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Electronic Funds Transfer

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 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 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.

See the Medicare Claims Processing Manual, (Pub.100-04), Chapter 24, Section 40.7 for further information on use of EFT for provider payments.

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