Although the Centers for Medicare and Medicaid Services (CMS) issued guidance on its FAQ page last fall prohibiting transaction fees for electronic funds transfer beyond “the small charge applied by the provider’s bank” and banning payers from forcing providers to accept virtual credit cards (VCCs), that guidance was removed from the site in mid-February, and industry leaders are demanding that CMS take immediate action to curb the “unfair” payment practices.
According to James L. Madara, MD, president of the American Medical Association, VCCs are creating greater administrative burdens on physicians and effectively cutting their payments by as much as 5 percent with fees and other costs.
“Health plans and their vendors are increasingly issuing claims payments to physicians and other health care professionals using VCCs, a nonstandard form of electronic payment,” Madara wrote in a letter to CMS Administrator Seema Verma on March 26. “While we welcome the opportunity for physicians to voluntarily accept VCCs, the Centers for Medicare & Medicaid Services must make clear to all involved stakeholders that physicians and other health care professionals may not be forced to accept VCCs because of several burdens they place on the practice.”
Those burdens, as outlined by Madara, include:
- Manual entry of VCC information for each claim into the physicians’ credit card merchant payment system.
- Manual posting of payments, “as [VCCs] cannot be processed using a Health Information Portability and Accountability Act of 1996 (HIPAA)—compliant electronic remittance advice.”
- Payment of interchange and transaction fees, “with percentage-of-payment interchange fees running as high as 5 percent.”
- Health plans profiting from “cash-back rewards” of up to 1.75 percent of the revenue generated by VCC merchant fees while physician practices lose contracted payment dollars from VCC use.
- The requirement that providers opt-out of, rather than opt-in to, this alternative form of payment, “which is a coercive strategy resulting in additional strain on the practice’s staff.”
According to Anders Gilberg, MGA, Senior Vice President of the Medical Group Management Association’s Government Affairs, VCCs often are used by payers reluctant to issue EFT payments, which is the industry standard for electronic payments. In his own letter to Verma on April 2, Gilberg said that payers often force providers to accept VCCs by “informing providers wanting to opt out of VCC payments that it takes 60 days or more to reissue the claims payment as either a check or ACH EFT payment, thus negatively impacting business cash flow.”
In other cases, payers charge “a percentage-based fee (typically 2-5 percent) on every EFT transaction, create “unnecessarily burdensome EFT enrollment processes,” or “communicate inaccuracies about the lack of safety of banking information” to deter providers from choosing the EFT standard transaction.
Both Madara and Gilbert said that the FAQs published by CMS last fall adequately addressed these and related issues and urged Verma to have the guidance republished. “This action would communicate your commitment to simplifying the nation’s healthcare system and prohibiting VCC abuses and unjust EFT fees imposed on physician practices,” Gilbert wrote. However, without the support of CMS, Madara said providers are left “with uncertainty, potential administrative hassles, and the challenge of fighting coercive payer business tactics.”
According to a March 20, 2018, MGMA poll, nearly 3 in 10 respondents (29 percent) reported that they’ve had a payment from a third-party payment vendor, and of those, 58 percent said they were charged a fee by the vendor to receive the payment.
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