Physicians' Rights Regarding Electronic Funds Transfer Focus of CMS Update

April 09, 2014 11:50 am News Staff

On Jan. 1, 2014, family physicians and all other entities covered by the Health Insurance Portability and Accountability Act (HIPAA) were obligated to come into compliance with operating rules related to electronic funds transfer (EFT) and electronic remittance advice (ERA)(

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EFT refers to the electronic message sent by a health insurance company to a bank or other financial institution to authorize the electronic transfer of funds from the health plan to a physician's account as payment for health care services provided to a patient.

The new standards were required by the Patient Protection and Affordable Care Act, in conjunction with HIPAA, as a means of easing administrative burdens placed on physicians, hospitals and other health care professionals.

Fast forward to a recent CMS administrative simplification e-mail update directed to Medicare participating physicians in which CMS urged physicians to consider receiving EFT payments through the Automated Clearing House (ACH) Network. The ACH Network is the "pipeline" through which many EFTs travel and is the network used by a majority of health plans to pay medical claims.

CMS reminded physicians that the ACH Network is the "standard format" for EFT and ERA transactions. What that standard format means to family physicians is that they need complete only a single enrollment form for participation in EFT and ERA, even though they likely have contracts with multiple health plans.

According to CMS' recently updated list of frequently asked questions( about EFT, health plans must honor physician requests to use the ACH Network to conduct EFT and ERA transactions. Furthermore, health plans cannot

  • delay or reject an EFT or ERA transaction because it is a standard transaction or
  • charge a fee or use any other method to encourage a physician to use an alternative payment method other than EFT through the ACH Network.

In addition, physicians are not required to use EFT and can instead opt to receive payments by check or alternative methods.

However, physicians new to Medicare -- or those who update their enrollment information -- are expected to participate in EFT unless electronic payment is unavailable because of extenuating circumstances. That's according to a Nov. 26, 2013, entry in Family Practice Management's Getting Paid blog. For example, if a family physician's practice is in a remote location devoid of EFT capabilities, the practice is not bound by the EFT requirement.

Overall, electronic transfers of information save physician practices time and money by eliminating the work involved in depositing paper checks and manually posting and reconciling health care claim payments. HHS estimates that administrative simplification efforts underway since 2012 could save the health care system as much as $9 billion by 2022.

Related AAFP News Coverage
Streamlining Administrative Tasks Focus of New Interim Final Rule From HHS

More From AAFP
Overview: Administrative Simplification

Additional Resources
CMS Administrative Simplification Guide (pages 18-22)(

AMA Electronic Funds Transfer Toolkit(