electronic data interchange (EDI)

Process by which understandable data items are sent back and forth via computer linkages between two or more entities that function alternatively as sender and receiver. Common examples for medical billing that use the X12 format are insurance claims, quality assurance reviews, utilization data, and certifications. See also Accredited Standards Committee X12 (ASC X12) .

Electronic Fund Transfer Act (EFTA)

Federal regulation that limits the consumers’ liability if there has been an unauthorized use of an automatic teller machine (ATM) card, debit card, or other electronic banking device. Consumers are only covered by a $50 liability limit if they notify their financial institution within 2 business days of discovering a problem of unauthorized use of their debit card. If notification is delayed, the liability can jump to $500.

electronic funds transfer (EFT) system

1. Paperless computerized system enabling funds to be debited, credited, or transferred to a provider’s financial institution, eliminating the need for personal handling of checks (e.g., from an insurance company’s account directly to the accounts receivable of the physician’s medical practice). Some insurance companies are using this system for Medicaid and Medicare payments. 2. Simple method of paying monthly insurance premiums in which the insured prearranges with his or her bank to automatically transfer payments to the insurance company’s account from his or her checking account. See also automatic bill payment and preauthorized payment . Also called automatic bill payment, bank check plan, check-o-matic, check deposit billing, preauthorized checking , or preauthorized payment . See also deposit-only bank accounts .