CMS killed the fax for billing. Now do it for patient care.

U.S. healthcare is estimated to exchange roughly nine billion fax pages a year — a wildly outdated modality compared to what's actually possible for claims and medical records. The Centers for Medicare & Medicaid Services (CMS) recently finalized a rule that electronic claims attachments and e-signatures are now required for all HIPAA-covered entities, phasing out fax and mail for billing documentation. But the rule only applies to claims attachments, not prior authorization or clinical communication, two areas in dire need of modernization.

In 2018, the CMS Administrator called for the end of fax machines across healthcare. Eight years later, the momentum is finally starting to build. The projected $782 million in annual savings that will result from the new rule shift accounts for paper, postage, staff time and processing delays. It’s the tip of the iceberg.

What it does not account for are billions of dollars spent every year on avoidable hospital readmissions, duplicated tests, medication errors and ER visits from communication failures. Reliance on phone and fax-based workflows, fragmented communication and the failure to translate available data into operational improvements are the three structural problems that endure.

The CMS rule is proof that the world is moving away from analog, but it's not enough. Healthcare entities must move toward modernizing clinical operations while taking into account those who do frontline patient work and the complications of their less-advanced technological realities and monetary constraints.

It’s harder to modernize some providers

Not every corner of healthcare can go digital on demand. Rural providers contend with infrastructure barriers that no mandate resolves — spotty or absent connectivity, paper-dependent workflows and no IT staff or technology to bridge the gap.

Non-emergency medical transportation runs almost entirely on paper, and not by accident, because many states require a wet signature to authorize a trip. Federal timelines don’t override state law.

AI is accelerating the problem. Healthcare is rushing to embed AI into clinical workflows before the evidence base has caught up, and even well-resourced systems are bypassing foundational work to adopt tools they don’t fully understand yet.

The deeper issue is structural: federal mandates are written for a version of healthcare that assumes most of healthcare operates like hospitals, and healthcare advancements tend to favor well-funded health systems with IT infrastructure in place. Rural and post-acute providers and community-based organizations have often never had the infrastructure these rules treat as a starting point. Progress often leaves out those who are nearest to patients and least equipped to comply.

A realistic way forward

Nobody is going back to fax and mail for claims processing, and nobody should want to. The question is whether healthcare learns from both the progress and the pain of CMS ripping off the band-aid. The May 2028 compliance deadline will be the next test.

The shift to digital, and eventually to AI-heavy workflows, is inevitable, but speed without a plan creates chaos and trouble. Strategic scale and sustainability have to be the focus, starting with an honest assessment of all providers’ current technologies, staffing, and budgets, not where a policy paper assumes they should be. Any credible path forward has to account for limited resources and entrenched paper-based workflows.

The first step should be foundational, bringing information together across care settings, including digitizing paper-based workflows, and actioning it with automation and real-time alerts for everyone in a patient’s care path. Yes, retire the fax, but in a way that accounts for the full ecosystem and its constraints. Tap technologies that all providers can afford, as care coordination options exist, paid for by health plans and governments, opening up access to providers of all shapes, sizes and constraints.

Mandating digital transformations is the right instinct, but an instinct is not a strategy. Healthcare has a pattern of issuing deadlines before laying the groundwork. This time, the stakes are too high to figure it out along the way.

Effie Carlson is the CEO of Watershed Health. She brings more than 17 years of experience in healthcare leadership, policy, strategy, and business development across the provider and payer sectors, and her experience spans managed care, healthcare technology, government relations, and value-based care. Carlson founded EJC Consulting Group and has served in executive leadership positions at Modivcare, PayrHealth, Team Select, and CareCentrix. Carlson is an active advisor and board member for healthcare organizations, including the Texas e-Health Alliance, SendaRide, and the Non-Emergency Medical Transportation Accreditation Commission® (NEMTAC®). Follow her on LinkedIn.