ACA Section 1104 Mandate for Federal Operating Rules

III. Requirements for Federal Operating Rules Addressing the EFT & ERA Transactions

1. What do the Phase III CAQH CORE EFT & ERA Operating Rules address?

Payment and remittance advice processing are faster when a provider receives payment via Electronic Funds Transfer (EFT) and Electronic Remittance Advice (ERA) instead of via paper check and corresponding paper remittance advice. The CAQH Index estimates the proportion of these transacions conducted electronically. Several key barriers exist to achieving rapid, industry-wide adoption of EFT and ERA including:

  • Non-uniform and inconsistent use of the 1000+ Claims Adjustment Reason Codes (CARCs) and Remittance Advice Remark Codes (RARCs)
  • Inconsistent data elements required by health plans for provider EFT and ERA enrollment
  • Inability of providers to specify to the health plan how payments should be made, i.e., by National Provider Identifier (NPI) or Tax ID
  • Challenges to provider reassociation of the EFT and ERA due to non-matching trace numbers and extensive time delays between receipt of the EFT and ERA

The Phase III CAQH CORE EFT & ERA Operating Rules address these challenges by requiring:

2. What CAQH CORE EFT & ERA Operating Rules have been adopted to fulfill the ACA Section 1104 mandate?

The August 2012 HHS Final Rule adopts all the Phase III CAQH CORE EFT & ERA Operating Rules to fulfill the ACA mandate, with the exception of rule requirements pertaining to use of Acknowledgements. Specifically, the Final Rule adopts the following Phase III CAQH CORE EFT & ERA Operating Rules:

NOTE: Rule requirements pertaining to use of Acknowledgements are not included for adoption in the HHS Final Rule given that standards for Acknowledgements have not yet been adopted under HIPAA.

3. Does the HHS Final Rule for EFT and ERA operating rules adopt the CAQH CORE Rule requirements pertaining to use of Acknowledgements?

No. The August 2012 HHS Final Rule adopting the CAQH CORE EFT & ERA Operating Rules does not adopt the Acknowledgement requirements in Section 4.2 of the CAQH CORE 350: Health Care Claim Payment/Advice (835) Infrastructure Rule.

The Final Rule does note that, “without Acknowledgements, it is difficult for the sender to know whether the intended recipient received the transmission, which often results in the sender repeatedly querying the intended receiver as to the status of the transmission...until such time as the {Health and Human Services} Secretary adopts a standard for Acknowledgments, we support the industry’s ongoing voluntary use of Acknowledgements and encourage even more widespread use.” The CAQH CORE 350 Rule supports the use of Acknowledgements.

4. What transactions are addressed by the ACA-mandated CAQH CORE EFT & ERA Operating Rules?

The CAQH CORE EFT & ERA Operating Rules apply to use, conduct, or processing of the ASC X12N/005010X221 Health Care Claim Payment/Advice (835) and associated errata (hereafter referenced as ASC X12N v5010 835) transaction and the HIPAA-mandated Healthcare EFT Standards (the NACHA ACH CCD+ and the ASC X12N v5010 835 TR3 TRN Segment).

5. What are the HIPAA-mandated Healthcare EFT Standards?

ACA Subsection 1104(c)(2) adds the Electronic Funds Transfer (EFT) transaction to the list of electronic health care transactions for which the HHS Secretary must adopt a HIPAA standard. Specifically, ACA Section 1104 requires the HHS Secretary to promulgate a final rule to establish a HIPAA transaction standard for healthcare EFT no later than January 1, 2012, with the rule effective January 1, 2014.

In January 2012, HHS issued an Interim Final Rule with Comment (IFC) adopting the NACHA CCD+ and the ASC X12N v5010 835 TR3 TRN Segment together as the HIPAA-mandated Healthcare EFT Standards. On July 10, 2012, CMS announced that the IFC is a Final Rule now in effect. The CMS announcement notes that “we have decided not to change any of the policies established in CMS-0024-IFC.”

NOTE: The HHS Final Rule adopting the Healthcare EFT Standards does not prohibit use of other electronic payment methods (e.g., Fedwire, card payment networks, ACH CTX, etc.) to make electronic healthcare claim payments. However, if a provider requests that a health plan conduct EFT using the ACH Network, the health plan is required to do so.

6. What entities are required to comply with the ACA-mandated EFT & ERA Operating Rules?

The ACA Administrative Simplification provisions require all HIPAA-covered entities to comply with the ACA mandated standards and applicable operating rules by their compliance dates. The compliance date for the ACA mandated operating rules for EFT and ERA is January 1, 2014.

Per ACA Section 1104, by January 1, 2014 HIPAA-covered entities must meet all applicable rule requirements outlined in the ACA mandated CAQH CORE EFT & ERA Operating Rules. The CMS website provides charts to help organizations determine whether an organization or individual is a HIPAA-covered entity. The role of a Business Associate should also be considered.

See the CMS website for more information on the operating rules compliance and enforcement requirements.

7. Do the CAQH CORE EFT & ERA Operating Rules apply when entities make electronic healthcare payments via other Electronic Funds Transfer (EFT) standards (e.g., Fedwire, card payment networks, ACH CTX, etc.) instead of the HIPAA-mandated Healthcare EFT Standards (NACHA CCD+ and the ASC X12N v5010 835 TR3 TRN Segment)?

No. The CAQH CORE EFT & ERA Operating Rules apply only when entities are using the HIPAA-mandated EFT and ERA standards. While the HHS Final Rule permits entities to use EFT transaction standards beyond the HIPAA-mandated Healthcare EFT Standards (the NACHA CCD+ and the ASC X12N v5010 835 TR3 TRN Segment), these other standards are outside the scope of the CAQH CORE EFT & ERA Operating Rules.

NOTE: The HHS Final Rule adopting the Healthcare EFT Standards does not prohibit use of other EFT transaction standards outside of the ACH Network (e.g., Fedwire, card payment networks, ACH CTX, etc.) to make electronic healthcare payments. However, if a provider requests that a health plan conduct EFT using the ACH Network, the health plan is required to do so.