On January 10, 2012, the U.S. Department of Health and Human Services (the “Department”) promulgated an interim final rule adopting uniform standards for electronic heath care claims payments. The new rules and pertinent background information are available online.

The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) amended the Social Security Act (the “Act”) and required the Department to adopt standards to promote a consistent framework for electronic health care transactions. In 2010, The Patient Protection and Affordable Care Act, as amended (the “Affordable Care Act”), amended the Act by adding electronic fund transfers (“EFTs”) to the list of electronic health care transactions for which the Department must adopt a standard under HIPAA. The Affordable Care Act also provided new guidelines for such standards. Such standards should require minimal paper augmentation, describe data elements in unambiguous terms, and reduce the number and complexity of forms and data entry required by patients and providers.

An EFT is defined in the Debt Collection Improvement Act as “any transfer of funds, other than a transaction originated by cash, check or similar paper instrument, that is initiated through an electronic terminal, telephone, computer, or magnetic tape, for the purpose of ordering, instructing or authorizing a financial institution to debit or credit an account.” This definition includes transfers through an Automated Clearing House (“ACH”), Fedwire, automated teller machines (“ATMs”), or point-of-sale terminals.

Health care plans generally transmit two kinds of health care information to providers and financial institutions: health care claim payments and electronic remittance advice (“ERA”). Payments are typically made through an EFT utilizing the ACH Network. ERAs, on the other hand, are transmissions that explain to the provider why the amount paid may be different from the amount charged, based upon contract agreements, secondary payers, benefit coverage, or co-pays. ERAs contain protected health information. ERAs and claim payments are generally transmitted as separate files at different times. This requires additional labor to reunite these files once the provider receives both files. These new standards aim to facilitate easier, and ultimately automated, “reassociation.”

The new rules only pertain to EFTs sent through the ACH Network. Payments through the ACH Network are comprised of three stages: 1) Payment Initiation; 2) Fund Transfer; and 3) Deposit Notification. The new rules only pertain to stage one of this process (Payment Initiation).

Under this rule, the Department adopted the NACHA Corporate Credit or Deposit Entry with Addenda Record (“CCD+Addenda”) implementation specifications as the standard for stage one payment initiations. Additionally, the Department adopted the TRN Segment implementation specifications in X12 835 TR3 (Accredited Standards Committee X12 Standards for Electronic Data Interchange Technical Report Type 3, Health Care Claim Payment/Advice (835), April 2006: Section 2.4: 835 Segment Detail: “TRN Reassociation Trace Number”) as the standard for the data content of the Addenda Record of the CCD.

Under these new rules, all health plans that choose to transmit payments using EFTs through the ACH Network must use the same electronic file format (CCD+Addenda) with consistent data elements in the Addenda Record of the CCD (X12 835 TR3). These rules do not require plans to utilize the ACH Network, but any transfer using such Network must follow these standards. Additionally, these rules do not require EFTs and ERAs to be transmitted separately. Plans can voluntarily combine these transmissions so long as the X12 data requirements are still followed.

These rules are effective January 10, 2012, however implementation is not required until January 1, 2014. Comments may be submitted to the Department until March 12, 2012. The Department plans on promulgating additional operating rules regarding EFTs in a future rulemaking.

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