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Electronic Funds Transfer (EFT) – Mandatory (GEN)
Posted September 21, 2006
The Medicare Program Integrity Manual, Chapter 10, §8, Electronic Fund Transfers (EFT), states: “Mandatory Use of EFT – All providers entering the Medicare program for the first time must use EFT in order to receive payments. Moreover, any provider not currently on EFT that submits any change to its existing enrollment data must also submit a CMS-588 form to convert to EFT.”
Eventually, all existing providers/entities will be required to make the transition to EFT. With EFT, the Upstate Medicare Division (UMD) can send payments directly to a provider’s financial institution whether claims are filed electronically (EDI) or on paper. EFT is a long-established technology, and is widely used because it is more reliable and less expensive than the use of mailed paper checks. EFT providers receive cash earlier, which can reduce administrative costs, and in some instances, reduce cash flow problems. In 2005, UMD transferred in excess of $192 million for Medicare providers directly to the bank of their choice.
Advantages of 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:
- Access your Medicare payments sooner – many banks credit direct deposits faster than paper checks.
- 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.
- Easier reconciliation of payments with bank statements.
How to Enroll in EFT
All providers/entities not already using EFT should include an EFT authorization form with their Medicare enrollment package or when submitting a CMS-855 change request on their file. Providers simply need to complete the short EFT agreement form signed by the solo provider or the authorized or delegated official for a group entity. Include a voided, blank check that contains the preprinted account information to facilitate the transfer. Medicare payments will be made directly to the financial institution through EFT, in as little as two weeks. The EFT form may be downloaded from the Centers for Medicare & Medicaid Services (CMS) Web site at www.cms.hhs.gov/cmsforms/downloads/cms588.pdf.
The bank account must be in the provider/supplier’s legal business name and only the provider/supplier may issue instructions on that account. The bank shall be bound by only the provider/supplier instructions. No other agreement that the provider/supplier has with a third party shall have any influence on the account.
If you have never completed a CMS-855 enrollment application, CMS requires the completion of the appropriate application. If you are unsure if this applies to you, the complete application will be requested by Provider Enrollment at the time your request is prescreened. These forms can be accessed by visiting the CMS Web site at www.cms.hhs.gov/MedicareProviderSupEnroll. Mail this information to Provider Enrollment Department, Upstate Medicare Division, P.O. Box 5209, Binghamton, NY 13902-5209.
Questions and Answers about EFT
| Q: |
If I receive my payments via EFT, can Medicare withdraw money from my account if an overpayment is found? |
| A: |
No. The provider would be contacted for a resolution. Medicare cannot retrieve funds previously transferred to the provider’s bank account. |
| Q: |
How many days does it take for my deposit to be made? |
| A: |
As soon as your Medicare payment is released, the EFT transaction takes place. This can be as frequently as daily. It takes two days from the date of payment release for the funds to be deposited into your bank account. |
| Q: |
Can providers who bill Medicare using paper claims utilize EFT? |
| A: |
Yes. |
| Q: |
How does the EFT payment get to the bank? |
| A: |
Through the Automated Clearing House (ACH) network, a highly reliable and efficient nationwide system that processes electronic payments on behalf of banks, savings and loan associations, and credit unions. The network uses high speed computers and telecommunications to transfer funds and information. |
| Q: |
How is the ACH network used? |
| A: |
ACH transactions include credit card services, savings transfers, direct deposit of payroll checks, dividends, and pensions, as well as Electronic Data Interchange (EDI) transactions. |
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