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Cold-reddened noses, mugs of hot chocolate, and New Year's Resolutions may seem like the distant future in the crisp, sunny days of early September, but the New Year is fast approaching. And with it...the EFT mandate. Are you prepared? We can help. Our Cash Management experts at the Provident Bank have supplied you with a helpful guide below to demystify the latest legislation in health care reform.
Effective January 1, 2014, Administration Simplification, a section of the Patient Protection and Affordable Care Act (PPACA), develops guidelines first laid out by the Health Insurance Portability and Accountability ACT (HIPAA) in 1996 to further improve quality, accessibility of care, privacy, and efficiency in health care.
As its name suggests, the legislation's intent is to simplify the administrative processes of the industry. It will require all healthcare transmissions to move from check to electronic funds transfer (EFT) via (ACH) and mandate the adoption of a set of "operating rules" to standardize those transactions.
So, what exactly, does this mean for you? Designed with regard for health care providers and health plans, the new mandate addresses your specific pain points, and the benefits promise to be numerous.
In accordance with the mandate, Health Plans must be prepared to provide Health Care EFT Transactions, if requested by the Provider, within three days of the transmission of the ERA and include the RTN segment.
Providers should understand that they must proactively contact their financial institutions to request the minimum required CCD+ Data Elements.
If you want to learn more about the details of the mandate, we've broken it down into six essential parts:
Financial institutions should understand the requirements of the new mandate and serve with their health care customers accordingly. They must be prepared to comply with the NACHA Operating Rules, ready to deliver the CCD+ Addenda Payment Information and RTN when requested by Providers at the branch, by phone, or through their cash or treasury management officers.
Banks and credit unions have a tremendous opportunity before them to strengthen their relationships with Healthcare customers and collaborate more closely with you. They can work to devise innovative products that efficiently provide the RTN, improve payment processing, reduce risk, develop funds management, enhance information delivery, and better protect private health information.
They can also help you navigate through the new world of health care payment processing, coach you through the details, and educate you on the benefits of Health Care EFTs and the new services that simply make your life easier.
Grab your coat, tug on your mittens, and get ready for the New Year and the Health Care EFT!
For more information, please visit www.nacha.org
ACH: The Automated Clearing House is a nationwide electronic funds transfer (EFT) system that processes large volumes of credit and debit transactions and provides for the exchange of information among financial institutions. It manages payroll, direct deposit, insurance premiums, tax refunds, mortgage loans, consumer bills, tax payments, and many more payment services.
CCD+: Cash Concentration or Disbursement can be a credit or debit application where funds are either distributed or consolidated between corporate entities. A CCD+ includes an Addenda Record with detailed payment information.
EDI: The machine-readable standard adopted by the Department of Health and Human Services (DHHS) for Electronic Data Interchange of healthcare transactions. DHHS identified 9 EDI transaction sets, including X12 835 and X12 820 for financial transactions.
EFT: An Electronic Funds Transfer is the electronic exchange of money from one account to another, either within a single financial institution or across a number of institutions, through computer-based systems. It is safe, secure, efficient, and less expensive than paper transactions.
ERA: Electronic Remittance Advice is an electronic payment explanation that provides information regarding claims payment and allows providers to update their accounts receivable and file for secondary insurance.
NACHA: The National Automated Clearing House Association manages the development, administration, and governance of the ACH Network.
RDFI: A Receiving Depository Financial Institution is a financial institution qualified to receive ACH entries.
RTN: The Reassociation Trace Number is an electronic data interchange (EDI) segment, a string of numbers and asterisks which can be read by a machine and looks similar to this: TRN*1*12345*1512345678*999999999\.