Healthcare Payment Options – Utilizing EFT’s

Staff time and labor spent interacting with multiple third party payers for the purpose of collecting a healthcare provider’s charge consumes two-thirds of a full-time equivalent employee per physician according to a study1 that recently came across my desk.  The graph below (Figure 1) shows the various tasks that consumes the time of this non-clinical staff.   Additionally, it is estimated that providers of care spent more than thirty-five minutes per day dealing with billing and insurance related tasks costing medical groups approximately 10% of their revenue.

On Tuesday, August 7, the Centers for Medicare and Medicaid Services issued new electronic funds transfer (EFT) transaction rules for HIPAA-covered providers that is anticipated to assist in reducing the administrative burden of collecting and depositing paper checks, and then manually posting and reconciling the health care claim payments into their practice management system.  Currently, many of our practices receive some of their insurance payments by way of EFT, but the checks are then posted manually and reconciled to the insurance voucher.  While some practice management systems have the ability to post this payment directly into the practice management system, the process is often not done with complete confidence that the payment for the individual procedures will be posted correctly resulting in useless management reporting and time consuming tasks attempting to reconcile the accounts receivable.  The new rules and standards being established, requiring compliance by January 1, 2014, will hopefully help eliminate the current negative consequences to posting payments electronically and provide the healthcare practice with the benefits of electronic fund transfers that have been realized in many other industries.  It is estimated that 70 percent of healthcare claim payments are received in the form of a paper check and 75 percent of remittance advice is also received through the mail in paper form.2 A medical or dental practice may eventually receive the many benefits and savings by utilizing transactional processes being developed for insurance payments, but you don’t have to wait to begin receiving some advantages in using the EFT process in its present form or with patient payments.

Given the amount of work it is estimated to take to collect insurance payments, it is no wonder that we are seeing higher levels of patient accounts receivable extend past 90 days.  After receiving the insurance payment, the patient responsible portion of the charge is typically billed to the patient in the form of a mailed statement to the patient.   If the patient pays promptly, great; however, often the patient doesn’t pay requiring additional work on the part of your staff.  The longer and more effort it takes to collect this money, the less profitable it is.  Much of this patient payment process can be eliminated by having or making adjustments to your financial policy and utilizing an EFT payment program. To learn more about establishing Healthcare Payment Options for your business, please give me a call.  Implementing this process today is very cost effective and will reduce the extra time and labor necessary to have your non-clinical staff work these accounts.

Figure 1

1Sakowski, J.A., Kahn, J.G., Kronick, R.G., Newman, J.M., & Luft, H.S., “Peering into the black box: Billing and insurance activities in a medical group,” Health Affairs: 28(4):w544-w554, 2009.
2Estimates for the percentage of EFT are taken from the interim final rule “Administrative Simplification: Adoption of Standards for the Health Care Electronic Funds Transfers (EFT) and Remittance Advice” published in the January 10, 2012 Federal Register (77 FR 1556). Estimates for the percentage of ERA are taken from the proposed rule “Administrative Simplification: Adoption of a Standard for a Unique Health Plan Identifier; Addition to the National Provider Identifier Requirements: and a Change to the Compliance Date for ICD-10-CM and ICD-10-PCS Medical Data Code Sets,” published in the April 17, 2012 Federal Register (77 FR 22950). The calculations from these two rules are explained in more detail in the Regulatory Impact Analysis of this rule.

Mike DeVries is a CERTIFIED FINANCIAL PLANNER ™ and a Certified Healthcare Business Consultant focusing on helping healthcare professionals. If you would like to learn more about becoming a client of Mike’s, contact him at

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