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Doctors: How to Avoid Being Shortchanged by Insurers Paying with Credit Cards

Updated: Apr 28, 2021

A $13 Billion Dollar Savings Opportunity

Over the past few years insurance providers have started to reimburse physicians with "virtual credit cards," essentially asking doctors to pay to get paid.

Not only does this form of payment come with a transaction fee of up to 5%, insurance providers are also often getting a kickback on this fee

This form of payment became more prevalent when in 2014 the Affordable Care Act ("ACA") dictated that all HIPAA covered health plans offer providers an electronic payment option via the newly mandated Healthcare EFT Standard. While the spirit of this regulation was to make it easier and quicker for doctors to get paid, unfortunately numerous insurance providers have used this as an avenue to collect even more fees.

Doctors need to know that there are cheaper and better ways to accept insurance payments, and that these unnecessary fees can be avoided

A cheaper and quicker alternative to virtual credit cards are payments made via ACH. ACH, which stands for Automated Clearing House, is a financial network used for electronic payments and money transfers. Not only is it significantly cheaper than payments made via credit card, it is also quicker and more secure. The way it works is simple, you provide your account and routing number to the payer and then the funds get deposited directly into your account. ACH Is actually the method used for direct deposits and e-Checks.

Exploring Your Insurance Payment Options

To illustrate how these fees can add up, assume an insurance payment of $1,000. Using ACH the cost of this payment averages $0.34 (often it is free), while with a virtual credit card this cost can be up to $50.00 (i.e. 5%). Add these numbers up over the course of a year and the incremental costs are easily in the thousands of dollars.

Quit Paying to Get Paid

It's important to know that while insurance providers might insist on paying with virtual credit cards, medical providers have the ability to choose the payment type that best suits their needs

Specifically, 45 CFR 162.925 gives providers the right to request and receive the Healthcare EFT Standard of their choosing for all reimbursements. The Centers for Medicare and Medicaid Services ("CMS"), has even gone as far to say that

"A health plan cannot require a provider to accept virtual credit card payments. A provider has the right to request that a health plan use the electronic funds transfer (EFT) transaction. If a provider makes the request, the health plan must comply."

Please also note that insurance providers are NOT ALLOWED to charge unnecessary fees for payments made via ACH. Specifically, they "are prohibited from charging fees or costs for normal telecommunications in excess of the fees they incur when they directly transmit or receive a standard transaction." What this means in practice is that the fees per ACH transaction should not be more than a couple dollars and under no circumstance should the fees be measured as a percentage of the transaction.

Steps You Can Take

1. Call Your Insurance Rep: The first step is to call your insurance representatives and let them know you no longer want to accept Virtual Credit Cards. Often the insurance office will claim to not know what you are talking about or resist your request, but by law they are required to comply

Common Tactics Insurance Companies Use to Keep Paying With Virtual Credit Cards

a. Plan Contracts: Many insurance plan contracts include language allowing them to send virtual credit cards. Although it is best to object to these clauses prior to signing, if you've already agreed to accept virtual credit cards you still have the right to switch upon noticing them.

b. Payment Terms: Certain insurance providers might tell you that by not accepting virtual credit cards your payments will be delayed. Not only is this untrue, it is illegal. A complaint can be filed here.

2. Negotiate for ACH: To avoid any issues, we also advise that when it comes time to renewing or entering into new plans you request that all EFT is made via ACH.

3. Send a Letter: The Council for Affordable Quality Healthcare ("CAQH") is a helpful resource when it comes to healthcare payments. In order to help physicians, they have provided a letter template that you can send to various health plan providers, a copy of which can be found here: Sample Letter.

Sample Letter


Virtual credit cards are an expensive and unnecessary way to accept insurance payments. Not only is ACH a cheaper alternative, it is also quicker and more secure. Despite what the insurance companies might tell you, you have the right to accept insurance payments without the burden of unnecessary fees, putting more of your hard-earned dollars back in your pocket.

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