The Affordable Care Act required health plans to offer medical practices an option of receiving reimbursement through a standardized Electronic Funds Transfer (EFT) method. In 2017, CMS removed guidance from its website that explicitly prohibited health plans and their payment processing vendors from engaging in unfair business practices that did not support an efficient health care system.
For years, physicians have faced reduced payments from commercial health plans using virtual credit cards (VCC) and third-party electronic payment vendors for standardized EFTs. As of 2022, 75% of claims payments were made using the standard EFT transactions. Fees for these services have placed an immense financial burden on physician offices, despite promises that transitioning to electronic payments and processing would reduce administrative burdens and reduce health care costs. This practice harms providers and is contrary to CMS’ statutory obligation to reduce the administrative costs of providing and paying for health care.
Despite years of advocacy from groups representing physicians, insurers and their businesses are still levying fees of up to 5% on physician offices. The regulation allows for health plans to charge nominal transaction fees to cover certain costs. However, third-party vendors, contracted with some health plans to facilitate the transaction fees, argue that the transaction fee limit does not apply to them, because the transaction is not occurring between the health plans and providers – a loophole in the regulation.
In addition to payments facilitated by third-party vendors, some health plans attempt to reimburse physicians for covered services using a virtual credit card (VCC). VCC payments have fees associated with them, just like traditional credit cards. Even though health plans cannot require physicians to accept payments using VCCs, they require providers to navigate a complex process to opt out of VCC payments. CMS does not have the authority to regulate VCCs. Some states have laws regulating VCCs.
CMS does have the authority to regulate HIPAA transaction standard violations, though. In 2022, CMS issued guidance that tried to close the EFT fee loophole by clarifying that providers can file HIPAA complaints against health plans if their business associates (e.g., third-party vendors) violate the transaction standard. However, the complaint process is difficult to navigate and slow to produce results. Furthermore, this process is burdensome for physicians, as they are required to shoulder the enforcement burden.
Congress has the ability to direct CMS to close the EFT fee loophole, including third-party vendors, in the statute prohibiting EFT transaction fees. As Congressional leaders continue to be interested in supporting efforts to decrease red tape and reduce costs in the health care industry, they may be more motivated to act on this issue.
Provider groups have been advocating on this issue for years, but a recent ProPublica report raises visibility for the need to increase scrutiny on this important issue among policymakers. It could be an important opportunity to resolve this issue for good.
We encourage you to consider opting out of accepting VCCs. As suggested in the ProPublica article, some practices have successfully reduced the fees charged on EFTs. We will continue to advocate for fair payments to allergists.
The Advocacy Council – ADVOCATING FOR ALLERGISTS AND THEIR PATIENTS.