Insurance carriers are increasingly resorting to reimbursing medical claims using virtual credit cards (VCCs), but the convenience to healthcare providers is offset by the loss of some of that medical reimbursement to transaction fees.
While being paid via VCC is a more efficient reimbursement than the paper checks of yore, they aren’t legally considered “electronic” payments under the Affordable Care Act; like paper checks, they also don’t come with Electronic Remittance Advice (ERA) integration and can’t be automatically posted into your medical billing software.
Carriers can receive rebates of 1 to 2 percent from the credit card processors in exchange for the business, making this an additional source of revenue for the health plans with the added savings of not having to mail paper checks. For providers, however, the percentage-based interchange fees, which can run as high as 5%, can cost a lot more than ACH EFT “flat” transaction fees. Worse, some providers may not be aware that their medical reimbursements are being reduced by this process.
While the Centers for Medicare and Medicaid Services (CMS) no longer has any official guidance regarding VCC payments on its site, the American Medical Association does recommend that physicians enroll in Electronic Funds Transfer (EFT) payments, which HIPAA mandates health plans make available upon request. Reading the fine print to avoid being locked into a contract with inflexible payment terms is critical, as opting out after the fact can be time-consuming and frustrating. Some providers even resort to sending cease-and-desist letters.