An Update on Electronic Payments & Healthcare Providers [Updated]

AUG 19

In today’s world of electronic connectivity and mobile payments (ePayments), the U.S. healthcare system lags not only other industries, but everyday consumers too.  Over the past ten years, nearly every component of the healthcare system has undertaken massive initiatives to transition from paper to electronic environments, but as shown below just 10% of provider payments are received electronically1, in spite of the fact that 75% of claims are submitted electronically1.


The laggard in the value chain prohibiting the transition is not the payers’ ability to submit ePayments, but the providers’ inability to accept them.  The benefits for providers getting on the ePayment bandwagon are real, and include:

  • Improved working capital due to decreased time to post payments
  • Reduced errors associated with manual, human processes
  • Reduced costs associated with the additional paper, postage and manual activity (it is estimated that eliminating paper checks in healthcare could save $11 billion per year1)

So why the slow adoption?  One reason could be that ePayments, also known as electronic funds transfer (“EFT”), add a layer of complexity due to a lack of standardization and lack of operating rules across payers and their EFT submissions.  Multiple payment submissions from multiple payers using different systems and submitting at different times all around a single claim makes reconciliation very difficult for the provider office.

When will we see change?  The Affordable Care Act (ACA) of 2010 mandates that payers must make payments to providers by electronic funds transfer (EFT) and electronic remittance advice (ERA) by January 1, 2014 or face considerable federal penalties.

These potential financial ramifications will be a catalyst for change with providers.  However, success will hinge on new levels of standardization and operating rules for EFT which allow providers to uniformly accept ePayments from many different payers.  We’re predicting (and already seeing) a mad dash by the providers to implement systems that accept EFT before the 2014 deadline.

Vendors such as PayformanceFidelity National Information Services (FIS), InstaMedHERAEWausau Financial Systems and Emdeon seem well positioned to enable the shift and we’ll be watching this space closely.  Let us know what you think.

Update: Made adjustments to the chart.


  1. U.S. Healthcare Efficiency Index©
Judd Stevens
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