On January 10, 2012, the HHS issued interim final regulations addressing standards for electronic funds transfers (EFTs) applicable to health care claims payments transmitted by health plans to health care providers. The regulations are the second in a series of transactions guidance under the Affordable Care Act (ACA), which required adoption of a uniform set of electronic standards under the Health Insurance Portability and Accountability Act (HIPAA). In July 2011, HHS issued the first set of interim final regulations that adopted electronic transaction standards for use in determining:

The EFT regulations are effective January 10, 2012, and compliance with the regulations will be required on January 1, 2014. Comments regarding the EFT regulations must be submitted on or before March 12, 2012.

In general, an EFT is a transfer of funds, other than through paper instruments (for example, cash or check), initiated electronically to instruct or authorize a bank to debit or credit an account. The purpose of the regulations is to make EFTs a more efficient and cost-effective method for receiving health claim payments that originate with health plans.

The EFT regulations adopt the following two standards for health plans that transmit health care claim payments to providers using EFTs:

In the health claims context, the EFT transmission includes two parts:

A remittance notice is not always transmitted in the same electronic format as the EFT payment/processing information, and therefore may not arrive to the provider at the same time as the payment information. When the EFT payment information and remittance advice do not arrive together, the provider must "reassociate" them (match them back together) in a manual process that can be expensive and time-consuming. To address this problem, the EFT regulations require use of a trace number that:

In practice, health plans will only need to use the regulations' EFT standards if the plan's provider wants to receive health care claim payments via EFT through the automated clearing house network (ACH), the electronic "pipeline" through which EFT travels. In background information accompanying the regulations, HHS acknowledged that use of EFT for health care claim payments is currently low relative to other industries. The agency anticipates, however, that the percentage of claim payments transmitted using EFT will increase substantially in the future.

The EFT regulations will translate to additional short term expense for health plans. HHS estimates that it will cost health plans, on average, $4,000 to $6,000 to implement the health care EFT standards. These costs include:

HHS further estimates that it will cost health plans $2,000 to $3,000 annually in maintenance, updating and subscriber fees for the two years following implementation. However, it is estimated that the EFT standards will result in savings for health plans, providers and other entities of up to $4.5 billion over the next ten years.

The regulations will also be of interest to third-party administrators of self-funded plans, who will likely be involved in implementing the EFT standards. Notably, however, it is the health plan that is ultimately responsible for ensuring compliance with the standards.

HHS also indicated that additional HIPAA guidance will include adoption of:

For more information on the EFT regulations, see Practice Note, HIPAA Privacy Rule, which will be updated to reflect this guidance.