“Virtual” credit cards (VCCs) are an emerging method for health plans and third-party payment vendors to issue payments to physician practices for patient services.
VCCs are 16-digit credit card numbers, most commonly faxed or emailed to the practice by the plan or vendor. The practice is expected to run the number through its credit card terminal as it would for charges associated with patient payment of copays and deductibles. The practice is responsible for paying all interchange fees, typically ranging from 2% to 5% of the total amount of the charge for these “card not present” transactions.
Payments made via VCC do not meet the requirements for the Electronic Funds Transfer (EFT) mandate included in the Patient Protection and Affordable Care Act (ACA), as they are not considered “electronic” payments under the law. In addition, the EFT transaction is designed to correlate with the Electronic Remittance Advice (ERA) and facilitate reassociation of the payment with the remittance. VCCs do not offer the practice the ability to automatically reassociate the VCC payment with the ERA. Those providers adopting EFT can accelerate claim payments while reducing staff time spent processing VCCs or paper checks.
A Dec. 19 MGMA Stat poll, that included more than 700 respondents, asked what percentage of health plan payments were sent to the practice via VCCs. About one quarter (24%) responded that 1% to 2% of their payments were coming via VCCs. Another 12% reported VCCs made up 3% to 15% of the payments, and a further 2% were receiving 16% or more of their payments via VCC. Thirty-two percent responded that they received no VCC payments, and an additional 30% were unsure.
Accepting credit cards from patients, in addition to the convenience factor, shifts the patient debt collection responsibilities to credit card companies, thereby eliminating potential bad debt risk for the practice. For that service, the practice is willing to accept the associated fees. There is not the same advantage with VCCs, and plans and vendors issue them to save them the cost of printing and mailing paper checks. Payment delays and requirements to submit additional EFT enrollment paperwork can also be used by plans as a disincentive for the practice to reject VCCs.
Comments from respondents included in the MGMA Stat poll highlighted the fact that many practices have been forced to accept VCCs or encounter significant barriers in trying to move away from this form of payment to EFT.
The Centers for Medicare & Medicaid Services (CMS) recently issued guidance in an effort to accelerate adoption of EFT and discourage the use of VCCs. The agency stipulated that:
- Health plans sending VCCs must stop if a provider requests to receive payments via EFT;
- Health plans and third-party payment vendors must not to charge fees for the use of EFT and costs are limited to banking transaction fees (maximum of $.034 per transaction);
- Health plans cannot deduct funds from a provider’s account unless contractually authorized by the provider; and
- Practices are not required to contract for additional “value added” payment services from third-party payment vendors.
The agency encourages providers to lodge a formal complaint against any payer refusing to support EFT, ERA or requiring providers accept VCCs.
Action steps for practices:
- Determine which of your plans and vendors are sending you payments via VCCs (or charging you EFT fees)
- If you receive an unwanted VCC, do not process the payment. Contact the plan or vendor and immediately request all payments via EFT
- Request EFT payment from your health plan using MGMA’s sample letter
- Visit CAQH’s EnrollHub to ascertain how many of your health plans participate in this EFT-enrollment utility
- Remember that payers MUST send you EFT if you request!
- Refuse to sign any plan or vendor contract that requires the practice to accept VCCs (or EFT fees)
- Talk to your financial institution about any fees they apply
- Stand firm against VCCs, EFT fees
- Lodge a formal complaint directly with CMS or go through MGMA should a plan or vendor refuse or unduly delay your EFT or ERA request, institute policies aimed at discouraging your adoption of EFT, or charge you fees for your EFT transaction
For more info, access MGMA’s EFT/ERA Guide.
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