An increasingly common payment method among health insurers could be racking up fees for your practice. Find out how to avoid paying these unnecessary fees in your practice—and what you can do to help secure more fairness in electronic health insurer payments.
If your practice accepts virtual credit card (VCC) payments from health plans, you may be losing a significant amount of your contractual payments to high interchange fees charged by your credit card company. These payments often offer health insurers significant financial rewards while sticking physicians with all the associated fees and extra work.
Many insurers are choosing to use VCCs for claims payments to physicians instead of sending paper checks or paying via the electronic funds transfer (EFT) standard transaction. When paying via virtual credit card, insurers send single-use credit card payment information and instructions to physicians via mail, fax or email. The physician’s office staff then processes the payment as they would a patient’s credit card.
For each of these payments, physicians are charged fees that typically amount to 3-5 percent of the total payment—and that adds up. If a physician contractually is owed $5,000, for instance, he or she could have to shell out up to $250 in fees.
So what should physicians do? Here are three actions you can take to prevent health plans from imposing VCC payments on your practice:
- Register for electronic funds transfer (EFT) payments. The Health Insurance Portability and Accountability Act (HIPAA) requires all health plans to offer standardized EFT using the Automated Clearing House (ACH) Network to physicians that request it. Similar to direct deposit, ACH EFT allows health plan payments to be directly deposited into a physician’s designated bank account. Each ACH EFT transaction carries a banking fee of about 34 cents, far less than the potential 5 percent fee charged for VCC transactions. In order to receive ACH EFT, physicians should request and enroll in this payment method.
- Be aware of restrictions in payment methods when contracting with health plans. Even though HIPAA requires health plans to make ACH EFT payments available upon request, health plans may try to require other payment methods, such as VCC, within their contracts with physicians. Be cognizant of any restrictions and avoid signing contracts with inflexible payment terms.
- Educate your practice staff. Make sure your staff is able to differentiate between patient and health plan credit card payments to avoid authorization of VCC payments. If your practice staff processes both patient and health plan payments, their education on the matter is crucial.
The AMA’s EFT toolkit has more information on EFT payment, including a VCC resource (log in) with more information on avoiding high fees.
Do you have experience with virtual credit cards in your practice?
If so, take a brief survey by May 8 to share your experiences and help the AMA, the Medical Group Management Association and the American Dental Association bolster their advocacy on health plan payment issues. The survey will collect data on the scope and impact of VCC usage, which will support the AMA’s push to ensure physician choice in health plan payment methods.
