient Protection and Affordable Care Act (PPACA) identifies specific ways to address the goals of Administrative Simplification. This section of the legislation includes an industry mandate for developing and using healthcare operating rules to help implement HIPAA standards and identify a healthcare EFT standard.The legislation outlines three sets of healthcare industry operating rules slated for approval by the Department of Health and Human Services (HHS), which the healthcare industry will implement. The second set of rules addresses Electronic Funds Transfer (EFT) and Electronic Remittance Advice (ERA).HHS must adopt operating rules for both of these transactions by July 2012. The new legislation requires all Health Plans to implement and support EFT and ERA healthcare operating rules no later than January 1, 2014.The timeline below will help with planning and implementation efforts:

 Section 1104 Transactions Requiring Operating Rules

 

Eligibility and Claims Status

EFT/ERA

Adoption Deadline

July 1, 2011

July 1, 2012

Effective Date

January 1, 2013

January 1, 2014

 View a graphic depiction of the timeline.

The Healthcare Operating Rules

In March 2011, the National Committee on Vital and Health Statistics (NCVHS) charged CAQH CORE— in collaboration with NACHA— to author the healthcare EFT and ERA operating rules. NCVHS received the draft healthcare rules by the Aug 1, 2011, deadline.To begin the planning process, CAQH CORE convened a work group of 120 participants, representing Health Plans, Provider Associations, financial institutions, healthcare clearinghouses, standards organizations, pharmacies, dental associations, and NACHA. The group met weekly from April to September to develop CORE healthcare operating rules that addressed specific industry pain points that they could complete within the limited timeframe.The group identified five key issues and submitted the draft CORE EFT and ERA healthcare operating rules on deadline. The rules addressed EFT and ERA enrollment challenges, consistent use of CARCs and RARCs codes in claims adjustments and payments, and Provider challenges matching the EFT claim payment with the remittance advice.

Five Key Issues Addressed by the Healthcare Operating Rules

  •  CORE EFT Enrollment Data Rule — Addresses the challenge that Providers face due to variances in the processes and data elements requested when a Health Plan enrolls in EFT. To receive EFT payments for Claims Submissions, Providers must enroll for EFT with each health insurance plan they accept. The variations in the forms, information requested, and processes are a barrier to EFT enrollment. To address this barrier, the EFT Enrollment Data Rule establishes a maximum EFT Enrollment Data Element Set that all Health Plans must adopt for EFT enrollment and establishes required master templates for paper and electronic enrollment.
  • CORE ERA Enrollment Data Rule — Providers face a similar challenge with ERA enrollment. The ERA Enrollment Data Rule establishes a maximum ERA Enrollment Data Element Set that all Health Plans must use for ERA enrollment; it also establishes master templates for use with paper and electronic enrollment.
  • CORE Uniform Use of CARCs and RARCs (835) Rule — Providers often fail to receive uniform and consistent CARC/RARC combinations for the same or similar business scenarios from all Health Plans. As a result, Providers are unable to automatically post claim payment adjustments and claim denials accurately and consistently. The Uniform Use of CARCs and RARCs (835) Rule establishes a maximum set of CARCs and RARCs code sets for use with four specific business scenarios.
  • CORE EFT and ERA Reassociation (CCD+/835) Rule — Providers have difficulty matching the EFT payment with the Electronic Remittance Advice (ERA). This problem occurs for several reasons: incorrect, missing, or unavailable data; misunderstandings related to existing standards and operating rules; or a lack of operating rules that govern them. When the correct ASC X 12 835 EFT Reassociation Trace Number is sent in the CCD+, Providers are able to “reassociate” funds sent separately from the ERA with the remittance advice information in the v501 835.
  • The CORE EFT and ERA Reassociation Rule addresses two primary issues:
      • Elapsed time between the origination of the ERA and the EFT. Providers report a lengthy duration of time between the receipt of the ERA and the availability of funds for use in their bank accounts via EFT. The delay in receipt between the ERA and the EFT by more than two or three days creates major problems for Providers with significant reassociation and reconciliation management issues. The EFT and ERA Reassociation (CCD+/835) Rule establishes a maximum of three days elapsed time between sending the ERA and the CCD+ transaction. This rule also requires that the Health Plan ensure that the CCD+ Effective Entry Date is a valid Banking Day and that the corresponding v5010 835 BPR 16 date is the same valid Banking Day.
      • Identification and delivery of the TRN Reassociation Trace Number. The EFT and ERA Reassociation Rule has identified three fields within the CCD+ that are necessary for Providers to facilitate reassociation. They have named those fields the CORE-required Minimum CCD+ Reassociation Data Elements. The rule requires that Health Plans tell Providers to request the CORE-required Minimum CCD+ Reassociation Data Elements when they talk to their financial institutions. The table below lists the specific elements:

CORE-required Minimum CCD+ Reassociation Data Elements

CCD+ Record #

Field #

Field Name

5

9

Effective Entry Date

6

6

Amount

7

3

Payment Related Information

 

What You Need to Do

The NACHA CCD+ transaction set has been recommended as the healthcare industry EFT standard. The Payment Related Information Field of the CCD+ must contain the reassociation trace number. The NACHA Operating Rules require that the financial institution provide the remittance information in the Payment Related Information Field if the Receiver requests it[2].Financial institutions must be ready to deliver this information to Providers; if they currently lack the capability, they should talk with their vendors or third-party service providers to ensure that they can comply with the NACHA Operating Rules and support their healthcare customers. Failure to deliver the requested information constitutes a NACHA Rules violation, potentially subjecting the RDFI to penalties and fines for non-compliance through the National System of Fines.  


[1] NACHA Operating Rules, Subsection 3.1.5.3[2] NACHA Operating Rules, Subsection 3.1.5.3

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