Understanding Your EFT Payment Options

As of January 1, 2014, all Medicare physicians are required to accept Medicare payments in the form of an Electronic Funds Transfer (EFT). Therefore, many health plans have moved from paper to electronic forms of payment. During this transition period it is important that physicians, as well as other health care providers, have an understanding of different methods of electronic payment and the financial risks associated with each.

Below is a brief comparison of the three most common electronic payment options:

  Automated Clearing House (ACH) (HIPAA Standard Format) Virtual Credit Card (VCC) Wire Transfer
What is it? Processed over the ACH Network, a payment system implemented by the Electronic Payments Association (NACHA), this is similar to a direct deposit offered by many employers Health plans fax, email or mail the payment information to the provider, often appearing in the form of a paper credit card A direct and irrevocable transfer of funds between bank accounts
Funds Availability Next Day 2-3 Business days Same Day (funds irrevocable)
Average cost to the practice per transaction* $0.34 3% of payment plus transaction fee $10.73
Manual processing for each payment None - funds deposited directly into bank account Each payment must be manually entered into the POS terminal by office staff None - funds deposited directly into bank account
Enrollment Must have bank account, one time enrollment with each health plan Must have bank account and agreement with a merchant card processing provider, and point of sale processing system/terminal Must have a bank account, one time enrollment with each health plan

Some health plans are automatically replacing paper checks with virtual credit card payments or wire transfers. While there is no prohibition from using these other payment methods, if a provider requests that a health plan conduct EFT using the ACH Network, the health plan is required to do so. Physicians should determine if their practice wants to accept virtual card payments for the sake of convenience, but should also be aware that it is their right to request payment using the healthcare EFT standard (ACH), and the health plan is not permitted to delay or reject a transaction. Physicians should communicate their selected payment method with their accounts receivable staff because many have been accepting the virtual card transactions for claims reimbursements unaware of the cost to the practice. Regardless of the method a physician chooses to receive health care payment from health plans, they should always carefully analyze their agreements for any added fees.

If your practice has requested that a health plan conduct the electronic funds transfer (EFT) and electronic remittance advice (ERA) transactions in standard format (by using the ACH network), and the health plan refuses to comply, you may report them using the CMS Administrative Simplification Enforcement Tool.

Additional resources:

CMS background on EFT's including how to enroll/update payment information under Medicare

NACHA/CMS Presentation on EFT and ERA

AMA's EFT Toolkit

EFT and ERA Enrollment - This solution from CAQH allows for a single EFT/ERA enrollment process for participating payers.