Declining Reimbursement, Increasing Collection Fees: Physicians are Feeling the Squeeze

Declining Reimbursement, Increasing Collection Fees: Physicians are Feeling the Squeeze

Would you be happy if your employer charged you 3 – 5% of your earnings each pay period just to generate your direct deposit? That sounds outrageous! But that is exactly how physicians’ profits are being trimmed on the back end – through forced virtual credit card (VCC) reimbursements with mandatory fees.

VCCs are 16-digit credit card numbers, most commonly faxed or emailed to the practice by the plan or vendor. The practice is then expected to run the number through its credit card terminal as it would for charges associated with patient payment of copays and deductibles. Even worse, the practice is responsible for paying all interchange fees, typically ranging from 3% to 5% of the charge for these transactions. For example, if a physician contractually is owed $5,000, they could pay up to $250 in fees.

What are the issues?

In 2018, the Centers for Medicare & Medicaid Services (CMS) unexpectedly removed guidance that previously gave providers the right to refuse (VCC) payments that can cost them money. They also eliminated guidelines that prevented payers from charging all but minimum transaction fees to receive electronic payments.

Who gets the fees? The VCC company charges the transaction fees, but, like the reward credit cards you have in your wallet the issuers, (in this case the insurers), receive a rebate of up to 1.75% cash.

To add insult to injury, virtual cards are processed by billing office staff without any strategic decision to accept this form of payment. Often, the provider’s office only becomes aware of VCC fees after receiving monthly statements from credit card.

It’s Past Time to Reinstate Guidelines

PRL stands in solidarity with physician groups against these fees and their impact on practice revenue. The CMS’s response in March neither reinstated requirements nor gave a satisfactory resolution to the issue for physicians.

In the face of declining reimbursements on the front end, these unregulated VCC fees squeezing physician revenue on the back end are a very hard pill to swallow. (Pun intended).

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