Considerations when Evaluating Vendor Solutions for Electronic Adoption and Compliance

Self Funding

May 28, 2020

Organizations are faced with a variety of choices when it comes to potential electronic payment solutions. Finding the right product for an organization is more than checking a capabilities list; it also needs to include evaluating service quality, implementation timelines and associated integration costs. This executive report will educate the user on important considerations when conducting a vendor review.

Electronic Adoption Is It Really Happening?

Indeed, it is. The change is occurring, in part, due to the regulatory development of global operating rules related to the transmission of electronic funds transfer (EFT) and Electronic Remittance (ERA). 1 Effective on January 1, 2014, the proposed new operating rules in development by CORE/CAQH in response to Section 1104 of the Affordable Care Act (ACA) is the driver for the insurance industry to become compliant. This legislation compels healthcare payers to have the ability to transmit electronic payments to any provider that requests transmission of payment and remittance data in this manner. Under the proposed new rules, each health plan will be required to attest to their compliance with significant penalties as a deterrent.

As these requirements and rules further develop, many health plans will rely on their payment administrator to assist with this compliance. As the payer steps in, many may find they need help from a third party vendor who has already achieved CORE certification. When choosing a vendor partner, there are several important factors to consider.

  • - Do your homework - Multi vs. Single Source Solutions
  • - Vulnerabilities and security risks
  • - Timeline for achieving compliance

Do Your Homework – Multi Vs Single Source Solutions

Multi-Source Solutions

Some vendors appear to offer everything you need. However, when more closely examined, these vendors specialize in only one payment resolution method. As an example, there are many electronic vendors offering a virtual card driven solution. EFT capabilities, which deliver the compliance you seek, are often limited with insignificant levels of providers actually enrolled to be paid in this manner. This creates risk and may introduce new complications in your workflow as often time the burden will fall back upon the payer to engage and enroll providers or seek additional vendors to provide the needed EFT adoption.

These suppliers seem attractive at first because they offer a lucrative revenue-sharing option, generated from the virtual card. However, the virtual card is only a single piece of evaluating a sustainable long-term solution. When conducting your vendor evaluation, important considerations should be:

  • - Do they have online support for providers to easily sign up for compliant EFT/ERA and opt-out of virtual cards?
  • - Do the various payment options require a separate and distinct funding process?
  • - Can they produce a compliant EFT/ERA from your data file?
  • - How many EFT providers do they have enrolled?
  • - How do they enroll EFT/ERA providers?

Payers evaluating these solutions should also pay close attention to the implementation plan and payment reconciliation workflows. Many times multi-source solutions issue and settle payments from three separate sources. Your internal workflow can become cumbersome and require additional support to reconcile all of your payments. Be sure to request a documented Implementation Plan with timelines and resource expectations. You can avoid a failed or stalled implementation by using a well-defined implementation plan to set proper expectations. However, be aware of indicators that you are implementing multiple payment processes with a single vendor. If the vendor issues and settles payments from different sources based on payment modality, daily workflows and processes may become more complex from your current state.

While quality multi-source products can produce beneficial results, expenses can climb if you have to add two or more multi-source vendors that each solve a single need. The payer may feel they need to reinvent themselves in order to accommodate each vendor's separate methodologies. Be confident that you do not need to implement a short-term or incomplete solution. A multi-source solution usually cannot manage all of your payments without complicating your daily operations.

Single Source Solutions

Single Source solution vendors can manage all of your payments and offer the payer a steady reconciliation process. A single source solution will preclude a payer from interfacing with multiple vendors, banks or other interfaces of the payment stream. Effective solutions should include important features such as the ability to link the real-time payment status to the adjudication system detail and originating funding event. This simply means that a payer can locate all relevant details for all payments through a single data source including images of cancelled checks. 

Additional important distinctions should focus on a long-term vision of migrating providers to electronic payments without exclusive dependence upon a virtual card. Payers should ask very specific questions about the number of providers enrolled for EFT and for specifics on their population of Provider Tax ID's. If the vendor cannot confirm a match of 25% or greater, the program will very likely achieve substandard results. ERA capabilities should also be properly vetted in this discussion. Confirm the vendor's capabilities to produce a compliant 835 from your current extract or print file. Ask specific questions about their experience with different adjudication systems, current production volumes, and if any crosswalk or tables will be required.

Any vendor under consideration should have well-documented implementation plans and weekly accountability calls. Newly implemented payers will be a very important reference point to confirm associated implementation timelines. The implementation team should have the ability to manage and lead the customer through a fully customized implementation that accounts for unique customers or plan designs. The result of these efforts is a refined, streamlined daily operation and workflow.

A quality decision under a single source platform should include:

  • - Market leadership in virtual card and EFT/ERA distribution
  • - Provider payment preference management
  • - Compliant EFT/ERA from your existing data file
  • - Single resource for reconciling all payments – card, check and EFT
  • - Implementation results that can be verified through client references

Consider Vulnerabilities and Security Risks

A critical step in the evaluation process is security. In healthcare payment processing there are many possible exposures such as private health information and banking transaction details. In your evaluation, ask how personal health information is protected and how security breaches and financial loss are avoided.

Established vendors are comfortable providing documented support of their security infrastructure and software protocols along with backup, failure and redundancy programs. Further, they can offer a voluntary third party audit of their organization proving their claims. This level of scrutiny compliance with not only healthcare regulatory procedures such as HIPAA and ACA, but financial transactions are protected as well through FDIC insured payments and Payment Card Industry Data Security Standards (PCI DSS) compliance.

With the aforementioned mandate and operating rules, third party payment services have quickly become a growth industry with many new entrants. Proper due diligence should include specific questions about a vendors growth and scalability. Companies committed for the long-term should conduct regular assessments and ensure that growth is aligned with infrastructure capabilities.

In a world where Fortune 100 companies are subject to data breaches, it is imperative to understand what measures a vendor takes to protect your data. With user interfaces and provider portals, there are often many access points that expose a company to potential breaches. Vulnerability testing and regular static scans are indicators that your vendor is taking the necessary precautionary measure.

If the vendor uses a series of vendors themselves to provide their services, be cautious that all parties maintain the same level of security standards. Distinct lines of responsibility and liability should be clearly defined in contracts.

Timeline for Achieving Compliance

Achieving compliance quickly can be a real possibility. Once the due diligence process is complete and you have narrowed your vendor selection, you can verify your selections are CORE certified if you have not already by going to Each health plan can begin achieving compliance on day one of production with a CORE Phase III Certified vendor.

A fully engaged payer and vendor can complete an implementation in 6-7 weeks. If your due diligence indicates that your vendor selection cannot perform within these parameters with validated references, this may be an indication to consider other options.

Electronic payment solutions range in quality and effectiveness. To ensure your organization partners with a vendor that can deliver the capabilities your organization needs ask the following questions: Do they provide a single source solution to handle all of my payments seamlessly? Can they provide documented support of their security infrastructure and programs? Does their solution allow my company to achieve compliance quickly? If the answer to each of these questions is yes, then you have found a quality vendor.

For questions about Electronic Adoption and choosing the right payment solution, contact Mike Hindo at 440.835.3511

About Echo Health, Inc.

Echo Health, Inc. has been in the business of healthcare payments since 1997. They understand the complexities of healthcare administration, regulatory compliance and security. Over the years, Echo has acquired many clients, including some of the largest healthcare plans and payers in the industry, including specialty payers in Workers Compensation, Property and Casualty, Dental and ASO lines. Today, Echo Health, Inc. processes over 4 million payments a month and $10.4 billion in annual payments. Boasting an electronic adoption rate of over 80%, Echo has leveraged its technology to become the cornerstone of Payer compliance and Provider conversion. Echo offers a single source, full service solution that is robust, automated, and scalable. Echo simplifies the entire backend payment process and provides a complete solution.