Are Paper Payments Becoming a Thing of the Past?


As healthcare administration costs continue to rise, major payers like UnitedHealthcare and Aetna are now mandating electronic payments. With this shift, it’s clear that more payers will embrace e-payments—especially when there are multiple options for receiving them.

In this whitepaper, you’ll take a deep dive into the shift toward electronic payments, including why industry leaders are paving the way and what a successful, universal e-payment landscape could look like.

Whitepaper | Bill Barbato
General Manager and Vice President, Business-to-Business Payments at Change Healthcare

Bill leads Change Healthcare’s B2B Payments solutions, guiding business strategy and product prioritization efforts needed to deliver industry-leading payment capabilities. Bill also fosters relationships with key industry partners to help drive payment innovation and affordability through the elimination of legacy payment and remittance processes.

Major Payers Accelerate Shift to e-Payments

Driven by the pressing need to reduce healthcare’s excessive administrative costs and the rapid expansion of digital solutions amid the pandemic, major payers are accelerating the transition toward electronic payments for provider reimbursement.

UnitedHealthcare, the nation’s largest health insurance company with 49.5 million covered lives, last year began phasing out paper checks and accompanying provider remittance advices (PRA) for medical payments to more than 1.3 million network physicians and care professionals.1

Aetna—the third largest carrier with 39 million covered lives— similarly announced in September 2021 that it would begin transitioning to an all-electronic payment and remittance process for participating and non-participating providers by September 2022.2

Lingering Resistance

While the vast majority of provider claims have long been submitted electronically, universal adoption of electronic payments has remained elusive, thwarted by provider-payer inertia and, in some cases, unwarranted fears of electronic clawbacks by payers. In 2020, 26% of medical claims were still paid with paper checks, down from 30% in 2019.3 That said, 84% of providers received paper checks from one or more payers in 2020.4

But with two major, national payers now mandating electronic payments, it seems likely that lingering resistance to e-payments will fade as more payers adopt the practice. For both providers and payers, the overwhelming economic and operational benefits that e-payments offer have become impossible to ignore, particularly in the wake of economic losses caused by the pandemic.

Time and Money

The 2020 CAQH Index estimates that the healthcare industry could save nearly $900 million annually by transitioning to fully electronic payment processes. On a per-transaction basis, electronic payments save health plans 99 cents and providers $1.99.5

There’s also time savings created through simplified reconciliation and a reduction in manual tasks. It’s estimated that processing a paper check requires, on average, six minutes to complete versus two minutes for an electronic funds transfer (EFT). Similarly, reconciling an electronic remittance advice (ERA) takes two minutes versus eight minutes for a manual remittance advice. For providers, electronic payments also translate into faster cash flow and reduced uncertainty associated with increasingly unpredictable postal services.

Delivering Multiple Payment Options

A key strategy for fostering e-payment adoption is to offer providers more than one mechanism for receiving electronic payments. With help from Change Healthcare, a major national payer embraced this approach several years ago to drive e-payment acceptance among paper-check holdouts.

The health plan had initially begun offering providers EFTs and ERAs back in 2003, then added online explanation of benefits (EOBs) in 2007. A letter campaign over the next seven years ultimately resulted in just over 80% of all claims being paid electronically by 2014. But when adoption rates subsequently stalled, the health plan began looking at offering payment via virtual credit cards (VCCs) as an alternative to EFTs.

VCCs can be mailed or faxed to providers, who then use their office credit card terminals to process the payment. Although VCC utilization eliminates the expenses associated with paper, printing, processing, and mailing checks, providers are still required to pay the 1%-3% transaction fee to their merchant card processor. To mitigate possible provider pushback, the health plan embraced a bifurcated approach to VCC adoption.

In 2014, notices from Change Healthcare were sent out announcing that providers could either enroll in EFT within 90 days or automatically begin receiving VCCs. However, an opt-out clause was available for those still determined to continue receiving paper checks.

Offering providers a choice of electronic payment options, combined with a deadline for making the transition, proved a sound strategy. Ultimately, an estimated 25%-30% of providers who’d received notices from Change Healthcare enrolled in EFT prior to the effective date, with virtually all others accepting the VCC approach. Only 3%, in fact, refused any type of electronic payment. Overall, the payer was able to push its electronic medical claim payment rate from 81% to 95%. Savings from the VCC campaign—in the form of reduced printing and postage costs—are estimated at $1 million annually.

In addition to deploying VCCs as a bridge solution to EFT adoption, Change Healthcare can also help providers with a third alternative for electronic payment: electronic checks. E-checks are digital check images that can be printed on the provider’s local printer, then deposited as you would any other check. Like EFT, there is no postage or material costs associated with e-checks, and delivery typically occurs the same day the check is issued.

A Business-To-Business Payment Leader

For payers looking to drive universal e-payment adoption, Change Healthcare can tailor a strategy to meet their specific requirements and timelines. In fact, we’re an industry leader in business-to-business payment solutions, with more than $63 billion in annual payment value delivered digitally in 2020. Our network provides access to more than 1.6 million providers and 200+ in-network payer relationships.

If you’d like to learn more about how we can help you accelerate your e-payment adoption rates, contact us or visit

1 "UnitedHealthcare Moving Exclusively to Electronic Payments," California Medical Association, Aug. 11, 2020
2 "Aetna to Halt Paper Checks and Remittances by September 2022," California Medical Association, Oct. 21, 2021
3 2020 CAQH Index
4 Trends in Healthcare Payments-Eleventh Annual Report: 2020, InstaMed
5 2020 CAQH Index
6 Ibid.

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