Typically, physician practices in the past would receive a paper check from a health plan for payment of a medical service. In 2012, the Centers for Medicare & Medicaid Services (CMS) established a standard for the Electronic Funds Transfer (EFT) and supporting operating rules.
Contrary to the spirit of the 2012 rules and arguably contrary to the law itself, some health plans and their contracted payment vendors have sought to take advantage of practices by forcing the payment of EFT transaction fees typically ranging from 2-5% of the total medical services payment.
A Sept. 5 MGMA Stat Poll found that 17% of respondents indicated that their EFT payments from health plans came with a fee, with 50% saying there was no fee attached to the transaction. More than 32% indicated that they were unsure. Of those who responded yes to receiving fees for EFT payments, almost 60% stated that these health plans use a third-party payment vendor. Providers are forced to pay these EFT fees as CMS has yet to issue explicit guidance against health plans and payment vendors charging these tolls.
The savings and benefits related to use of EFT for business and consumer payments are well established. For practices, the most common savings are in the ability to automate the reassociation of the electronic payment with the Electronic Rremittance Advice (ERA), as well as savings in staff time to process and deposit paper checks manually. Health plans are required to offer EFT payments when requested by providers and achieve operational efficiencies themselves by eliminating printing and mailing costs. Beyond the material and administrative time savings for all sides, the time and resources that physician practices spend on billing and related tasks are better spent on delivering health care to patients.
EFT operating rules will help practices by
- Requiring health plans to use a consistent format and form on EFT enrollment forms, including offering electronic enrollment, ensuring that the enrollment process is similar across plans
- Automating the reassociation of EFTs and the ERA
- Requiring the health plan to release the EFT payment and ERA within a reasonable timeframe (e.g. three days or less) if the provider has enrolled for both transactions
- Allowing practices to receive the key data elements (“trace numbers”) in the two transactions necessary for successful reassociation of the EFT with the ERA
Recently, the Workgroup for Electronic Data Interchange (WEDI), the leading authority on health information technology, created a task group, co-chaired by MGMA and Aetna, that took on the task of drafting a set of consensus-based electronic payments principles. WEDI was named in the 1996 HIPAA legislation as an advisor to the Department of Health and Human Services and is comprised of a broad cross-section of the healthcare industry including patients, physicians, hospitals, health plans, laboratories, pharmacies, clearinghouses, dentists, vendors, government regulators and other industry stakeholders. In the document, WEDI set out a number of key electronic payments principles that included the following:
- When a health plan or any of their clearinghouses or payment-related vendors offers an ACH EFT payment option, it should offer an ACH EFT option with no origination fees.
- The provider should not be subject to any hidden fees. Before a provider may be paid via electronic payment, the health plan, clearinghouse or payment-related vendor must: (a) notify providers regarding their fees associated with this payment method; (b) advise providers to check with any of their contracted vendors (i.e., their credit card merchant processer) regarding any additional administrative fees; and (c) notify providers about the availability of an ACH EFT payment option.
- Before a provider may be paid via an epayment method other than ACH EFT, the health plan, clearinghouse or payment-related vendor should receive explicit agreement (“opt-in”) from the provider.
- There should be transparency from health plans, clearinghouses and payment-related vendors regarding any required transition from paper-based payments to electronic payments, and providers should be given a minimum 90-day notice before the effective date of the electronic payment mandate and must opt-in to any nonstandard electronic payment method scheduled to replace a paper-based payment.
MGMA and other provider organizations have been advocating that CMS release regulatory guidance based on these and other payment principles established by WEDI. Once that guidance is in place and physician practices are no longer subject to unreasonable fees, we believe provider adoption of the EFT transaction will increase. Recently, CMS did issue a set of frequently asked questions (FAQs) based on the WEDI principles, and included a prohibition against health plans or their contracted vendor charging fees for the basic EFT service. However, after just a few days, the agency removed these FAQs from the CMS website. MGMA is strongly advocating for this guidance to be reissued as soon as possible. In the interim, practice executives should review all payment contracts with health plans or their vendors closely and push back whenever possible on any health plan or vendor seeking to impose fees on basic EFT payments.