Electronic Funds Transfer Basic Requirements
Electronic Funds Transfer (EFT) serves for Medicare to send payments directly to a provider’s financial institution whether claims are filed electronically or on paper. All Medicare providers may apply for EFT.
Advantages of Electronic Funds Transfer
EFT is similar to other direct deposit operations such as paycheck deposits, and it offers a safe modern alternative to paper checks. Providers who use Electronic Funds Transfer may notice the following benefits:
- Reduction to the amount of paper in the office
- Valuable time savings for staff and avoidance of hassle associated with going to the bank to deposit a Medicare check
- Elimination of the risk of Medicare paper checks being lost or stolen in the mail
- Faster access to funds; many banks credit direct deposits faster than paper checks
- Easier reconciliation of payments with bank statements.
How to Enroll in EFT
All Medicare contractors include an EFT authorization form in the Medicare enrollment package, and providers can also request a copy of the form after they have enrolled. Providers simply need to complete the EFT enrollment process as directed by their contractor. Medicare payments will be made directly to the financial institution through EFT, in as little as two weeks.
Electronic Funds Transfer Transaction Formats
Medicare contractors can use one of two formats to transmit provider electronic claim payments to financial institutions: Automatic Clearinghouse (ACH) format, or table 1 of the Accredited Standards Committee (ASC) X12 835 version 5010 implementation guide which was adopted as a national standard under HIPAA for electronic payment and remittance advice. Both of these formats are considered national standards.
Electronic Funds Transfer is the required method of Medicare payment for all providers entering the Medicare program for the first time and for existing providers that are submitting a change to their existing enrollment data but are not currently receiving payments via Electronic Funds Transfer.