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Emphasis on electronic funds will help providers

Thursday January 5, 2012
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New standards for electronic funds transfers in healthcare, required by the Affordable Care Act, will reduce up to $4.5 billion from administrative costs for doctors and hospitals, private health plans, states and other government health plans over the next 10 years, according to estimates included in new rules published Thursday by the U.S. Department of Health and Human Services.

The standards build on regulations published earlier in 2011 that set industry-wide standards for how health providers use electronic systems to easily determine a patient's eligibility for health coverage and check on the status of a health claim.

Together, the regulations implementing the Administrative Simplification provisions of the Affordable Care Act and the Health Insurance Portability and Accountability Act (HIPAA) are projected to save the healthcare industry more than $16 billion over the next 10 years. These savings come from the adoption of electronic standards that will help eliminate inefficient manual processes and reduce costs.

The provisions will allow healthcare professionals to "spend less time filling out paperwork and more time focusing on delivering the best care for patients," HHS Secretary Kathleen Sebelius said in a news release.

A May 2010 study in the journal Health Affairs found that physicians spend nearly 12% of every dollar they receive from patients to cover the costs of filling out forms and performing other unnecessarily complex administrative tasks. The study found that simplifying these systems could save four hours per week of professional time per physician and five hours of support staff time every week — time that could be better spent on patient care.

"As a nurse, I know the importance of giving healthcare professionals time to focus on patient care," CMS Acting Administrator Marilyn Tavenner, RN, BSN, MHA, said in the news release. "The less time a physician has to spend on paperwork is that much more time that can be devoted to patient care. Having standardized procedures across the healthcare industry can only lead to lower costs and greater efficiencies all around."

The rule — formally known as the Adoption of Standards for Health Care Electronic Funds Transfers and Remittance Advice — 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, 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 matching up the bill and the corresponding payment difficult or sometimes impossible for the provider. The rule addresses this issue by requiring the use of a trace number that automatically matches the two. The new tracking system should allow healthcare providers to eliminate costly manual reconciliation.

Future administrative simplification rules will address adoption of a standard unique identifier for health plans and a standard for claims attachments, as well as requirements for health plans to certify compliance with all HIPAA standards and operating rules.

The regulation went into effect Jan. 1, and all health plans covered under HIPAA must comply by Jan. 1, 2014.

For more information, visit http://go.cms.gov/wn6p44.

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