Ask MGMA: Credit card surcharges for medical practice payments

An MGMA member recently reached out to Ask MGMA to ask about payments for non-covered services by insurance and any balance left from insurance that is the responsibility of the patient (e.g., deductible, coinsurance, copay), and if it would be acceptable to have a cash price and a credit card price to account for a 3% surcharge for non-cash, non-debit transactions. 

Several MGMA members have inquired about the legality and pros and cons of passing credit card processing fees onto patients, a cost typically charged to businesses by card issuers. 

As of 2024, only a few states prohibit credit card surcharges, in which businesses charge an extra fee for paying with a credit card. However, it’s crucial to know your state’s specific regulations prior to implementing credit card surcharges in medical practices. Some states may have certain restrictions or guidelines on surcharging based on requirements from attorneys general or bar associations. 

Here are some key points to consider regarding credit card surcharges in medical practices:  

1. Medical practices must notify major credit card institutions in writing about their intent to surcharge. Clients should be clearly informed about any surcharges, such as on invoices or signage. 
2. Surcharges should not exceed the cost of the processing fee and generally cannot exceed 3% in the United States. However, specific limitations may apply in certain states. 
3. Surcharges are limited to credit card transactions and are not applicable to debit cards, even if processed as credit transactions. Prepaid cards are also exempt from surcharges. 
4. Surcharges should be listed as separate line items on invoices, clearly labeled. This promotes transparency, clearly alerting clients about the extra fee for using a credit card. 
5. Medical practices must ensure payment card industry (PCI) compliance for secure credit card transactions, protecting against data breaches. Compliance questionnaires may need to be completed annually. 

 Charging credit card processing fees to patients in a medical practice can have both pros and cons.  

 Pros: 

1. Accelerates payment collection, reducing wait times for patient payments.  
2. Potentially increases collection rates as patients are more likely to pay on time with credit card options. 
3. Streamlines billing and minimizes manual invoicing and follow-up, saving time and resources. 
4. Can improve patient satisfaction by providing more convenient and flexible payment methods. 

 Cons: 

1. Fees may impose an additional financial burden on patients, especially those who are already struggling with medical expenses. 
2. May encounter patient resistance or dissatisfaction due to reluctance to share credit card information or preference for alternative payment methods. 
3. Can introduce security risks in storing and processing credit card information; medical practices must ensure compliance with data protection regulations, such as the PCI data security standard. 
4. Requires compliance with specific legal and regulatory standards for credit card processing, including liability for unauthorized charges and breach notifications. 

A medical practice also should consider patient preferences before making any changes to processes, as covering that 3% fee might risk losing a patient in the long run. 

Resources: 

• Credit Card Surcharge Laws By State Explained | LawPay 
• Credit Card Surcharge Laws By State (Is it Legal) 
• Is it Legal to Charge Customers a Credit Card Processing Fee? | LendingTree 
• Make them want to pay: Finding patient engagement in billing and payment processes