You Don't Have to Pay 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). Many are paying that way, and you could be losing as much as 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.

The December issue of Texas Medicine will have more information about VCCs. The article explains some health plans and third-party vendors that process plan payments are moving to VCCs, without warning and without much explanation of fees or opt-out procedures.

You don't have to accept payment via VCC. 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 VCCs. 

Most health plans don't ask physicians before sending VCC 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 off in the end. "Office billing staff may need to be aggressive in denying acceptance of these forms of payment from payers," says ACP Internist

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.
  • To obtain more resources on EFT, visit the Healthcare Administrative Technology Association website

Action, Nov. 2, 2015

Last Updated On

June 23, 2016

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