Electronic Funds Transfer (EFT) - (Rev. 5, 08-30-02)

160 - Electronic Funds Transfer (EFT) - (Rev. 5, 08-30-02) A1-1430, B1-4430 The contractor shall pay claims from providers of services according to the following criteria. A. Requirement The contractor may transmit payments electronically to each provider who bills Medicare, elects to receive payments electronically, and who provides the necessary bank account and routing data to enable the contractor to pay electronically. B. Notification Requirement The contractor shall provide its Regional Office (RO) with quarterly data on the number of providers paid under EFT, the transmission protocol, such as the ANSI X12 835 used for its EFT transmissions, and the benefit payment amount of EFT transactions. It shall use Form CMS-588, Authorization Agreement for Electronic Funds Transfer, to maintain a record of those physicians and suppliers that authorize Medicare payment under EFT. C. Claims Processing Timeliness (CPT) Requirement When transmitting electronic payments to providers, the contractor shall pay claims in a timely manner consistent with the payment floor in effect at the time of payment. It shall transmit the EFT authorization to its originating bank upon the expiration of claims processing timeliness payment floor, as discussed in the Medicare Claims Processing Manual, Chapter 1, General Billing Requirements. For example, an EFT payment in March 2001 for an electronic claim may not be transmitted to the originating bank earlier than 14 days after the date of receipt. An EFT payment in March 2001 for a paper claim may not be transmitted to the originating bank earlier than 27 days after the date of receipt. Payment settlement, i.e., the date on which funds are posted to the provider's account, should not be earlier than 2 business days following transmission of the electronic payment data to the originating bank. The contractor shall accomplish this by designating an effective payment date on the electronic payment file of no earlier than 2 business days after the transmission date. D. Electronic Transmission Standard When making direct deposits to the accounts of providers under EFT, the contractor shall use a transmission format that is both economical and compatible with its servicing bank and the Automated Clearing House. For Standard Systems Maintainers, the Medicare standard ANSI 835 health care payment/advice can be abbreviated and used to generate an ACH-FORMATTED EFT file that contains no beneficiary-specific data. In these cases, the bank translates the abbreviated ANSI 835 into an ACH-COMPATIBLE payment file. The entire ANSI 835 Remittance advice record will be sent directly to the provider. In the event these abbreviated ANSI data are not acceptable to certain banks for purposes of initiating electronic payments through the appropriate ACH, the standard system users should consult with their individual banks to determine which electronic payment data format is acceptable. The contractor should refer to Part 3, Chapter 24, EDI Support Requirements for more information on the abbreviated ANSI-835. E. Alternatives to Electronic Payment When EFT is not used, the contractor shall make payments to providers via hardcopy checks drawn on the commercial bank servicing its Medicare account. It shall send the hardcopy check by first class U.S. Postal Service only. NOTE: The pickup, next-day delivery, express mail or the use of a courier service for hardcopy checks is prohibited except in emergency situations, as authorized by the contractor's RO. F. Modification of Tri-partite Bank Agreement to Include EFT Method of Payment The contractor shall work with its servicing bank and its RO to ensure that the Tri-partite bank agreement is modified to include wording that allows funding of the Letter of Credit to include electronic payments as well as hardcopy checks. The Tri-partite bank agreement needs to clearly state that all references to checks in the original bank agreement shall mean checks and/or electronic funds transfer (EFTs). The contractor shall have its legal department and that of the originating bank review the Tri-partite bank agreement to ensure that it meets contractor needs and the requirements of the Medicare program. It shall forward any modifications to the Tri-partite bank agreement at least 1 month prior to its effective date to the RO and the Chief, Financial Management Unit, OCA, BPO in CO for review and approval. See §160.1, Exhibit 2 for a sample addendum to the Tri-partite bank agreement that includes general provisions for payment under the EFT method. G. The Receiving Bank's Role in EFT/Electronic Remittance Advice (ERA) While providers may wish to consider criteria such as experience with EFT and receipt of ANSI-formatted financial data when choosing a bank, these procedures should in no way be interpreted as requiring providers to do business with a particular financial institution (e.g., receiving bank only). H. Electronic Funds Transfer Transaction Costs Prior to transmitting payments electronically, the originating bank fills in the relevant EFT transaction costs on the Schedule AS (Schedule of Bank Processing Charges), and submits it to the contractor. The contractor shall transmit this information to both the RO and CO. Once electronic payments are initiated, the originating bank shall include all payment information on the Monthly Schedule of Bank Processing Charges, (TAA 1-b), and transmit this form to the contractor, who enters the data into the Contractor Administrative Budget and Financial Management (CAFM) system where it is reviewed and approved first by the RO and then CO. NOTE: The EFT costs reported on line 8 of the AS Schedule and the Monthly Schedule of Bank Processing Charges (TAA 1-b) shall include a breakdown of all costs associated with EFT, including the cost per EFT transaction, set-up costs, monthly charges, transmission costs, etc. I. Contractor Responsibility for EFT/ERA Records Retention The contractor shall retain records on EFT/ERA in accordance with established CMS and Department of Justice procedures for retention of documentation associated with electronic claims. J - Provider Responsibility for the Accuracy of Claims Data To minimize errors and disruptions to cash flow, providers are responsible for verifying the accuracy of claims payment information submitted to their Medicare contractor.