• CMS Guidance on EFT/ERA Transactions Reflects AAFP Advocacy

    Agency Addresses Concerns About Health Plans’ Electronic Payment Practices

    April 14, 2022, 3:54 p.m. News Staff — In response to strong advocacy by the AAFP and other physician groups, CMS last month released new guidance for HIPAA-covered entities conducting certain electronic transactions that is intended to clarify regulations the agency implemented in 2012 to streamline payer-to-physician claims payments. Those regulations were promulgated as part of HIPAA Administrative Simplification requirements for electronic transactions. The agency simultaneously issued separate guidance concerning covered entities’ obligation to require that their business associates comply with HIPAA regulations.

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    At issue are reports of health plans using third-party vendors to make electronic payments to physicians via the HIPAA electronic funds transfer transaction standard. Many of these vendors charge extra fees the practice has not agreed to when sending electronic payments via the standard. Often characterized as charges for additional “value-added” services, these fees typically average 2-3% of the claim payment, according to survey data from the Medical Group Management Association.

    Needless to say, such fees chip away at what, for many family medicine practices, is already an extremely thin operating margin — a situation that has only been exacerbated by the rigors of practicing during the current pandemic.

    Transactions Defined

    A health care EFT transaction is defined as the transmission of payment, information about the transfer of funds, or payment processing information from a health plan to a physician or health care professional. Similarly, a health care electronic remittance advice transaction is defined as the transmission of an explanation of benefits or remittance advice from a health plan to a physician or health care professional.

    Of electronic payment delivery methods that meet the regulatory definition of the EFT transmission — wire transfer, virtual credit cards and the Automated Clearing House Network — HHS regulates only EFT transmissions made through the ACH Network. EFT through the ACH Network involves three stages: payment initiation, transfer of funds, and deposit notification.

    Story Highlights

    Guidance Highlights

    First, although the guidance acknowledges that HIPAA EFT and ERA transaction standards permit health plans to pay physician claims using VCC, physicians cannot be compelled to receive payment via VCC, a process that may incur fees (assessed by health plans or credit card networks) because it is not subject to HHS’ regulatory oversight. Physicians may request that health plans use the adopted HIPAA health care EFT and ERA transaction standards to make electronic claims payment through the ACH Network, and plans must comply. Depending on the circumstances, charging fees for these EFT transactions “may be construed as the health plan adversely affecting the transaction or the provider on the basis that the transaction is a standard transaction.” In other words, the plan may not be compliant with HHS regulations if it is charging EFT fees. In any event, physicians must enroll with each health plan they bill to receive EFT payments and associated ERAs.

    Furthermore, the guidance also stipulates that health plans may not mandate that a physician work with any specific vendor to receive electronic payments. Whereas a vendor operating on behalf of a health plan to conduct Stage 1 payment initiation transmissions is free to offer services related to Stage 3 transmissions or other payment/and or reassociation processes, any health plan effort to require a physician to agree to receive unwanted payment or reassociation services from such a vendor may be seen as adversely affecting the transaction, which is not permitted.

    Generally speaking, it’s important for physicians to be familiar with the terms of any claims payment agreements they have in place with the health plans they bill. If a physician has submitted a request to a health plan that health care EFT and ERA transactions be conducted using the adopted standards, and the physician subsequently thinks the health plan has failed to comply with any of the adopted standards or operating rules, that physician may file a complaint against the plan with the CMS National Standards Group using the agency’s Administrative Simplification Enforcement Testing Tool. Inquiries about this guidance may be sent to AdministrativeSimplification@cms.hhs.gov with the subject line: EFT ERA Guidance Question.

    COD Takes Note

    AAFP News noted in November 2021 that the Arizona AFP had introduced a resolution on such practices that was to be considered by the 2021 Congress of Delegates when it convened in February 2022. During that event, which was held virtually, the Reference Committee on Practice Enhancement recommended that the measure be referred to the Board of Directors. COD delegates disagreed, however, extracting the item from the consent calendar and singling it out for further discussion and a vote during the next in-person COD, scheduled for Sept. 19-21 in Washington, D.C.