Modernizing Payment Processing Methods in the Health Care Industry

Today’s health care environment has grown increasingly complex due to compliance requirements that were introduced as part of the Affordable Care Act (ACA). Among other initiatives, the ACA included an industry mandate for the development and use of a HIPAA-compliant Electronic Funds Transfer (EFT) standard for electronic claims payments. The law also increased transparency by implementing Medical Loss Ratio (MLR) requirements that limit a health plan’s ability to pass increased administrative costs on to plan participants.

As a result, payments per life administered are decreasing, and health care claims payers like Boon Administrative Services, Inc. face mounting pressure to find innovative solutions that are compliant while reducing payment distribution expenses. To meet these requirements, Boon Administrative Services teamed up with Emdeon to offer multiple payment and remittance advice options to providers.

By some estimates, transitioning current health care payment methods from paper to electronic processes might save as much as $11 billion and 2.5 billion pieces of paper each year. Meanwhile, billing and administrative costs account for about 10-12 percent of a physician practice’s annual revenue. In contrast, the U.S. retail sector spends only about two percent of annual revenue on payment processing. Modernizing payment processing methods in the health care industry would lead to huge gains in efficiency.

In October 2015, Boon Administrative Services began making claims payments to providers using the Healthcare EFT Standard designated by the U.S. Department of Health and Human Services. Payments made via EFT are similar to other direct deposit operations (like paycheck deposits) and are a safe alternative to paper checks. Providers like EFT payments because of the following additional benefits:

  • Reduction of the amount of paper in the office
  • Time savings and avoidance of the hassle associated with frequent staff trips to the bank to deposit checks
  • Greater security due to elimination of the risk of paper checks being lost or stolen
  • Faster access to funds (most banks credit direct deposits faster than paper checks)
  • Easier reconciliation of payments with bank statements
  • Less risk of fraud

Another option that Boon Administrative Services is using to deliver claims payments electronically is Virtual Credit Card (VCC) technology. VCC payments leverage a provider’s existing credit card network to deliver claims payments even faster than EFT payments. The majority of health care providers today accept credit card transactions from patients, so utilizing the credit card networks to pay providers through a business-to-business credit transaction is relatively simple.

The most exciting part about VCC claims payments is the potential to remove the hurdle of provider enrollment, which encumbers EFT payments. Neither registration nor enrollment with the payer is required, so the provider does not have to take any action to begin receiving VCC payments.

Meanwhile, Boon Administrative Services receives a rebate based on VCC transaction volume, channeling revenue back to the company and offsetting provider payment distribution expenses. VCC transactions also benefit providers by:

  • Simple electronic payment acceptance for providers since neither registration nor enrollment with the payer is required
  • Elimination of the cost and hassle of processing paper checks
  • Elimination of the risk of checks being lost or stolen
  • Easy initial implementation through a process most providers are already familiar with
  • Economical payment processing–merchant fees are comparable to or lower than fees already incurred by providers that accept credit card payments
  • Immediate processing of transactions, increasing cash flow

Doctors and hospitals throughout the country are increasingly requesting that claims payments be made electronically. Boon Administrative Services’ partnership with Emdeon has produced comprehensive, compliant and innovative claims payment solutions that promote a positive and mutually beneficial payer-provider relationship.

This guest post was written by John Jenkins, Director of Licensing & Compliance at The Boon Group. He can be reached at

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