Education, News Events, Tip of the Week

New Operating Rules for Claims Processing are Fast Approaching

The following is a guest post by Renae D. Price CHBME, CMPE, CHFP, CPA. Occasionally RISC Management presents guest posts from leaders in our industry that are related and timely. Please enjoy the following valuable information related healthcare claims processing.

Deep within the Affordable Care Act (ACA) are technical provisions that have been ignored by most of the press. They are directed squarely at the administrative burden faced by providers in the reimbursement process. Specifically, in section 1104(b)(2) of the Affordable Care Act, Congress required the adoption of operating rules for the health care industry and directed the Secretary of Health and Human Services to “adopt a single set of operating rules for each transaction * * * 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 have 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 and 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 Affordable Care Act.

To the average policy wonk (and certainly the daily press) this may seem obscure or even unintelligible but healthcare financial managers know that processing of claims 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 provided services to providers in the form of translating non-standard transactions into standardized transactions.

Operating Rules, in turn, 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.” (Federal Register Volume 76, Issue 131 (July 8, 2011 page range 40457-40496). 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 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 response varies widely. By some estimates 40% 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 it 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; and
  • 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 number of denied claims and write-offs for uncovered services;
  • Decrease in days to collect provider account receivables, helping organizations gain operational efficiencies, administrative savings and improved cash flow; and
  • 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.

By Renae D. Price CHBME, CMPE, CHFP, CPA


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).

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