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Reminder: Practices should be wary of virtual credit card fees

April 05, 2016
Area(s) of Interest: Fraud & Abuse Practice Management 

Is your practice accepting virtual credit card (VCC) payments from payors? If so, you risk losing a significant amount of your contractual reimbursement to high interchange fees.


When paying claims, some payors have shifted from paper checks to electronic payment methods, including payor-issued VCCs. With this method, when issuing payment a payor sends credit card payment information and instructions to physicians, who process the payments using standard credit card technology.


This method is beneficial to payors, but costly for physicians. Health plans often receive cash-back incentives from credit card companies for VCC transactions. Meanwhile, VCC payments are subject to transaction and interchange fees, which are born by the physician practice and can run as high as 5 percent per transaction for physician practices.


While there is no requirement that payors continue to issue paper checks, physicians have the right to request electronic funds (EFT) instead. The Health Insurance Portability and Accountability Act requires all health plans offer standardized EFT using the Automated Clearinghouse (ACH) Network. Similar to direct deposit, ACH EFT allows health plan payments to be directly paid into a physician’s designated bank account. Each ACH EFT transaction carries only one fee of about $0.34, far less than the potential 5 percent fee charged to VCC transactions. In order to receive ACH EFT, physicians should request and register for this payment method with payors.



For more information on electronic payments and avoiding high fees, including a VCC tip sheet, see the American Medical Association’s (AMA) EFT toolkit and "The effect of health plan virtual credit card payments on physician practices."


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