ACH Networks to generate $11 billion in annual savings for the Healthcare Industry

Automated Clearing House (ACH) Networks can significantly reduce the cost and time of processing payments for medical professionals. Processing Electronic Fund Transfer (EFT) with the ACH Network could bring cost-savings and efficiencies not only to the Healthcare providers, but also to other key players in the Healthcare industry. Some of these beneficiaries would include health insurance corporations, medical billing and software providers, practice management software providers and medical billing clearinghouses.

Traditionally, the EFT payments made through the ACH Network include Direct Deposit of payroll, Social Security, as well as Direct Payment of home mortgages, insurance payments, loan payments, newspaper and magazine subscriptions, utility bills, cable TV bills, health club membership dues, credit card payments, and contributions to non-profit organizations.ACH Networks for Healthcare EFTs

The usage of ACH Networks has gone far beyond the traditional transactions and it is already being used in the Healthcare industry for EFT transactions such as Health Plan/insurance company claims to Providers, vendor remittances, monthly Health Savings Account contributions, and monthly recurring payments through patient long-term treatment reimbursement plans.

Adopting the electronic payments systems like Payment21® through ACH brings cost-savings along with efficient and much faster processing times for the users. According to the U.S. Healthcare Efficiency Index Fact Sheet, moving from paper to electronic payments could alone create $11 billion in annual savings for the healthcare industry in the future.

Regulatory Changes to Facilitate Healthcare EFTs

On August 10, 2012 the Department of Health and Human Services (HHS) released a rule to promote administrative simplification, referred to as the Electronic Fund Transfer (ETF) and Electronic Remittance Advice (ERA) Operating Rule Set, that builds on current electronic communication standards and defines operating rules that must be followed by all health plans(payers) that:

  • Facilitates the ability of physician practices and other healthcare entities to receive claim payments electronically
  • Defines the maximum data set that a health plan can require a practice to submit to qualify for electronic payment under these operating rules
  • Standardizes the format that a health plan must use for companion guides that explain the policies and requirements for practices and clearing houses to engage in these payment transactions

In addition, to facilitate a smooth functioning of the healthcare payments, the National Automated Clearing House Association (NACHA) has amended its Operating Rules in October 2012. This means that any health care provider with a bank account is able to receive a health care electronic funds transfer (EFT) via ACH, just like a Direct Deposit. The key component of the NACHA Operating Rules is that the originators are required to clearly identify Corporate Credits or Debits (CCD) entries that are Health Care EFTs through the use of a unique identifier.

So what are the benefits of using ACH Networks for Healthcare EFTs?

Healthcare legislation may affect the way you do business and require, depending on whether you are a Health Plan or Provider, changes to your accounts receivables department, accounts payables department, operations, and back office processes and procedures. There are a number of significant benefits to be realized by early adoption of EFTs through the ACH Network:

Key benefits for Healthcare Service Providers are:

In addition, according to the Electronic Transaction Savings Opportunities for Physician Practices, Milliman USA, a physician who currently relies on paper and telephone calls for insurance administration may be able to save more than $42,000 a year through simple steps to increase electronic transactions for operations likes claims submission, referral and pre-authorization requests, and eligibility verifications.

Estimate Annual Savings from Electronic Transactions for Typical Physician Office Practice


Manual Cost

Electronic Cost

Savings /Transaction

Transactions Per Year

Estimated Annual Savings







Eligibility Verification


















Payment Posting






Claim Status






                 TOTAL                                                                                    $42,433.23

Source: Electronic Transaction Savings Opportunities for Physician Practices

Benefits for Health Plan Providers are:

  • Faster claims processing and payment cycles
  • Reduced phone calls
  • No lost or missing checks
  • No stop payments

Other benefits of electronic payments are:

  • Reduced operating costs for collection and disbursement, streamlined treasury management, and improved productivity and efficiency
  • Lower processing costs
  • Improved company services and response times
  • A fast, safe, reliable, efficient, and low-cost means to make and collect payments
  • Financial institution service charges are reduced. Typically, it costs more to process a paper check than an EFT transaction.
  • The potential for errors is reduced, because an EFT requires less manual handling than a check.
  • Account reconciliation is simplified

Health Plans, Providers, and healthcare clearinghouses/technology providers all use EFTs to varying degrees. Given the multitude of the benefits the use of ACH Networks for EFTs is only going to increase in future.Find out more about ACH Processing with Payment21®

Source: ACH Primer for Healthcare, NACHA, 2013


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