Claims Payments via EFT: A Good Idea for Medical Practices

Electronic Funds Transfer (EFT) is a payment method utilizing electronic means (as contrasted with paper checks) to transfer monies between parties. EFT payments can be nearly instantaneous (avoiding postal delays) and reduce personnel costs associated with depositing payments. Many practices already use EFT to transfer employees’ wages electronically into each employee’s designated bank account, reducing administrative payroll expenses.

Your practice can automate your claims management by requesting that claim payments are transferred through EFT to the designated physician account. Most health plan payers offer EFT programs, including Medicare.

Practice managers should contact their health plan payers regarding EFT. Ask your bank and health plan payers if there are any fees that will be charged to participate in the EFT program. Make sure that the EFT agreement requires notification with an acceptable opt-out period before any fees or other charges are initiated. With the EFT payments you will also receive documentation, as you would with payer checks and reports that itemize the deposits to your account.

One important question to ask: Will the EFT agreement allow the health plan payer to offset its payments or make debit or adjust entries to your account without your authorization? The Medicare program does not allow offsets out of a designated physician account. Review the EFT agreements closely to determine if the agreement allows the health plan to unilaterally apply and deduct a service fee, refund request, adjusting entry, or otherwise make debit entries from funds due to the physician. Physicians and practice managers need to know up front how these credit and debit entries will be recorded and if their bank will charge a fee for such entries or for a debit taken that exceeds the balance of the account.

HIPAA requires health plans to use standardized codes as part of the payment/remittance advice presented on the Explanation of Benefits (EOB). This national administrative code set identifies the reasons for any differences or adjustments between the original physician charge for a claim or service and the payer’s payment reflected on the EOB. These code sets have the potential to help you understand what is missing and/or required on a claim to receive payment. Visit the CMS website for more information on HIPAA transaction and code set standards.

If you use a billing service to submit your claims and collect the receivables, can you still participate in an EFT agreement? You will need to coordinate with that entity if you wish to participate in a health plan payer’s EFT program.

Practices should understand an EFT agreement’s termination notice requirements prior to signing an EFT agreement as well. Health plan payers’ termination notice requirements and procedures may vary.

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