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CMS Offers Guidance for Virtual Credit Cards and EFT Fees

CMS Guidance for Virtual Credit Cards and EFT Fees

The Centers for Medicare and Medicaid Services (CMS) recently issued guidance on payer-issued virtual credit cards and EFT transaction fees.

In a FAQ listed on its website, CMS confirmed that providers cannot be forced to accept virtual credit cards. In fact, under Section 1104 of the Affordable Care Act, which standardizes health care business practices, EFTs and electronic remittance advice (ERA), providers have the right to refuse VCC payments and “request that a health plan use the Electronic Funds Transfer (EFT) transaction.” The ERA and EFT rule, which was published in 2012 and took effect in 2014, requires all insurers, not just Medicare and Medicaid, to offer electronic payments upon request by providers.

The American Medical Association (AMA) has been speaking out against virtual credit card payments for the past three years, “alerting physicians to their rights to refuse payments via VCCs and advocating against the coercive tactics used by payers and their vendors to force physicians’ acceptance of VCC payments.” In 2014, the AMA, along with the Medical Group Management Association (MGMA) and other organizations, sent a letter to then Health and Human Services Secretary Sylvia Matthews Burwell asking for more specific guidance about this practice. That guidance has finally been issued.

Another concern for providers under the ACA EFT rules are the transaction fees being charged in order to receive EFT payments. In a September 5, 2017, MGMA Stat poll, 17% of 876 respondents indicated that their EFT payments from health plans came with a fee — often up to 2 percent of the total payment.

In February 2017, the AMA, MGMA, and 12 other organizations sent a letter to then-CMS Administrator Marilyn Tavenner, RN, asking for specific regulation against this practice. “We have been alarmed to receive reports of health plans or their vendors assessing percentage-based fees (usually 1.5 percent to 2 percent) for delivering ACH EFT payments to providers,” the letter stated. “As with virtual credit cards, providers are again losing income from their contracted rates due to unnecessary fees.”

Another FAQ on the CMS website addressed this practice, limiting transaction fees to “the small charge applied by the provider’s bank. According to NACHA – the Electronic Payments Association, the typical bank fee is around $.34 nationally.” Also, providers cannot be required to pay for additional “value-added services,” such as “24-hour hotline numbers, consolidation of payments, prompt payments, special output of the remittance advice, and other similar services.” CMS encouraged providers and their staff to “review vendor contracts and agreements, including opt-in/opt-out clauses, and ensure they have a thorough understanding of the value of the additional services and additional costs of the fees that will be assessed.”

A Workgroup for Electronic Data Interchange (WEDI) task group, which is co-chaired by representatives from MGMA, is developing consensus-based electronic payments principles for the industry. Included among their guiding precepts are the following:

  • “When a health plan or any of their clearinghouses or payment-related vendors offers an ACH EFT payment option, it should offer an ACH EFT option with no origination fees.
  • “The provider should not be subject to any hidden fees. Before a provider may be paid via electronic payment, the health plan, clearinghouse or payment-related vendor must: (a) notify providers regarding their fees associated with this payment method; (b) advise providers to check with any of their contracted vendors (i.e., their credit card merchant processer) regarding any additional administrative fees; and (c) notify providers about the availability of an ACH EFT payment option.
  • “Before a provider may be paid via an epayment method other than ACH EFT, the health plan, clearinghouse or payment-related vendor should receive explicit agreement (“opt-in”) from the provider.
  • “There should be transparency from health plans, clearinghouses and payment-related vendors regarding any required transition from paper-based payments to electronic payments, and providers should be given a minimum 90-day notice before the effective date of the electronic payment mandate and must opt-in to any nonstandard electronic payment method scheduled to replace a paper-based payment.”

WEDI asserts that the slower-than-expected adoption of ACH EFT by providers may be partially the result of these VCCs and excessive ACH EFT payment fees. According to Andis Robeznieks in a recent article for the AMA Wire, the 2016 CAQH Index, a report on healthcare adoption of electronic business processes published by the Council for Affordable Quality Healthcare, the nation’s health system could save as much as $395 million annually if all providers switched to ACH EFT payments.

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Charity Singleton Craig

Charity Singleton Craig is a freelance writer and editor who provides communications and marketing services for CIPROMS. She is responsible for creating, editing, and managing all content, design, and interaction on the company website and social media channels in order to promote CIPROMS as a thought leader in healthcare billing and management.

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