CMS vows to ditch faxes for electronic claims attachments

CMS has released a final rule that aims to phase out the use of fax machines and snail mail.

"The 1980s called, and they want their fax machines back," CMS Administrator Mehmet Oz, M.D., said in an announcement on the Administrative Simplification; Adoption of Standards for Health Care Claims Attachments Transactions and Electronic Signatures Final Rule.

The final rule, introduced on Friday, would establish electronic standards for healthcare claim attachments, enabling the secure digital exchange of supporting clinical documentation. The rule would also create requirements for electronic signatures.

CMS estimates this shift to the 21st century would save approximately $781 million annually.

"The futuristic medical breakthroughs we've achieved, like augmented reality glasses that give surgeons X-ray vision, shouldn't have to coexist with administrative systems that often lag decades behind," Oz stated. "This new rule will modernize American healthcare by standardizing electronic claims attachments and enabling secure electronic signatures. Because every minute providers save on paperwork is another minute they can spend caring for patients."

The rule was first proposed by the Biden administration in 2022. It will now take effect on May 26, 2026, with HIPAA-covered entities required to comply within two years.

The fax machine remains a major means of communication in healthcare. Roughly 70% of hospitals use mail or fax to send and receive healthcare information, according to ONC data. Reliance on faxes and paper mail is considered highly inefficient and costly, yet has remained prevalent in healthcare due to the industry's intense security concerns and interoperability challenges.

The new final rule strives to overcome the challenges of going digital by creating standards for electronic information exchange. Specifically, the rule would create X12 standards for administrative transaction data and Health Level 7 (HL7) standards for clinical data integration.

Notably, the final rule did not include standards for prior authorizations. This is a break from the proposed rule, which would have expanded the standards' scope beyond claim attachments.

CMS said it decided against including prior authorizations because new standards for electronic exchange could conflict with its Advancing Interoperability and Improving Prior Authorization Processes final rule, which already mandates the use of HL7 standards to streamline prior authorizations through application programming interfaces.

Including prior authorizations may also have created misalignment with the existing X12 transaction standard for the administrative transaction, CMS added.

However, HHS will continue to consider alternative standards for prior authorization attachments.

The federal agency also noted that the final rule would adopt the March 2022 version of the HL7 Attachments Implementation Guide rather than the March 2017 version proposed in the rule.

The final rule is part of CMS's key initiative to reduce administrative burden in healthcare and simplify transactions. The initiative was mandated by HIPAA to streamline administrative transactions through national standards for electronic transactions, code sets and identifiers.

CMS continues to promote easier data exchange, especially in light of technology advancements. Last year, the federal agency pledged to "kill the clipboard" through a new Health Tech Ecosystem of providers, health app developers, EHR vendors and other industry stakeholders. Companies including Amazon, Apple, Google and OpenAI have also pledged their support to the initiative.

Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016.