United Healthcare (UHC) plans to move all contracted providers from paper checks and remittances to electronic funds transfer (EFT) and electronic remittance advices (ERA) in 2015 through Optum’s Electronic Payments and Statement (EPS) system. United Healthcare stated that moving to an electronic process for checks and explanation of benefits will reduce administrative costs. 

UHC advised the California Medical Association that they plan to send notice of the change to contracted providers sometime in April. Physicians will be required to select to receive payment either by Automated Clearinghouse (ACH) direct deposit to their bank account or payment through the issuance of a virtual credit card (VCC) payment.

ACH EFT is a funds transfer tool in which payment from payors are processed over the ACH network. Effective January 1, 2014, all health plans and HIPAA-covered entities must use ACH EFT to pay physicians if the physician requests it. ACH EFT transactions typically only carry one fee of about $0.34, while VCC payments are subject to transaction and interchange fees that can run as high as 5 percent per transaction – paid for by physician practices.

The VCC payment method is beneficial to health plans, but costly for physicians. Health plans often receive cash-back incentives from credit card companies for VCC transactions. Meanwhile, the high costs associated with VCC payments are born by the physician practice. For more information on steps a practice can take to avoid high VCC fees, click here.

Practices that do not make a selection of either ACH EFT or VCC will automatically be enrolled to receive payments via the VCC option, costing the practice a significant amount of its contractual payments to high interchange fees.

Practices who are interested in continuing with paper payments in lieu of electronic transfers or that have questions regarding the EPS system can contact a United Healthcare EPS representative at (866) 842-3278. Decisions about allowing physicians to opt out of the EFT option will be made on an individual basis.

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