Many employers use direct deposit, so why can’t physicians expect the same from payers?
The good news is—they can. Physicians who enroll in electronic funds transfer (EFT) see an immediate return on investment in terms of efficiency and improved cash flow as insurers transfer payments electronically into a bank account of their choosing.
Benefits of EFT
Why may EFT be a better option than traditional payment via a check? EFT offers many benefits for physicians, some of which include the following:
- Faster turnaround time for payment. Funds are deposited directly into the physician’s account as quickly as the very next day.
- Greater revenue cycle efficiency, consistent cash flow. Staff members don’t need to spend time on manual tasks such as depositing paper checks or calling insurance companies to follow up with payments. Instead, they can expedite filing to secondary payers, focus on ensuring correct payment, and perform other office tasks as necessary.
- Reduced risk of lost or stolen checks. Because payments are transferred electronically, physicians don’t need to worry about losing or misplacing a paper check.
- Cost savings. When processing an EFT payment via the Automated Clearinghouse (ACH) Network, practices pay only $0.34 per transaction, according to the National Automated Clearinghouse Association (NACHA). The government estimates that the savings and cost benefit to using ACH EFT and electronic remittance advice (ERA) operating rules is $3 to $4.5 billion for government and commercial health plans, third-party administrators, hospitals, and physician offices over 10 years.
EFT is your right
Effective January 1, 2014, all health plans must be able to deliver an EFT payment if a physician requests it. Payers are not permitted to substitute a non-standard form of electronic payment, such as a “virtual” credit card—a 16-digit number sent to the provider for processing through the practice’s card terminal. With a virtual card, the provider is responsible for all associated transaction fees.
To take advantage of the expedited payment processing associated EFT, reach out to your billing software vendor, your clearinghouse, or payers to determine what specific steps are necessary to enroll. You can visit the CAHQ Web site to access a single EFT/ERA enrollment process for multiple participating payers. If your payer is not included in this list on the CAHQ Web site, contact the payer directly to obtain the necessary forms for EFT enrollment. To enroll in EFT with Medicare, contact your Medicare contractor for an EFT authorization form. This form is also included in the Medicare enrollment package.
When thinking about EFT, start by identifying the payers that represent the largest portion of your business. Enroll in EFT with these payers first to improve cash flow and reduce the number of manual transactions necessary to process checks and credit cards.
EFT questions to ask your payers
Following are some specific questions to ask your payers as you venture into the world of EFT:
- How long will it take before the payer begins issuing EFT payments instead of checks?
- What is the payer’s payment cycle for EFT?
- Will the payer notify the practice prior to the EFT deposit so someone can be on the lookout for the payment?
- Does the payer include a trace number in the EFT payment?
- What is the payer’s policy for debiting the practice’s account? For example, does the payer only reverse an EFT when there is a duplicate or erroneous payment?
- Does the payer apply service fees? If so, what are those fees? Twenty-five percent of providers reported paying fees for the use of ACH EFT transaction, according to an Electronic Remittance Advice/EFT survey conducted by the Workgroup for Electronic Data Interchange (WEDI) in early spring 2016.
- What’s the process for terminating an EFT agreement or opting out?
- Who is available at the payer to answer questions about EFT payments?
The American Medical Association’s Toolkit for Navigating the Ins and Outs of EFT also provides other questions to ask your bank, billing service, and clearinghouse before you enroll in EFT.
To learn more about EFT, view the NACHA/CMS presentation on EFT and ERA.