Electronic banking could save health system $4.5 billion

A CMS interim final rule says administrative costs will be lowered significantly by standardizing electronic fund transfers, a uniform arrangement developed as part of reform.

By Charles Fiegl amednews staff — Posted Jan. 12, 2012

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A new Centers for Medicare & Medicaid Services regulation sets a framework for electronic fund transfers that should cut down on administrative time and money spent on processing paper checks, officials said.

The Jan. 5 CMS interim final rule would create a new standard for electronic fund transfers between health plans and financial institutions, and specify the data content for sending payments to physicians and hospitals. Using a standardized format would allow billing and accounting systems to track payments for services electronically.

Creating an environment that encourages electronic transfers of payments instead of paper checks could save doctors and hospitals between $3 billion and $4.5 billion over 10 years in reduced administrative costs, the rule projects. The agency also noted the potential environmental benefits from saving an estimated 400 tons of paper by sending checks electronically.

"The less time a physician has to spend on paperwork is that much more time that can be devoted to patient care," said CMS acting Administrator Marilyn Tavenner. "Having standardized procedures across the health care industry can only lead to lower costs and greater efficiencies all around."

The 2010 health system reform law authorized the rule as part of the statute's administrative simplification provisions. A related regulation published in June 2011 set rules for electronic health care transactions between payers and practices, changes that are projected to save the system $12 billion.

The new EFT standards could impact more than 230,000 physician offices and 66,000 hospitals, according to CMS, which oversees exchanges of health information under the umbrella of HIPAA compliance. The agency estimates that there will be no direct costs to practices and hospitals to implement the standards because there typically is little or no cost associated with accepting electronic payments.

CMS noted that its calculations for potential savings to the health care industry might be on the lower side. A 2009 UnitedHealth Group report stated that $108 billion could be saved over 10 years if payments were required to be made electronically.

The American Medical Association has online resources to help physicians incorporate EFT into their practices (link).

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