Health Reform Provision Cuts Red Tape—and Costs—for Senior Care Providers

Some standards that have recently been introduced for electronic funds transfers in healthcare through the Obama Administration’s Affordable Care Act will reduce up to $4.5 billion off administrative costs for healthcare providers, including doctors and hospitals and private and government health plans, says the U.S. Department of Health and Human Services.

This cost reduction is according to estimates included in new rules that the HHS published on Jan. 5, 2011, and the two regulations that implement the Administrative Simplification provisions of the ACA and the Health Insurance Portability and Accountability Act are projected to save the healthcare industry more than $16 billion in the next decade.

“Thanks to the Affordable Care Act, health care professionals will spend less time filling out paperwork and more time focusing on delivering the best care for patients,” said HHS Secretary Kathleen Sebelius in a statement.


Last year, a study published in the Health Affairs journal found that for every dollar a physician receives from patients, 12% goes to cover the costs of filling out forms and performing other “excessively complex administrative tasks,” reports the HHS. However, simplifying these systems could save four hours per week of professional time for each physician, along with five hours of support staff time, the study found.

The rule, “Adoption of Standards for Health Care Electronic Funds Transfers and Remittance Advice,” adopts “streamlined standards for the format and data content of the transmission a health plan sends to its bank when it wants to pay a claim to a provider electronically and to issue a Remittance Advice notice,” says HHS.

Sometimes, the Remittance Advice (a notice of payment sent to providers) doesn’t accompany the payment the provider receives, and in instances where it’s separate from the Electronic Funds Transfers payment, the disconnect makes it difficult for the provider to match up the bill and the corresponding payment.


“Today’s rule addresses this by requiring the use of a trace number that automatically matches the two,” says HHS. “The new tracking system will allow healthcare providers to eliminate costly manual reconciliation that must currently be done.”

Interim Final Regulations can be viewed here.

Written by Alyssa Gerace