Credit Cards Costing Providers
By Katie Wike, contributing writer
With payment by credit card costing physicians up to 5 percent in transaction fees, AMA is urging CMS to regulate payment methods
Payment by plastic or virtual credit card is growing in popularity but, after transaction fees are applied, providers are losing out. According to American Medical News, “A chief complaint is that fees are associated with the cards. Physicians may pay as much as 5% per transaction when office staff enters a card number in a credit card reader machine. The fees are not always transparent, and they result in physicians getting less than the negotiated prices for services.”
The American Medical Association (AMA) “is urging CMS, which regulates electronic billing transactions, to prohibit insurers from paying physicians less than contracted rates when using electronic payment methods.”
In a letter to CMS, the AMA wrote, “Unfortunately, while credit cards may provide a convenient means for payers to reimburse physicians, there are significant financial and administrative burdens associated with this payment method that should be considered. Physicians cannot afford any further cuts to their reimbursement, particularly with the current budget crisis and sequestration cuts. These fees take away valuable health care dollars that physicians can use toward other critical efforts like health [information technology], quality improvement, and payment and delivery reform initiatives.”
The fees referred to can add up to 5% of the payment, and leave physicians with less than the agreed upon amount for payments. The AMA wants CMS to prohibit payers from giving physicians less than they deserve because of electronic payments.
When paper checks were the standard, payers took the cost of mailing them to providers. Now the responsibility of that transfer cost has shifted to the provider. According to American Medical News, “The cost of an automated clearing house transaction to move a $2,500 payment is 34 cents. A same-day wire transfer would cost $10.73. A virtual card transaction would cost the most at $75.10, which accounts for a 3% interchange fee and a 10-cent transaction fee.”
Click here for the AMA’s FAQs about payer credit cards