One impending deadline of the Affordable Care Act that flies under the radar is the one in which payers must comply with the mandate on electronic claims reimbursement.
From many perspectives, healthcare is woefully behind in the technology game. In fact, the Council for Affordable Quality Healthcare (CAQH) reports through its Healthcare Efficiency Index that while 46 percent of healthcare remittances are automated, only about 10 percent of payments are sent electronically to providers.
Fortunately, that statistic is slated to rise in 2014 with the ACA requirements, which call for the adoption of electronic funds transfer (EFT) and electronic remittance advice (ERA) operating rules and technical standards.
Regulations around electronic payment information have existed for years, including provisions in the Health Insurance Portability and Accountability Act (HIPAA). However, they did not include details about the infrastructure to promote the move from today's paper-based system to an electronic, interoperable system. Providers also experience problems with the reassociation of remittance data to payment information because oftentimes it is incorrect, missing or not available.
The new rules are designed to help providers more quickly match payments with data and post to patient accounts more quickly.
CAQH helped design the rules that are to go into effect on Jan, 1, 2014. The provisions require that health plans have the capability to transmit EFT and ERA files to any provider organization that requests electronic transactions. While providers are not required to accept electronic payments from health plans, they will be required to receive Medicare reimbursements via EFT. The mandate also states that if a provider requests to receive funds via automated clearing house (ACH), payers must have the ability to comply.
As the mandate deadline nears, the industry is learning about the benefits and drawbacks of ACH. Like other transaction methods, it does away with checks and minimizes many administrative requirements. ACH transactions also allow health plans to transmit additional information with the payment, much as they would have done via paper.
One potential barrier for adoption is that healthcare organizations will be required to enroll with each payer and actively manage the relationship, which is a time- and resource-consuming proposition. And like any transaction medium, the electronic infrastructure is susceptible to fraud and abuse.
With these insights, healthcare providers are considering what form of EFT makes the most sense for their situation. Health plans have an excellent opportunity to educate their providers about ACH as well as other electronic payment methods, including virtual credit card payments. A convenient way to leverage a technology platform that already exists within the organization, virtual payments are an innovative means for facilitating funds transfer from plan to provider. Virtual payments can be processed through the POS system already in place and do not require the provider to enroll with health plans.
In most cases, each transaction starts with a unique number given by the virtual payment issuer to a health plan. This number is then sent by the payer to the provider, who simply processes the payment through their existing POS device, with the funds electronically routed to an existing bank account, eliminating the hassles and costs associated with handling paper checks. Since many provider organizations already have established credit card merchant agreements to support patient card payments, the need for enrollment to support virtual payments is eliminated.
Virtual payments add transparency to healthcare transactions while improving cash flow, ensuring payment accuracy, and providing robust analytics. As health plans gear up for the EFT/ERA mandate, they should consider virtual payments as a cost-effective alternative for members of their provider network not yet on board with ACH.