The Changing Landscape of Healthcare B2B Payment Transactions

Healthcare B2B payment transactions have been high in 2021, potentially signaling the importance of electronic payment transfers as the nation emerges from the coronavirus pandemic, according to a report from National Automated Clearing House Association (NACHA).

Nacha oversees the ACH Network, a national payment system. B2B payments made through this network in the healthcare industry include transactions such as health insurance premium payments.

According to ACH Network data, the healthcare industry produced 108 million claim payments in the second quarter of 2021, a historic amount of payments for this industry.

“Medical and dental providers are increasingly realizing the many advantages that come with having claims directly deposited to their accounts,” Jane Larimer, president and chief executive officer of Nacha, said in the Nacha report.

Nacha found that the healthcare sector’s claim payments increased by 35.7 percent over its 2020 second quarter results. Healthcare contributed the highest volume of transactions in the second quarter of 2021 of any sector, compared to the second quarter of 2020.

Overall, B2B volume increased by 28.7 percent over its second quarter transaction volume in 2020. In contrast, the person-to-person (P2P) sector its volume of payments increase 24.2 percent over its 2020 second quarter transaction volume.

Experts pointed to the introduction of electronic payments as a major reason for the increase in transaction volume. ACH Network facilitates a fully-electronic model of payment.

“While the B2B segment was growing before the pandemic, the transformation of business payments from paper has greatly accelerated over the past year,” Larimer explained.

By February 2021, electronic payments dominated the industry so strongly that paper payments made up less than four percent of ACH transactions, according to a separate Nacha report from early on in 2021. This represented a decrease of 21 percent when compared to 2019 levels.

The escalation in second quarter ACH Network payments continued an overarching trend. 

In the previous quarter, ACH Network saw its overall payments increase 11.2 percent over the first quarter in 2020. The volume rose to 7.1 billion payment transactions, valued at $17.3 trillion. In February 2021, the organization set a record of 118 million payment transactions per day.

In 2020, ACH also experienced record-breaking payment transaction levels. The organization’s healthcare transaction volume increased by 5.4 percent or 361.6 million transactions. Overall, volume increased by 8.2 percent from 2019 and value increased by 10.8 percent compared to 2019.

Specifically, in 2020, the number of direct deposits—including benefit and assistance payments—rose 12 percent.

While the healthcare industry may have already been gravitating toward electronic payment methods before coronavirus struck the US, the data indicates that the pandemic boosted electronic payment adoption. In the first four months of 2021, healthcare electronic claim payments rose 15.6 percent, achieving 132 million transactions worth $622 billion.

Healthcare industry experts touted the electronic payment process’s impact during the coronavirus pandemic and voiced their support for the transition to digital payments.

“This data from Nacha is good news for payers, providers and members,” said April Todd, senior vice president of CORE and explorations at CAQH. 

“The increase in electronic payment volume likely indicates that people who deferred routine medical appointments due to COVID are now able to get the care they need.  And when that care is paid electronically, it is more efficient and cost-effective for the industry.” 

Todd’s organization has been tracking the economic impact of transitioning to electronic payment.

A CAQH report estimated that the healthcare industry could see $426 million in cost savings by transitioning to electronic payments. Switching to electronic payment for claims submissions could save providers around $2 for each claim. Exact savings can vary based on the type of transaction.

CAQH has urged the healthcare industry to adopt automated and electronic processes for other data and payment transfers as well.

For example, the organization supported adopting electronic transferral processes for claims attachments. Todd told HealthPayerIntelligence that these attachments may accompany a claim payment or a prior authorization request. When submitted manually, attachments may become disconnected from the appropriate claim or prior authorization.

“There has been a lot of good progress just around electronic transactions,” Todd said. “Generally speaking, we have been lagging in areas that require a clinical connection and that's related to attachments and prior authorizations. In other areas, we've seen a lot of gradual continued improvement in this space.”

Electronic processes can also be useful in lowering costs on prior authorizations and other forms of automated data transfer.

Payers that are interested in cutting costs may re-evaluate their manual processes to see how transitioning to electronic processes could help reduce healthcare spending.