TEFCA Explained for Healthcare Software Vendors: What It Changes for Data Exchange and Strategy

A study estimated that poor data interoperability and fragmentation contribute to $760–935 billion in annual waste across the U.S. healthcare system, that’s about 25% of total healthcare spending. These costs reflect real-world impacts: duplicate labs and imaging, delayed care coordination leading to readmissions and clinicians spending extra time on record hunts instead of patients.

 TEFCA directly targets these root causes by creating a trusted, nationwide "network of networks" for standardized, secure data exchange through QHINs. It  enables real-time, purpose-specific access (e.g., for treatment or payment) without custom point-to-point builds, reducing silos, minimizing manual work, and supporting HIPAA-aligned rules.

With over 70,000 connected locations in 2026, TEFCA is already facilitating 39+ million clinical document exchanges, says a report, helping cut admin costs and denial risks through complete, timely data.

Aligning your software with TEFCA means developing healthcare apps that deliver full patient context nationwide, automate workflows, and prove clear ROI to clients. In the sections ahead, we’ll break down what TEFCA means for vendors, how it compares to FHIR, and the practical steps to prepare your software for this new era of interoperability.

What is TEFCA in Healthcare?

TEFCA stands for Trusted Exchange Framework and Common Agreement.

It is the U.S. federal initiative that establishes a single set of rules for secure and standardized health data exchange. It is designed so that EHRs, health information networks, apps, payers, and public health systems can share information reliably without custom integrations that have defined healthcare IT for decades.

Purpose of TEFCA

TEFCA creates one trusted framework so that patient data can move seamlessly across the country for legitimate purposes like treatment, payment, operations, public health, benefits determination, and individual access. Instead of dozens of regional networks or proprietary integrations, vendors and providers connect once (through a QHIN) and gain broad, governed access, reducing rework, supporting better care and lowering costs.

Key Components: How TEFCA works in practice

• Trusted Exchange Framework

This is the technical and policy blueprint that defines how health data should be exchanged nationwide. It builds directly on widely used standards you’re likely already working with:

• FHIR for modern, API-based queries 

• HL7 v2 and C-CDA for legacy document-based exchanges 

• Other specs like USCDI (United States Core Data for Interoperability) to ensure consistent data elements.

The Framework sets minimum requirements for data formats, transport protocols, security controls, and consent handling. This ensures data exchanges are predictable, interoperable, and future-proof.

• Common Agreement

This is the binding legal and operational contract that every participant (providers, payers, networks, vendors, and patient mobile health apps) must sign to join TEFCA. It creates uniform rules across the entire ecosystem so no one can impose their own conflicting terms. 

• Security & Privacy: Strong encryption, access controls, and HIPAA implementation.

• Identity Proofing & Authentication: Verifying who is requesting data (using NIST standards).

• Audit Logging & Breach Notification: Mandatory tracking and rapid reporting of any issues.

• Exchange Purposes: Strictly limits data use to one of six approved reasons (Treatment, Payment, Health Care Operations, Public Health, Benefits Determination, Individual Access) to prevent misuse.

• Individual Access Services (IAS): Rules ensuring patients can get their own records easily and transparently. 

• Qualified Health Information Networks (QHINs)

These are the trusted backbone organizations that actually make nationwide exchange happen. QHINs act as secure intermediaries routing queries, responses, and documents between participants while enforcing the Common Agreement. 

Healthcare vendors usually connect to one (or more) QHINs rather than directly to every provider or payer. Once connected, your software can query or receive data from anywhere in the TEFCA ecosystem, provided the request matches an approved Exchange Purpose and passes privacy/consent checks.

TEFCA vs. FHIR

TEFCA (Trusted Exchange Framework and Common Agreement) and FHIR (Fast Healthcare Interoperability Resources) serve distinct but synergistic roles in the sphere of U.S. healthcare interoperability. 

TEFCA lays down the overarching governance framework, policies, and legal agreements for secure, nationwide health information exchange. It defines the rules about who can participate and certain requirements for privacy, security, and mechanisms to connect disparate networks into a unified ecosystem.

In contrast, FHIR is the modern technical standard developed by HL7 for structuring and exchanging healthcare data. It uses RESTful APIs, modular resources, and internet-friendly protocols to enable real-time data access and interoperability between systems, apps, and providers.

For example: TEFCA defines “who can exchange” (e.g., authorized participants under the Common Agreement, with identity verification and legal obligations), while FHIR defines “how data is exchanged” (e.g., via standardized API calls for getting data on allergies, medications, or lab results).

How TEFCA Changes Healthcare Data Exchange and Product Strategy

TEFCA changes healthcare data exchange by making it standardized, secure, and truly nationwide, so you don’t need to reinvent the wheel for every connection.

At its core, TEFCA defines six clear exchange purposes, namely - treatment, payment, health care operations, public health, benefits determination, and individual access. Your software can only request or share data when the purpose matches one of these. All this while keeping data legal, auditable, and HIPAA-friendly.

1. Ensure nationwide interoperability 

The old approach involved with building one-off integrations for each major EHR, joining separate regional networks, negotiating custom data-sharing deals is expensive and unsustainable.

Instead, TEFCA pushes you toward one unified, nationwide data-access strategy through QHINs. Connect once, follow the Common Agreement rules, and your product can reach data from tens of thousands of organizations across the country (treatment, payment, public health, etc.) without stitching together dozens of different exchanges.

2. Leverages modern healthcare standards 

TEFCA doesn’t throw out what works; rather it:

• Uses FHIR for modern, granular API queries (meds, labs, problems, etc.)

• Keeps HL7 v2 and C-CDA for document-based exchanges 

• Adds mandatory security pieces: strong identity proofing, detailed audit logs, consent tracking, and breach rules

This combination means your existing FHIR work isn’t wasted. It just becomes more reliable and far-reaching.

3. Brings practical changes for EHR vendors

You’ll need to support query/response workflows instead of one-way pushes. That sounds technical, but it’s easier in practice:

• A clinician opens your decision-support tool and it automatically knows the patient and pulls relevant history from outside the current EHR.

• A revenue-cycle app submits a claim and it can fetch missing encounter notes or labs from another state in real time.

How it works in reality

Imagine a billing or prior-authorization app that misses critical clinical details because a patient was treated at an out-of-network hospital, leading to delayed or denied claims. 

With TEFCA and a QHIN connection, the same app can securely query that data in seconds (for permitted treatment or payment use). This helps you get more complete information, cleaner claims, fewer denials, and faster reimbursements.

4. Allows complete patient control 

TEFCA requires participants to honor patient-directed access and consent decisions consistently across the network.

Your healthcare app can now offer patients a more trustworthy experience (e.g., “Share my full record with this specialist for this visit only”) without building custom consent engines for every integration. This reduces legal/compliance friction and builds patient trust.

5. Positions your software for compliance

TEFCA is not mandatory for healthcare software vendors right now, but the pressure is building quickly and smartly.

CMS (Centers for Medicare & Medicaid Services) keeps tying interoperability to incentives like MIPS bonuses, value-based care programs, and future CMS rules that reward (or penalize) based on data-sharing capabilities. Meanwhile ONC’s information blocking regulations add another layer. If you can’t share data efficiently when required, you risk complaints, investigations, or losses. 

Here, the TEFCA Manner Exception gives you a strong defense. If your product follows TEFCA rules and connects through a QHIN, you can lawfully decline non-standard, custom integration requests without violating information blocking laws.

TEFCA Use Cases for Healthcare Software Vendors

TEFCA opens practical, high-value ways for your software to use nationwide data exchange without custom builds for every partner. Here are the most relevant use cases for vendors today, explained simply:

• Patient Data Exchange Across States: A healthcare app (patient portal, care coordination tool, or clinician dashboard) can pull a full or targeted patient history from any connected organization in the U.S. 

Example: A chronic care app automatically shows recent hospitalizations, meds, and labs from an out-of-state ER, leading to better decisions, fewer gaps and higher patient satisfaction.

• Claims Submission and Payer Communication: Revenue cycle and prior-authorization tools can fetch data from clinical data management software (eg. clinical notes, labs, imaging) in real time to complete submissions or respond to payer requests.
  
  

• Lab Results Integration: Diagnostic lab softwares, population health, or clinician-facing apps can query and display recent lab results from labs or hospitals outside your client’s network. 

• Individual Access for Patient Apps: Remote patent monitoring tools and mobile apps can give users a near-complete, up-to-date record (with consent) from the entire TEFCA network. This can dramatically increase patient engagement and satisfaction scores unlike fragmented portals.

  
  

TEFCA Implementation Challenges

1. Higher upfront costs for QHIN connectivity

Solution: Start with an intermediary/Participant instead of direct QHIN connection to lower initial fees and speed onboarding.

2. Potential data overload without smart filtering

Solution: Implement scoped queries and purpose-specific filtering in your app so only relevant data is pulled and displayed.

3. Mapping legacy HL7 v2/v3 systems to TEFCA requirements

Solution: Use middleware or integration platforms that translate legacy formats to FHIR/C-CDA before hitting the QHIN.

4. Aligning HIPAA, PCI-DSS, and TEFCA simultaneously

Solution: Conduct a unified gap analysis early and embed overlapping controls (audit logs, encryption, minimum necessary) once across the stack.

5. Cost of onboarding with QHINs

Solution: Pilot with one high-ROI Exchange Purpose (Treatment or Payment) first, run limited production tests with one QHIN partner, then scale based on real results.

6. Lack of internal expertise

Solution: Partner with experienced health IT consultants (like Latent’s managed teams) to handle QHIN connectivity, compliance mapping, and phased rollout without derailing your core roadmap.

Conclusion

The real value of TEFCA for healthcare software vendors is simple but significant: build once, exchange data nationwide (where permitted). Instead of maintaining fragile point-to-point integrations or staying confined to regional networks, vendors can now design products under a single governance framework. TEFCA seems like magic but is actually thoughtful planning where the payoff is measurable efficiency, enhanced security and faster data access to the data your applications depend on.

Getting Started with TEFCA

• Review your current interoperability stack (FHIR servers, APIs, and data flows) against TEFCA’s Common Agreement.
  
  

• Establish connectivity through a QHIN or trusted intermediary.
  
  

• Update APIs for scoped access, consent management, and audit logging.
  
  

• Validate workflows end to end using vendor and QHIN sandbox environments.

If you are building patient engagement, RCM, care coordination, or clinical analytics platforms, Latent can help you assess TEFCA readiness and plan phased implementation for your product. Contact us today.

FAQs

1. Is TEFCA mandatory for healthcare vendors?

No, TEFCA is voluntary. However, CMS incentives, MIPS bonuses, and ONC information blocking rules make alignment essential for funding eligibility and staying competitive in the healthcare market.

2. Who needs to comply with TEFCA?

Primarily Qualified Health Information Networks (QHINs) and large providers. Healthcare software vendors connecting to them (via EHRs or APIs) should align to prevent integration barriers and future roadblocks.

3. What is a QHIN in TEFCA?

A Qualified Health Information Network (QHIN) is a trusted intermediary that securely routes health data queries and responses between participants under TEFCA’s Common Agreement rules.

4. Does TEFCA replace FHIR?

No. TEFCA does not replace FHIR. Rather, it builds in synergy with FHIR, adding nationwide governance, trust, and standardized rules for secure, scalable exchanges.

5. How does TEFCA improve data interoperability?

TEFCA improves interoperability by enforcing one set of rules and exchange purposes, removing silos, and enabling seamless, secure data flow across EHRs, networks, and apps nationwide.