What is Electronic Funds transfer (EFT)

Electronic Funds Transfer

Electronic Funds Transfer (EFT): With EFT, Medicare can 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): 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 EFT 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 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 this short form, mail it to their Medicare contractor, and include a voided blank check to facilitate the transfer. Medicare payments will be made directly to the financial institution through EFT, in as little as two weeks.

EFT 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 X12 835 version 40101A1 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.

 

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