Benefits Of New EFT Standard And Automatic Reassociation Not Realized

By Christine Kern, contributing writer

Many health IT professionals are unaware of the benefits of the new electronic funds transfer standard that took effective at the beginning of the year.

According to Health Data Management, although a new healthcare electronic funds transfer (EFT) standard went into effect at the beginning of the year, many healthcare IT professionals remain unaware of the requirements and potential benefits.

Previously, there was no EFT standard, placing a heavy burden on providers interested in receiving EFT payments. These providers had to deal with a variety of enrollment procedures, and delayed transactions. There was also no standard for reassociation of data – making it difficult to match payments with claims.

A new Healthcare EFT Standard took effect in January, a part of the ACA, to help remedy those problems. The new standard established enrollment, security and reassociation processes, making it easier, safer and more efficient for healthcare providers to receive EFT payments electronically.

The NACHA website explains that, similar to financial transactions such as payroll direct deposits, EFT allows providers to conduct electronic payment and remittance advice transactions. January, 2014 was the first month health plans were required to comply with new standards and operating rules aimed at making EFT transactions simpler and faster. That same month, more than eight million healthcare payments were made using electronic funds transfers through the Automated Clearing House (ACH) Network.

The first three months of 2014 saw a 32 percent increase in EFT transactions identified as healthcare payments over the fourth quarter of 2013. In the long run, it is estimated that EFT standards will lead to a 6 to 8 percent annual increase in the use of EFT for healthcare payments from 2014 to 2018.

The new standard offers a faster, easier, and less expensive way to handle payments for healthcare professionals, including billers, coders, and IT personnel. Each EFT payment includes a reassociation number, facilitating matching outstanding claims with payments for accounting offices. The Healthcare EFT Standard is the only payment method with this feature.

They are also faster than paper checks and card payments and more secure than checks—the dominant payment form targeted by fraudsters—and all transactions are compliant with HIPAA privacy standards. Most importantly for healthcare providers, however, is that the cost of a claims payment using the Healthcare EFT Standard is, on average, 34 cents. Other EFT payment types, such as wire transfers and credit cards, can cost $10.73 or more per transaction.

Those cost reductions, combined with additional savings on items like paper, could save physician practices and hospitals an estimated $3 billion to $4.5 billion over the next 10 years, according to preliminary estimates from the Department of Health and Human Services.

For more information on the new Healthcare EFT Standard, visit healthcare.nacha.org.