Health Insurance Reform: Standards for Electronic Transactions. 1. Health care Providers and Health Plans


As a result of standard data format and content, health care providers and health plans that wish to do business electronically will be able to do so knowing that capital outlays they make are likely to be worthwhile, with some certainty on the return of their investment. This is because covered entities that exchange electronic health care transactions will be required to receive and send transactions in the same standard formats. We believe this will be an incentive for small physicians’ offices to convert from paper to EDI. In a 1996 Office of the Inspector General study entitled “Encouraging Physicians to Use Paperless Claims,” the Office of the Inspector General and HCFA agreed that over $36 million in annual Medicare claims processing savings could be achieved if all health care providers submitting 50 or more Medicare claims per month submitted them electronically. Establishment of EDI standards will make it financially beneficial for many small health care providers to convert to electronic claim submissions because all health plans will accept the same formats.

Additionally, health care providers that currently use health care clearinghouses and billing agencies will see costs stabilize and will potentially enjoy some cost reduction. This will result from the increased efficiency that health care clearinghouses and billing companies will realize from being able to more easily link with health care industry business partners.