Affordable Care Act provision cuts red tape, saves up to $4.5 billion

FOR IMMEDIATE RELEASE January 5, 2012. New standards for electronic funds transfers in health care, required by the Affordable Care Act, will reduce up to $4.5 billion off administrative costs for doctors and hospitals, private health plans, states, and other government health plans, over the next ten years, according to estimates included in new rules published today by the U.S. Department of Health and Human Services (HHS).  The standards build upon regulations published earlier this year that set industry-wide standards for how health providers use electronic systems to quickly and easily determine a patient’s eligibility for health coverage and check on the status of a health claim.

Together, the two regulations implementing the Administrative Simplification provisions of the Affordable Care Act and the Health Insurance Portability and Accountability Act (HIPAA) are projected to save the health care industry more than $16 billion over the next 10 years.  These savings come from the adoption of electronic standards that will help eliminate inefficient manual processes and reduce costs.

“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.

A May 2010 study in the journal Health Affairs found that physicians spend nearly 12 percent of every dollar they receive from patients to cover the costs of filling out forms and performing other excessively complex administrative tasks. The study found that simplifying these systems could save four hours per week of professional time per physician and five hours of support staff time every week – time that could be better spent on patient care.

“As a nurse, I know the importance of giving health care professionals time to focus on patient care,” said CMS Acting Administrator Marilyn Tavenner.  “The less time a physician has to spend on paperwork is that much more time that can be devoted to patient care. Having standardized procedures across the health care industry can only lead to lower costs and greater efficiencies all around.”

Today’s rule—the 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 (through an electronic funds transfer) and to issue a Remittance Advice notice.  Remittance Advice is a notice of payment sent to providers that may or may not accompany the payment the provider receives.

For example, currently when a provider submits a claim electronically for payment, a health plan often sends a Remittance Advice separately from the Electronic Funds Transfers payment.  The disconnect between the two makes it difficult or sometimes impossible 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.  The new tracking system will allow health care providers to eliminate costly manual reconciliation that must currently be done.

Future administrative simplification rules will address adoption of:

A standard unique identifier for health plans;

A standard for claims attachments; and

Requirements that health plans certify compliance with all HIPAA standards and operating rules.

The regulation is effective January 1, 2012.  All health plans covered under HIPAA must comply by January 1, 2014.

To view the Interim Final Regulation with comment period, go to: http://www.regulations.gov

For more information on the June 2011 HIPAA Administrative regulation: Adoption of Operating Rules for Eligibility for a Health Plan and Health Care Claim Status, visit: http://www.hhs.gov/news/press/2011pres/06/20110630a.html

Contact: CMS Press Office (202) 690-6145x

US Labor Department proposes rules under Affordable Care Act to crack down on health care fraud, protect workers and small businesses

Release Number: 11-1677-NAT.EBSA.News Release:12/05/2011.WASHINGTON.The U.S. Department of Labor's Employee Benefits Security Administration today announced two proposed rules under the Affordable Care Act to protect businesses and workers whose health benefits are provided through a multiple employer welfare arrangement. MEWAs frequently have been used by scam artists and criminals to defraud consumers, resulting in an inability to pay medical claims. When such MEWAs become insolvent, they may leave consumers with substantial unpaid medical bills. For employers or employee organizations that have paid premiums or made contributions to a MEWA, and thought they were doing the right thing for their workers and their families, the impact also can be significant.

The proposed rules call for MEWAs to adhere to enhanced reporting requirements so that employers, workers and their families will not unexpectedly be cut off from needed health care services. The rules also will increase the Labor Department's enforcement authority to protect participants in such plans and allow the department to shut down MEWAs engaged in fraud or other activities that present an immediate danger to the public safety or welfare.

"Too many MEWAs are taking advantage of good employers who want to make health insurance available to their workers, and too many hardworking Americans have suffered," said Secretary of Labor Hilda L. Solis. "These proposed rules under the Affordable Care Act will crack down on those who want to use MEWAs to defraud American families."

Through MEWAs, unrelated employers, typically small businesses, seek to provide health care and other benefits to their workers at what is represented to be a lower cost than other traditional forms of coverage.

The promoters, marketers and operators of MEWAs often have taken advantage of gaps in the law to avoid state insurance regulations, such as a requirement to maintain sufficient funding and adequate reserves to pay the health care claims of workers and their families. In the worst situations, operators of MEWAs have drained their assets through excessive administrative fees or outright embezzlement, resulting in harm to participants and their families. In some cases, individuals incur significant medical bills before they learn that claims are not being paid — and that they are liable and need to pay their medical bills themselves. The Affordable Care Act includes provisions designed to remedy these gaps.

Under the proposals issued today:

MEWAs must register with the Department of Labor prior to operating in a state or be subject to substantial penalties. This step will allow the department to track MEWAs as they move from state to state and to identify their principals, which will provide the department with important information regarding potentially fraudulent MEWAs.

The secretary of labor will be able to issue a cease and desist order when it appears that fraud is taking place or an arrangement is causing immediate danger to the public safety or welfare.

The secretary of labor could seize assets from a MEWA when there is probable cause that the plan is in a financially hazardous condition.

Complete details on all provisions will be published in the Dec. 6 Federal Register and also are available at http://s.dol.gov/KO.

Since President Obama signed the Affordable Care Act in March 2010, more than 22.6 million people with Medicare have received free preventive care benefits such as screenings and vaccinations, and another 2.2 million have saved more than $1.2 billion on their prescription drugs — an average savings of $550 per person. Additionally, adults under the age of 26 are now able to remain on a parent's health insurance plan, small businesses and tax-exempt organizations are eligible for tax credits and the denial of coverage to those with pre-existing conditions is coming to an end. For more information about the Affordable Care Act, visit http://www.healthcare.gov/index.html.

Contact Name: Mike Trupo or Jason Surbey
Phone Number: (202) 693-6588 or x4668v