Obama Administration Issues New Rule on Electronic Fund Transfers, Potentially Saving Physicians and Hospitals Up to $9 Billion


On August 7, 2012, HHS Secretary Kathleen Sebelius announced the release of a new rule for making health care claim payments electronically, stating that the rule will “cut red tape, save money and ensure doctors spend more time seeing patients and less time filling out forms.”  Entitled “Administrative Simplification: Adoption of Operating Rules for Health Care Electronic Funds Transfer and Remittance Advice Transactions,” this rule is projected to save up to $9 billion over the next ten years for physicians, hospitals, and health plans. 

The new rule implements “operating rules” for making electronic health care claim payments and describing claim payment adjustments.  Because many physician practices and hospitals accept and deposit paper checks and manually post these payments in their accounting systems, the average physician practice spends approximately three weeks a year on billing and insurance-related tasks.  These operating rules will allow physician practices and hospitals to receive and post payments electronically, significantly decreasing administrative time and costs.

The operating rules expand upon the electronic fund transfer (EFT) standards adopted by HHS in January 2012 and also include guidance on electronic remittance advice (ERA).  Among other things, the operating rules:

  • outline best business practices on the transmission of EFT;
  •  target potential problems that health insurers and physicians have using EFT;
  •  require insurers to offer a standard, online enrollment for EFT and ERA, making it simpler to enroll with multiple health plans; and
  •  require health plans to send EFT within a required amount of days of the ERA, helping providers to efficiently reconcile accounts.

For more information, click here to view the regulation, which will be published in the Federal Register on August 10, 2012.  A fact sheet with technical information on the new rule can be found here.

Reporter, Katy Lucas, Atlanta, +1 404 572 2822, klucas@kslaw.com.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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