On January 5, 2012, CMS issued an Interim Final Rule that specifies new standards under HIPAA for electronic funds transfers (EFT) and remittance advice transactions. Comments are due within 60 days after publication of this regulation, which is the second in a series of regulations to be issued over the next five years as required by Section 1104 of the Affordable Care Act's administrative simplification provisions to standardize electronic healthcare transactions. Once finalized, all covered entities must comply by January 1, 2014.
The common interchange structure standards adopted under HIPAA will minimize the industry's reliance on multiple formats for electronic data interchange (EDI). By creating greater uniformity in data exchange and reduction in the amount of paper forms needed for transmitting data, the administrative burden on covered entities will dramatically decrease. CMS estimates that as a result of this Interim Final Rule, covered entities could reduce administrative costs by up to $4.5 billion dollars over the next 10 years.
Despite the gains made since the passage of the initial EDI and EFT standards, healthcare policy makers determined that new EFT standards were required, in part, because the administrative burden in processing healthcare related transactions remains high. CMS, for example, cites a May 2010 study in the journal Health Affairs which found that physicians spend nearly 12 percent of every dollar they receive from patients to cover the costs of filling out forms and performing other excessively complex administrative tasks.
With the Interim Final Rule, HHS has adopted two standards for the healthcare EFT:
- the CCD+Addenda implementation specifications in the 2011 National Automated Clearing House Association Operating Rules & Guidelines, and
- the TRN Segment implementation specifications in the X12 835 TR3 for the data content of the Addenda Record of the CCD+Addenda.
CMS anticipates that healthcare EFT standards will have the most substantial cost and benefit impacts on commercial and government health plans, physician practices and hospitals. Specifically, health plans will have direct costs associated with implementing and using the standards due to required software upgrades and associated training. CMS anticipates that because physician practices and hospitals receive payments electronically and do not remit payments in this manner, these providers will incur little to no cost to implement the standards. Even so, physician practices and hospitals must upgrade billing software to address the new changes and staff members must be trained on the new standards.
Despite these initial and recurring costs, CMS estimates that over ten years, the savings for commercial health plans could be as much as $40 million and $31 million for Medicaid, the Children's Health Insurance Program and the Indian Health Service. Similarly, physician practices and hospitals should see savings of $3 billion to $4.5 billion over the next ten years as health plans implement the healthcare EFT standards.
Future administrative simplification rules will address adoption of a standard unique identifier for health plans, a standard for claims attachments, and requirements that health plans certify compliance with all HIPAA standards and operating rules.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
