Monday, September 15, 2014

qotd: Private insurers using “virtual credit cards” to loot physician payments

AMA Wire
September 12, 2014
Footing bill for insurers' pay methods shouldn't fall on doctors

An increasingly common payment method among health insurers offers these
companies significant financial rewards while sticking physicians with
all the associated fees and extra work. But physicians are fighting back
as the AMA and other health care associations take the issue to the
federal government.

Many insurers are choosing to use virtual credit cards for claims
payments to physicians, instead of sending paper checks or paying via
the electronic funds transfer (EFT) standard transaction. When paying
via virtual credit card, insurers send single-use credit card payment
information and instructions to physicians via mail, fax or email. The
physician's office staff then processes the payment as they would a
patient's credit card.

For each of these payments, physicians are charged fees that typically
amount to 3-5 percent of the total payment, the AMA explained in recent
testimony (log in) to the National Committee on Vital and Health
Statistics, an advisory board to the secretary of the U.S. Department of
Health and Human Services (HHS).

That adds up. If a physician contractually is owed $5,000, for instance,
he or she could have to shell out up to $250 in fees.

In a letter (log in) sent last week to HHS Secretary Sylvia Burwell, the
AMA and three other leading organizations called on the agency to
prohibit insurers from forcing physicians to accept this payment method.


August 25, 2014

To: The Honorable Sylvia Mathews Burwell, Secretary, Department of
Health and Human Services

We, the undersigned organizations, are writing to you to convey our
views and recommendations in response to recommendations made to you by
the National Committee on Vital and Health Statistics (NCVHS) on May 15,

At issue is a type of non-standard electronic funds transfer (EFT)
transaction known as a "virtual card" payment. In a virtual card
payment, a health plan or its vendor sends a single-use credit card
number to a provider by mail, fax or email. This is known as a virtual
card because a physical card is never created or presented to the
provider. The provider must then manually enter the virtual card number
into its Point-of-Sale (POS) processing terminal, and the card
processing network provides an authorization for the payment. The
provider then receives funds in the same way as for other card payments
– via an Automated Clearing House (ACH) funds transfer from the POS
merchant acquiring vendor to the provider's bank account. For these
virtual card payment authorizations, providers pay interchange fees of
approximately 3 percent of the value of the payment (though anecdotally
some providers have reported paying as much as 5 percent). Providers are
unexpectedly losing income through these card fees, which essentially
reduce the contracted fee rate that has been negotiated with the health
plan for a particular service or services. Many providers are
understandably opposed to incurring these fees, especially when they did
not choose to use this payment method and when they are faced with a
manual, burdensome opt-out process that further delays payment. In many
cases, decision- makers in the provider's office only become aware of
the incurred fees after receiving monthly statements from credit card
merchants, as the virtual cards are processed by billing office staff
without any strategic decision in the practice to accept this form of

American Hospital Association (AHA)
American Medical Association (AMA)
Medical Group Management Association (MGMA)
NACHA, The Electronic Payments Association

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Comment by Don McCanne

It's in their blood. Private insurers will always find a way to cheat
others under the guise of good business practices. Now private insurers
are using the scam of "virtual credit cards" in order to keep 3 to 5
percent of agreed upon payments made to physicians under their network
contracts, while loading more administrative work onto the backs of the
physicians' staff members.

Thieves. That's all they are. Thieves.

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