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Understanding Health Care EFT Standards: Part III

Which Message Format to Use for Health Care EFT?…

In Part I of my Understanding Healthcare EFT standards blog, I identified several major obstacles for health care providers to adopt EFT (electronic funds transfer) and ERA (electronic remittance advice). In Part II, I explored the differences between in-band versus out-of-band remittance delivery and how it reletes to EFT standards. In Part III, I will discuss which message format is best to use for Health Care EFT.

Which message format should you use for health care EFT? How can you best address timely delivery, reassociation keys or in-band or out-of-band delivery? Testimony during the December 2010 hearing (held by the National Committee on Vital and Health Statistics (NCVHS) indicated that currently, when payments are made via EFT (as opposed to paper check), the majority are already being transmitted through the ACH network. A much smaller percentage is processed through Fedwire or card networks.

What about EDI? Although the X12 EDI 835 can contain payment instructions in addition to remittance, no testimony was given to support that use of it. Currently it appears to be used solely for the delivery of remittance advice data. Nor was X12 EDI 820 suggested as an alternative for EFTs. Neither were there any suggestions in support of standardizing any proprietary formats currently in use.

Of particular significance is the NACHA Corporate Trade Transaction (CTX), which was mentioned but not endorsed. Testimony was given that while 99+% of ERA data could be carried as the message payload in a CTX transaction, exceptions would nevertheless need to be addressed. Also, the ERA data is typically generated and sent from a health plan’s claims system, not their treasury system.

More critical to the discussion was the recognition that passing personal health information (PHI) through CTX would require that the ACH Networks be HIPAA compliant. Some in the financial industry are reluctant to be subject to HIPAA’s privacy and security requirements with respect to such information. On the other side, providers and payers are reluctant to send PHI through the ACH network without assurances that the PHI is adequately protected under HIPAA. While bank testimony indicated a preference for passing “data and dollar” together, representatives of the health care industry have mixed opinions about whether they would want to send or receive EFTs and ERAs together in the future.

Consensus Reached

Ultimately, the NACHA CCD+ was chosen as the standard message format for health care EFT send over the NACHA network. Many health plans use it today to initiate payment instructions with their ODFI, and it is used for nearly all health care claim payments transmitted between banks. The Payment Related Information Field of the CCD+ has the capacity to carry the reassociation key which, as part of the standard, will be the TRN segment from the EDI 835 used to carry the ERA. Using the addenda record to carry the TRN Segment will facilitate reconciliation downstream and out-of-band delivery avoids the challenges of HIPAA compliance within the ACH network. Timeliness of transmission is addressed in the regulations, with payers required to send the EFT and ERA within 3 days of each other.

In my final post in the Understanding Health Care EFT Standards blog series, I will explore the NACHA SEC Code.

Are you using the NACHA CCD+message format for Health Care EFTs? I’d like to hear from you…


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