Electronic Funds Transfer (EFT)

The information in this section is intended for the use of health care providers, clearinghouses and billing services that submit transactions to or receive transactions from Medicare fee-for-service contractors.  Electronic Data Interchange (EDI) is the automated transfer of data in a specific format following specific data content rules between a health care provider and Medicare, or between Medicare and another health care plan.  In some cases, that transfer may take place with the assistance of a clearinghouse or billing service that represents a Medicare provider. EDI transactions are transferred via computer either to or from Medicare.  Through use of EDI, both Medicare and health care providers can process transactions faster and at a lower cost.

Not only can providers and suppliers submit Medicare claims electronically, but they can also have their Medicare payments deposited directly into a designated bank account. To be eligible for Electronic Funds Transfer (EFT) the designated account must meet the following criteria:

  • The bank may provide financing to the provider/supplier as long as the bank states in writing, in the loan agreement, that it waives its right of offset. (This allows the bank to lend money to the provider as well as deposit money from Medicare into the provider/supplier’s account.)
  • The bank account is in the provider/supplier’s name and only the provider/supplier may issue instructions on that account.
  • The bank should only be bound by the provider/supplier’s instructions.
  • No other agreement that a provider/supplier has with a third party can have any influence on the account. In other words, if a bank is under a standing order from the provider/supplier to transfer funds from the provider/supplier’s account to the account of a financing entity in the same or another bank and the provider/supplier rescinds that order, the bank honors this rescission notwithstanding the fact that it is a breach of the provider/supplier’s agreement with the financing entity.

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