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New Operating Rules for Claims Processing are Fast Approaching


An article by Renae D. Price, CHBME, CMPE, CHFP, CPA, taken from the September/October issue of the Healthcare Billing and Management Associations publication, HBMA Billing located at

Deep within the Affordable Care Act (ACA) are technical provisions that most of the press have ignored. They are directed squarely at the administrative burden faced by providers in the reimbursement process. Specifically, in section 1104(b)(2) of the ACA, Congress required the adoption of operating rules for the healthcare industry and directed the Secretary of Health and Human Services to "adopt a single set of operating rules for each transaction1 with the goal of creating as much uniformity in the implementation of the electronic standards as possible."

While the nation has focused on constitutional issues, a series of federal rule making pronouncements has moved to provide the specific operating rules to govern claims processing. Payers are mandated to adopt new operating rules for eligibility and claims status reporting by January, 2013 and new rules for Electronic Remittance Advices (ERA) and Electronic Funds Transfer (EFT) by January, 2014. The final rule for EFT was issued July 11th; healthcare financial managers should consider how to manage a transition to fewer checks and more electronic payments. The EFT rule is just part of a larger project mandated by the ACA.

To the average policy wonk (and certainly the daily press), this may seem obscure or even unintelligible, but healthcare financial managers know that claims processing is burdensome, expensive, and rife with error and rework. Back in 1996, HIPAA was passed, mandating that the payer community adopt and support electronic transactions – such as eligibility inquiries and responses, claim forms (1500s and UBs), claims status inquiries, and responses and claim payments – by 2003. In general, transaction standards adopted under HIPAA enable Electronic Data Interchange (EDI) through a uniform common transaction standard, thus eliminating the healthcare industry's former reliance on multiple "standard" claim transaction formats that varied by payer. This lead to an expansion in the number of healthcare clearinghouses that provide services to providers by translating non-standard transactions into standardized formats.

"Operating Rules … attempt to define the rights and responsibilities of all parties, including security requirements, transmission formats, response times, liabilities, exception processing, error resolution and more, in order to facilitate successful interoperability between data systems of different entities."2 So, to put this in perspective, while the 2003 implementation deadline has come and gone, there remain many issues that have prevented providers from using automation and have forced them to rely on the web, phone calls, and paper documents.

What does this mean practically for providers? Today, payers are mandated to respond to an electronic eligibility inquiry in the X12 270 format with an X12 271 response. Many do so, but the quality of the responses varies widely. By some estimates, 40 percent of eligibility responses are limited to simple "Yes" or "No" responses related to coverage, and no detail is provided about co-pay requirements, the amount of deductible left outstanding, and other key details. Providers, as a result, end up going to a website, installing expensive third party software solutions, or making a phone call to obtain the data lacking in the EDI transaction. It may have been that the payer's yes or no response was HIPAA compliant (a formatting issue) but was also data deficient (an operating rule issue).

The ACA legislation directed the Department of Health and Human Services to select a non-profit organization to promulgate the detailed operating rules. They chose CAQH CORE (Committee on Operating Rules for Information Exchange), whose website with details on the first eligibility and claims status rule can be found at

As payers adopt these operating rules, providers may see marked improvements in revenue cycle management processing activities such as:

  • Automated validation of patient insurance and eligibility prior to an office visit
  • Expedited online confirmation of patient benefit coverage directly from the payer
  • More comprehensive and accurate patient registration at the time of the visit

The benefits of EDI transaction refinement facilitated by these operating rules should correspondingly result in:

  • Improvement in the number of denied claims and write-offs for uncovered services
  • A decrease in the time to collect provider account receivables, helping organizations gain operational efficiencies, administrative savings, and improved cash flow
  • A reduction in phone calls both outgoing and incoming, allowing provider office staff to focus on more critical administrative tasks

There is more to come! Further down the road, we can expect CAQH CORE to promulgate rules on all ten 1996 HIPAA mandated standards in addition to these new ACA-required HIPAA standards for ERAs and EFTs. All of the rules should be issued by July, 2014. Stay tuned as these rules roll out and more detail on compliance and enforcement is finalized.

Ms. Price obtained her Certified Public Accountants license during her tenure within the international audit, tax and advisory firm KPMG. She is currently the managing member of a specialty healthcare consulting firm providing organizational strategy, revenue integrity, turn-around, and other business advisory services.

1 On January 10, 2012, Department of Health and Human Services (HHS) published in the Federal Register CMS-0024-IFC, an interim final rule with comment period (IFC), adopting standards for the health care electronic funds transfers (EFT) and remittance advice transaction under the Health Insurance Portability and Affordability Act of 1996 (HIPAA). HIPAA-Administrative-Simplification/Affordable-Care-Act/index.html

2 Federal Register Volume 76, Issue 131; July 8, 2011; page range 40457–40496

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