Cut costs, boost efficiency with the healthcare EFT standard

The healthcare EFT standard became effective January 1, 2014, which required all health plans to deliver claims reimbursement payments via the ACH Network if requested by the provider.^[1] In 2014, more than 149 million healthcare EFT standard transactions were processed through the ACH Network saving the healthcare industry an estimated $740 million.

Under HIPAA, providers are also able to receive electronic remittance advices (ERAs)^[2] if they request it from their health plan. In 2013, almost 50 percent of remittance advices were conducted using the HIPAA standard. It is estimated that more than $1.5 billion could be saved annually in the healthcare industry by full conversion to ERA.^[3]

To help healthcare industry providers recognize and realize the benefits of automation using the healthcare EFT standard and ERA, NACHA worked with provider groups to document savings realized by different sized organizations, from a single doctor micro-practice to one of the largest hospital groups in the U.S. The research proved that practices of all sizes can achieve cost savings and benefits from converting their claims reimbursements payments from paper checks to the healthcare EFT standard transaction and automating the reconciliation and posting process using the ERA.

Benefits achieved across practices included:

• Faster patient billing, as EFT payments are received faster allowing for quicker secondary billing and billing of patient responsibility
• Reduced posting errors through automation of EFT and ERA
• Reduced processing costs

Documenting Success: Case Studies

Case Study #1 - A practice with one doctor, one physician’s assistant and one administrative director leveraged the implementation of the healthcare EFT standard to move to a 95 percent adoption of both EFT and ERA in the practice. Through automation, the administrative director was able to limit the billing, reconciliation and posting to only 25 percent of her time, allowing her to deal with all other administrative tasks of the practice.

Case Study #2 - With the healthcare EFT standard, a midsized OB/GYN practice with 56 providers and 19 care centers with a centralized billing office was able to achieve a 90 percent adoption rate for both EFT and ERA. The billing management staff started converting insurers it billed most and continues to migrate all insurers to EFT and ERA. With the migration to the healthcare EFT standard and ERA, the practice has also been able to reduce its claims outstanding. Seven years ago, the practice’s claims outstanding was at 25 days. Today, the practice has reduced the average claims outstanding to 13 days from claims submission to posted payment, significantly improving the cash flow of the practice.  Additionally, despite growth in practice providers and care centers - and resulting claims processed through the business office - the practice has not needed to increase the billing staff.

Case Study #3 - A large hospital group with 165 locally managed hospitals and 115 freestanding surgery centers in 20 states and England has been converting checks to EFT for over 20 years. With the implementation of the healthcare EFT standard, the volume of checks converted to EFT has increased significantly for the hospital group. In addition, the hospital group has seen a 70 percent reduction in the processing costs for claims reimbursed with EFT and ERA as a result of improved payment posting and reconciliation. Now, the hospital group has an 83 percent match rate of EFT and ERA on the day received (Day 0), which improves to a 98 percent match by Day 2. The automation of the EFT and ERA has essentially eliminated the errors associated with manual posting and processing.

NACHA is the federally recognized standards body for the healthcare EFT standard and is the private-sector rule making organization for the ACH Network. NACHA staff has worked with the healthcare industry to provide information and education on the benefits of the healthcare EFT standard.  All case studies are posted on the NACHA Healthcare Payments microsite.

NOTES

[1] CAQH 2014 U.S. Healthcare Efficiency Index.

[2] The X12 835 version 5010 is the HIPAA standard for electronic remittance advice (ERA).

[3] CAQH 2014 U.S. Healthcare Efficiency Index.