Stop Paying to Get Paid

Would you pay $50 to deposit $1,000 into your back account? You might be doing just that.

When health plans pay you with a virtual credit card (VCC) — and many are paying that way — you could be losing as much 2 percent to 5 percent per transaction. For example, if you receive a $1,000 VCC payment from a health plan, you could lose $20 to $50 in processing fees. In essence, your charge for your services from that payer shrunk by that amount.

You don’t have to accept payment via virtual credit card. You have a right to request direct deposit, which costs just a few cents per transaction.

Since Jan.1, 2014, the Affordable Care Act has required health plans to offer electronic funds transfer (EFT) payments, essentially direct deposit, using the Automated Clearing House (ACH) Network to physician practices that request this method of claims payment. As a way to avoid using an ACH EFT, health plans began to issue virtual credit cards. 

Most health plans don’t ask physicians before sending virtual card payments. They mail a virtual card number to the practice with no information about how to opt out of this payment method or the cost to the practice of processing the payment.

Office staff have to manually enter the virtual card number into the practice’s credit card processing terminal (and then manually reconcile the payment to the explanation of benefits).  When office staff key in a credit card number manually, that increases the fee the credit card vendor charges.  

And while physicians receiving VCCs must pay steep processing costs to receive payments, health plans often receive cash-back incentives from credit card companies for such transactions, according to the American Medical Association. Credit card companies may offer health plans up to 1.75-percent rebates for paying claims with VCCs, says AMA

By most accounts, opting out of VCC payment may not be an easy task, but the effort will pay in the end. “Office billing staff may need to be aggressive in denying acceptance of these forms of payment from payers,” says ACP Internist

For starters, be sure to watch AMA’s free webinar, Stop Paying to Get Paid, available through Oct. 30. It’s part of AMA’s Electronic Funds Transfer Toolkit. Here also are some suggestions from the field:

  • Educate your staff to recognize VCC payments if you want to avoid authorizing these payments from health plans. Let your staff know a VCC payment can cost up to 5 percent of the total charged amount. (See AMA’s 3 things physicians can do to avoid virtual credit card fees.)
  • Prepare a standard letter (or use the sample letter on the CAQH Committee on Operating Rules website) opting out of receiving payment via VCC and requesting payment via ACH EFT (or via written check).
  • Call the insurance company or health plan to ask to be removed from VCC payments. Then follow up with the merchant that issued the credit card payment to see that it was done.


Published Aug. 12, 2015

 TMA Practice E-Tips main page

Last Updated On

November 28, 2023

Originally Published On

September 09, 2014

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