FIs Urged to Address Reassociation Trace Number Challenge

BALTIMORE — In January 2012, the Department of Health and Human Services issued an interim final rule, adopting the CCD+ as the standard for healthcare EFT (Direct Payment via ACH) transactions, Nell Campbell-Drake of the Federal Reserve, who spoke at NACHA’s PAYMENTS 2012 annual conference, explained. It also adopted the “Reassociation Rule,” requiring that the CCD+ transaction carry a reassociation trace number in the Payment Related Information Field (field 3) of the addenda record.

According to Drake, the healthcare EFT and ERA Reassociation Trace Number challenge poses a major barrier to Healthcare Providers accepting EFT claims payments from Health Plans.

Irfan Ahmad of The Clearing House said financial institutions urged attendees to carefuly evaluate their capability to provide the Reassociation Trace Number in CCD+ addenda records to provider clients, reminding attendees, “The Reassociation trace number and the ACH trace number are different.”

“Financial institutions should act now to address the EFT and ERA Reassociation Trace Number challenge and educate themselves about the language of healthcare, as well as key legislative efforts that impact their services of the healthcare sector,” Drake said.

In addition to addressing the EFT and ERA Reassociation Trace Number issue, financial institutions should educate retail staff regarding, “provider customer” needs regarding healthcare payments.

Ahmed told attendees, “Be on the alert for potential NACHA Rule changes to address healthcare payments and remittance process.”

According to panelists, U.S. healthcare spending is projected to double to more than $4 trillion by 2017, providing new opportunities for financial institutions to meet the growing education and service needs of the healthcare industry. According to the healthcare industry, EFT adoption is expected to account for 10 to 30 percent of all transactions.

Healthcare legislation impacting financial institutions includes the Health Information Technology for Economic and Clinical Health (HITECH) Act, which modifies and amplifies existing data privacy and security rules for protected healthcare information. In addition, the Health Insurance Portability and Accountability Act of 1996 (HIPAA), intended to improve portability of health insurance coverage, to protect the privacy of individual health information, and to simplify and improve the efficiency of administering health insurance,  mandates substantial changes that directly affect financial institutions.

However, HIPAA Privacy and Security Rules apply only to “covered entities,” which must comply with the Rules’ requirements to protect the privacy and security of health information. Under HIPAA, a covered entity is defined as a healthcare provider, healthcare plans, healthcare clearinghouse, or “business associates.” 

The Privacy Rule goes on to define a business associate as a person or entity that performs certain functions or activities that involve the use or disclosure of protected health information on behalf of, or provides services to, a covered entity.

The Rule allows covered providers and health plans to disclose protected health information to these business associates if the providers or plans obtain satisfactory assurances that the business associate will use the information only for the purposes for which it was engaged. Further, business associates must safeguard the information from misuse, and agree to help the covered entity comply with their duties under the Privacy Rule.

Drake said, “Banks should work with their legal counsel to ensure compliance with the Health Insurance Portability and Accountability Act (HIPAA) requirements if they are providing services that go beyond originating or receiving a healthcare CCD+ transaction.”

By breaking down barriers to EFT adoption and helping Healthcare Providers transition from paper to electronic, financial institutions could help save  the healthcare industry $11 billion annually, Drake said.

View the related PAYMENTS 2012 presentation.