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ACA Section 1104: New Technology Operating Rules for Physician Practices


Why one of the little-noticed aspects of the law requires a practice’s attention.


Perhaps you’re busy wondering what your state will do about the Affordable Care Act’s (ACA) Medicaid provision, and the impact that’ll have on your practice. Or you’re celebrating (lamenting?) the insurance mandate, which remains intact after the Supreme Court cast its 5-4 vote in favor of the healthcare law. 

But you probably haven’t thought about one of the little-noticed aspects of the law that deals with technology and could have a big effect on your practice: Section 1104.

Section 1104 of the ACA “…establishes new requirements for administrative transactions that will improve the utility of the existing HIPAA transactions and reduce administrative costs.” Specifically, ACA Section 1104 requires the secretary of HHS to adopt and regularly update standards, implementation specifications, and operating rules for the electronic exchange and use of health information for the purposes of financial and administrative transactions.

ACA Section 1104 applies to all HIPAA-covered entities (like you!) and business associates engaging in electronic standard transactions. Legislation requires that the standards and operating rules adopted by HHS will:

• Allow for the determination of an individual’s eligibility and financial responsibility for specific services prior to or at the point of care;
• provide for timely acknowledgment, response, and status reporting that supports a transparent claims and denial management process (including adjudication and appeals); and
• describe all data elements (including reason and remark codes) in unambiguous terms, require that such data elements be required or conditioned upon set values in other fields, and prohibit additional conditions (except where necessary to implement State or Federal law, or to protect against fraud and abuse).

What Section 1104 of the ACA means for your practice: You’ll have to make sure the vendors you work with (practice management, data clearinghouse, etc.) are up to speed with understanding the new operating standards.

“ACA Section 1104 is going to have the biggest impact on technology standards,” Ken Bradley, vice president of strategic planning for Navicure, an Internet-base medical claims clearinghouse, told Physicians Practice. “There really are efforts underway to standardize the EDI process, the payments process and include more information in eligibility claims. It’s going to be important that a practice’s IT vendor supports those new standards.”

In terms of remittance, eligibility, and claims processing, new information will be required.

“The practice really needs to have an understanding of the new rules are and ensure that each of its vendors understand the changes too,” says Bradley.

The whole idea of the ACA Operating Rules is to reduce the cost of doing business for a physician practice, says Bradley, noting that it does this by automating the entire process to reduce paper and phone calls so that all inefficiencies are removed.

“Practices should approach this like any other software update,” says Bradley. “The first thing the practice should ask is whether or not the vendor is aware and understands the new regulations. From there practices can ask the typical questions such as: What are your plans for handling this? Do I need a software update? Will there be testing involved?”


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