ACTION
The Centers for Medicare & Medicaid Services (CMS) today announced
an interim final rule with comment period (IFC) under which the
Department of Health and Human Services (HHS) adopts operating rules for
the health care electronic funds transfers (EFT) and remittance advice
transaction under the Health Insurance Portability and Accountability
Act of 1996 (HIPAA).
Section 1104 of the Affordable Care Act (the Affordable Care Act)
requires HHS to issue a series of regulations over the next five years
for the purpose of streamlining health care administrative transactions,
encouraging greater use of standards by providers, and making existing
standards work more efficiently. On July 8, 2011, HHS published the
first regulation, an IFC that adopted operating rules for two electronic
health care transactions to make it easier for physician practices and
hospitals to determine whether a patient is eligible for coverage and
the status of a health care claim submitted to a health insurer. On
January 10, 2012, HHS published a second regulation, an IFC adopting
standards for health care claim payments made via EFT and for electronic
remittance advice (ERA).
The regulation announced today is the third in the series. It adopts
EFT and ERA operating rules that, when implemented by health plans, are
estimated to save the industry, primarily physician practices, between
$300 million and $3.3 billion over the next ten years.
Some of the future administrative simplification rules will address the adoption of:
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A standard unique identifier for health plans;
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A standard for claims attachments; and
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Requirements that health plans certify compliance with all HIPAA standards and operating rules.
BACKGROUND
Congress addressed the need for a consistent framework for electronic
health care transactions and other administrative simplification issues
through HIPAA. HIPAA amended the Social Security Act (the Act) by
adding Part C—Administrative Simplification—to Title XI of the Act,
requiring HHS to adopt standards for certain electronic administrative
health care transactions to enable health information to be exchanged
more efficiently and to achieve greater uniformity in the transmission
of health information.
Section 1104(b)(2)(A) of the Affordable Care Act amended section
1173(a)(2) of the Act by adding the electronic funds transfers (EFT)
transaction to the list of electronic health care transactions for which
the Secretary must adopt a standard under HIPAA. Section 1104(b)(2)(C)
of the Affordable Care Act further requires the adoption of operating
rules for all HIPAA electronic health care transactions.
Standards include implementation specifications for electronic formats
as well as requirements for the data included in that format. By
contrast, operating rules include best business practices on how
electronic transactions are transmitted and often target obstacles that
physician practices, hospitals and health plans encounter in using
electronic transactions. For instance, the EFT & ERA Operating Rule
Set adopted in today’s rule requires health plans to offer a
standardized, online enrollment for EFT and ERA so that physician
practices and hospitals can more easily enroll with multiple health
plans to receive those transactions electronically. Among other
requirements, the EFT & ERA Operating Rule Set requires health plans
to send the EFT within a certain number of days of the ERA, making it
easier for physician practices and hospitals to reconcile their
accounts. The EFT & ERA Operating Rule Set also includes
requirements for the initial set-up for the electronic communication
between providers and health plans.
In general, the savings and benefits related to use of EFT for business
and consumer payments are well established. The most common savings
are in paper, printing, and postage costs, as well as savings in staff
time to manually process and deposit paper checks. Yet adoption and
use of EFT by the health care industry has been low, resulting in
administrative savings that go unrealized. The obstacles to greater use
of EFT by the health care industry can be lessened by standardization
of the EFT transaction and operating rules that target difficulties for
physician practices and hospitals in using EFT and ERA. Beyond the
material and administrative time savings for health care providers and
health plans, the time and resources that physician practices and
hospitals spend on billing and related tasks will be better spent
delivering health care to patients.
On March 23, 2011, the National Committee on Vital and Health
Statistics (NCVHS) sent a letter to the Secretary recommending that the
Council for Affordable Quality Healthcare's Committee on Operating Rules
for Information Exchange (CAQH CORE) be named as the authoring entity
for operating rules for all health care EFT and ERA transactions.
Between March and August 2011, CAQH CORE held more than 30 open calls
and over 15 straw polls with industry and government representatives to
discuss and develop operating rules for EFT and ERA. Over 80 health
care entities, including health plans, clearinghouses, providers, and
financial institutions, were represented at weekly meetings and worked
hard to build consensus on the operating rules. On Dec. 7, 2011, the
NCVHS sent a letter to the Secretary recommending that the CAQH CORE EFT
& ERA Operating Rule Set be adopted. Based on that recommendation,
HHS is adopting the CORE EFT & ERA Operating Rule Set and
transaction.
The goal for adopting these operating rules is to support and enhance
the health care EFT and ERA transactions and improve the transaction's
functionality by applying necessary business rules and guidelines for
the electronic exchange of information.
PROVISIONS OF THE IFC ANNOUNCED TODAY
In this interim final rule with comment period (IFC), we are adopting
the Phase III Council for Affordable Quality Healthcare (CAQH) Committee
on Operating Rules for Information Exchange (CORE) EFT & ERA
Operating Rule Set, including the CORE v5010 Master Companion Guide
Template, for the health care EFT and remittance advice transaction
(hereinafter referred to as the EFT & ERA Operating Rule Set), with
one exception: We are not adopting Requirement 4.2, titled "Health Care
Claim Payment/Advice Batch Acknowledgement Requirements," of the Phase
III CORE 350 Health Care Claim Payment/Advice (835) Infrastructure Rule
because that requirement requires the use of the Accredited Standards
Committee (ASC) X12 999 acknowledgement standard, and the Secretary has
not adopted standards for acknowledgements.
Covered entities must be in compliance with the EFT & ERA Operating Rule Set by January 1, 2014.
COSTS/BENEFITS
The EFT & ERA Operating Rule Set is expected to have the most
substantial cost and benefit impacts on physician practices, hospitals
and health plans. For physician practices and hospitals, there is little
to no cost to implement the health care EFT & ERA Operating Rule
Set, as providers are the receivers of the transaction and not the
senders.
This IFC is estimated to have a net savings of between $300 million and
$3.3 billion over ten years. Both costs and benefits are calculated
within four areas of administrative tasks:
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Provider enrollment in EFT and ERA;
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Implementing connectivity between trading partners;
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Reassociation of the payment information with the remittance information; and
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Posting payment adjustments and claim denials.
Costs will be borne by the health plans, with much of the benefits coming to providers.
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CMS estimates that the cost to implement the EFT & ERA Operating
Rules is $1.2 to $2.7 billion for government and commercial health
plans, third party administrators (TPAs), and hospitals and physician
practices over ten years.
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CMS estimates that the savings and cost benefit to using EFT & ERA
Operating Rules is $3 to $4.5 billion for government and commercial
health plans, TPAs, hospitals and physician office over ten years.
We anticipate that the use of operating rules may help foster
electronic payments. We had previously estimated that use of the health
care EFT standards would save an estimated 800,000 pounds of paper over
ten years.
The operating rules build upon industry-wide health care EFT standards
adopted in January of this year. Together with the health care EFT
standards, the EFT and ERA operating rules are estimated to save between
$2.7 billion and more than $9 billion in administrative costs over ten
years by reducing inefficient manual administrative processes for
physician practices, hospitals, and health plans.
REGULATION EFFECTIVE DATE/COMPLIANCE DATE
The effective date of this regulation is August 10, 2012. All
HIPAA-covered entities must be in compliance with the EFT & ERA
Operating Rule Set by January 1, 2014.
The IFC announced today may be viewed at
www.ofr.gov/inspection.aspx. The IFC will be published in the Federal Register on Aug. 10, 2012, and comments are due on Oct. 9, 2012.
A news release on the rule may be viewed at
http://www.hhs.gov/news and at
http://www.cms.gov/apps/media/press_releases.asp.
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