Electronic payment methods are the fastest and the most secure means of getting payment from the insurance companies. All healthcare organizations such as hospitals, health systems, clinics and individuals practitioners opt for EFT and ERA methods of receiving both payment and remittance advice, this prcess simplifies the receivable process and keeps unpaid claims in check.
What is the relationship between CAQH and EFT/ERA enrollment?
CAQH has created ACA-approved functional rules for EFT and ERA. It is CAQH that conducts reaching out and educating insurance plans, healthcare providers, hospitals and health systems along with clearinghouses trading partners on how to follow and implement those rules for enrolling EFTs and ERAs. CAQHs Phase III CORE Certification tests compliance with the EFT/ERA functional rules and provides certification for these entities. CAQH Solutions created an industry-wide enrollment tool to encourage easy EFT/ERA enrolment. CAQH Indexes tracks down healthcare industry adaptations of electronic claims payments and related cost savings which includes both insurances and healthcare systems, hospital, clinics and individual providers.
What is EFT?
Electronic Funds Transfer Or EFTs are the electronic transaction of reimbursement or transfer of funds from insurance companies to the designated healthcare organization. EFT is the most safest, user friendly, timely and cost efficient alternative to paper check, virtual card and other manual modes of payments. According to a survey done by CAQH in 2014, there were ans astonishing 149 million healthcare EFT transactions from health plans to healthcare organizations and providers, transferring $876.6 billion in claim reimbursements. Almost all EFTs are “ACH Network” transactions “Automatic Clearing House” (ACH) Form of electronic payment used by most health plans, including Medicare, to pay healthcare organizations and providers.
What is ERA?
Electronic Remittance Advice Or ERA is an electronic explanation to the healthcare organizations or providers of the health insurance reimbursement made, including:
Information regarding the patient. This includes the following information:
- The medical service or procedure performed by the rendering provider.
- The service rendering provider information performing that particular service or procedure.
- Claims adjustments which includes contractual adjustment and other adjustments like sequestration.
- EFT and ERA always coordinate together, of which ERA contains information about a particular medical claim and the outcome which is EFT payment.
- ERA used alongside the EFT enables automated reconciliation and payment posting in EHRs which has inbuilt automatic payment posting features.
- Explanation of Benefits or EOBs are frequently used interchangeably with Remittance Advice, but usually refers to the claims and reimbursement information provided by paper to the provider or patient.
Cost savings by using EFT payment methods:
Usage of EFT and ERA results in higher savings for healthcare organizations and providers:
|Claim payment||Insurance cost(per transaction)||Provider cost (per transaction)|
In Addition to this, on average, virtual cards charge 3% of the total transaction amount plus a $0.10 per transaction fee.
Drawbacks of still using manual payment and remittance methods:
Points to know about ACA Mandated electronic payments methods:
- As of January 1st 2014, new guidelines came into effect, allowing healthcare organizations and providers the right to choose the electronic payment methods for claim reimbursements stating that is best for their practice.
- HIPAA needs health insurance plans to make EFT through ACH available upon request.
- Some health insurance plans have been proactive in their outreach to inform providers about their EFT options.
- Some insurance plans may only have a web portal or hard copy form for healthcare organizations and providers to fill out and send in to the plan for EFT enrollment.
- Health insurance plans are not allowed to delay or reject an EFT or ERA transaction and/or charge an excessive fee.
- However, all healthcare organizations and providers should understand and be informed of any restrictions in payment methods when contracting with specific health insurance plans.
Benefits of using electronic payments methods:
Insurance claims payments and funds are received and available for use in healthcare organization’s or provider’s bank accounts the next business day after the insurance plan initiates payment. Payments are available within a week’s time (5 business days) faster than manual paper checks on an average. Delays for Manila paper checks include mailing, deposit and funds clearance. Absolutely 0 staff time required for bank visits to make manual check deposits.
BillingParadise has provided EFT and electronic remittance methods to all of it’s clients. These clients have saved a minimum of $10,000 on manual remittance task eliminating hassle in receiving payments from insurance companies and lessen manual payment posting methods. Talk to our RCM experts and learn more.