Why utilize ERAs and EFTs?

A provider recently asked me whether she should register to receive Electronic Funds Transfer (“EFT”) and Electronic Remittance Advice (“ERA”) for her Medicare Part B claims. I answered “yes” and also encouraged her to consider registering for EFT and ERA with regard to any other payers with whom she participates. Since so many providers have asked me this question, I am providing a quick summary of the reasons I believe every provider should consider EFTs and ERAs.

Reducing the Risk of Embezzlement

A large percentage of successful and busy providers will, at some point in time, fall victim to employee embezzlement. This embezzlement often takes the form of stolen co-payments; however, the embezzlement is sometimes perpetrated by means of stolen payer checks. A provider who receives payments via EFT eliminates the possibility that payer checks may disappear before he or she is aware of their existence. Likewise, while an embezzler may snatch and destroy a paper EOB evidencing a payer payment and co-payment, it is usually more difficult for an embezzler to completely eliminate all traces of the existence of an ERA, which may be automatically imported into many practice management systems.

Address Changes and Red Tape

Medicare’s Do Not Forward Initiative, or “DNF”, (N.B. many commercial payers have their own DNF styled procedures) is aimed at preventing the forwarding of Medicare checks from one address to another. In accordance with DNF procedures, every envelope containing a payment states “Return Service Requested.” When Medicare receives a returned envelope, it ‘flags’ the provider’s account and will refuse to issue (or reissue) any checks until the provider completes, and Medicare processes, the CMS-855 form. See , e.g., Medicare Carriers Manual, Change Request 2284 (Aug. 21, 2002). While DNF is aimed at preventing fraud and misdirected payments, in reality it often serves as a trap for honest and unwary participating providers. I have spoken with many providers who have stopped receiving payments for many months due to their failure to properly complete a CMS-855 prior to a change of address. Likewise, even after a provider submits the CMS-855, CMS must process the application and this generally takes 90 to 120 days. EFT eliminates the possibility that an address change will cause cash flow to come to a screeching halt.

Reduction of Errors

ERAs can be automatically imported into many practice management systems. By automating the process of importing payment information, a practice can eliminate the margin or error that, despite a provider’s best efforts, will accompany the manual entry of payment data.


EFTs eliminate the effort involved in receiving, negotiating and depositing paper checks. Moreover, if ERA data is automatically imported, next step determinations (e.g., bill secondary, bill patient, write-off balance) can be made immediately.

Cash Flow

As reimbursement rates continue to decline, the need for unimpeded and speedy cash flow increases. Depending upon the particular payer, EFTs may reduce the time lag between submission and receipt of payment by one week or more.

One final thought. Some providers are driven away from EFT by a fear that as surely as CMS ‘giveth, it may taketh away’ (in the event of an overpayment). In other words, providers believe that if the payer is depositing money in an account, it may also withdraw money from the same account in the event of an overpayment: this is accurate. See , 31 C.F.R. 210.6(f). Actually, CMS has the right and ability to recoup an overpayment regardless of whether a provider participates with EFT. In the event of a non-EFT overpayment, CMS has the right to offset the overpaid amount (with interest) against future payments and the matter may be referred to the United States Department Treasury for collections activities, which may include tax refund offsets. See , e.g., 42 C.F.R. 447.31.

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