Guest Commentary: Understanding the benefits of the new Healthcare EFT Standard

Thanks to the Patient Protection and Affordable Care Act, a new electronic funds transfer standard and associated operating rules went into effect at the beginning of the year. The Healthcare EFT Standard offers medical providers new opportunities to reduce costs, streamline accounting processes and improve operating efficiencies—ultimately allowing them to spend more time with patients and less time on paperwork.

In the past, the lack of an EFT standard placed a heavy burden on healthcare providers. NACHA—The Electronic Payments Association collaborated with the Council on Affordable Quality Healthcare in 2010 to research how healthcare providers and health plans used EFTs and found several problems with the former system. Providers interested in receiving EFT payments had to tackle numerous enrollment procedures that often led to delayed transactions. There was also no requirement to reassociate data with payments, making it difficult to match payments with their electronic remittance advices, which explain what the payment covered.

With the new EFT standard, enrollment, security and reassociation processes have all been established. It's now easier, safer and more efficient for healthcare providers to receive EFT payments via the automated clearinghouse network, which provides a secure and reliable system for direct account-to-account consumer, business and government payments.

Although the new rule does not prohibit providers from using other payment options for claims reimbursements, EFT payments via the ACH network provide a number of benefits that other electronic payment options and paper checks do not.

For example, the new standard offers providers significant cost savings over other payment types. The cost of receiving a claims payment using the Healthcare EFT Standard is, on average, 34 cents. Other EFT payment types, such as wire transfers, can cost an average of $10.73. Credit cards or virtual cards, which use a third-party provider to process electronic payments for health plans, cost providers an average of 3% of the claim amount 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 HHS.

Using the Healthcare EFT Standard can also boost provider efficiency. The new standard includes a reassociation number, which makes matching outstanding claims with payments quick and easy for providers' accounting offices. The new standard is the only payment method with this feature. Working with a provider's practice-management system to match outstanding claims with payments and update patient accounts can help facilitate a fully electronic practice.

Additionally, healthcare EFTs that use ACH are more secure than checks, which continue to be the dominant payment form targeted by fraudsters, and all transactions are compliant with Health Insurance Portability and Accountability Act privacy standards. They also offer amore efficient alternative to paper checks or card payments. Funds from EFTs via ACH are available on the day received by the provider's bank, and transferred funds are available up to seven days faster than with paper checks. ACH payment funds are also available faster than credit card or virtual card funds, which are deposited to the provider account, on average, two to four days after transactions are processed in the provider's office.

Providers can easily begin realizing these benefits. To get started, they simply need to contact their health plans, choose the Healthcare EFT Standard and provide the plans with their payment information.

For more information on the new standard, visit healthcare.nacha.org.

Priscilla Holland Senior director NACHA—The Electronic Payments Association