Is Your Biller Filing Money Away?

There seems to be a new trend with insurance payments.  Some insurance carriers are now issuing what they call virtual credit cards.  What is a virtual credit card you may be wondering?  Well it’s basically a picture on the EOB that resembles a credit card that contains a one-time use number to allow the provider to be reimbursed for their services electronically.  The problem is that the provider or the person who handles the EOBs must recognize that the payment is being made by virtual credit card.

If the person handling the EOB does not recognize the payment information as being a virtual credit card they may simply post the EOB and file it, not realizing that they must use the information on the virtual credit card to obtain the payment.  Many providers have systems that don’t allow them to enter payments without accounting for the funds, however there are still many providers out there who do not have systems to protect them from these accounting errors.  If this is the case they may be filing away money that should be deposited into their bank account.

The problem with the virtual credit cards is that they can be easy to overlook.  If the person is unfamiliar with them they may go unnoticed.  And if the payment gets posted in the system then they will be recorded as paid even though the provider didn’t actually get the money.  Virtual credit card numbers must be run through the providers’ credit card system so that the provider can receive the funds.

There are companies out there providing the service of issuing the virtual credit cards to providers on behalf of insurance carriers.  The insurance carriers are saving money on not creating and mailing paper checks.  The virtual credit card companies are making their percentage whenever the virtual credit cards are redeemed.  And now the providers are bearing some of these expenses.

So what can a provider do?  Well if they have the ability to accept credit cards then they can simply put the virtual credit through their credit card system.  If they do not want to do that, or if they are unable to accept credit card payments (yes, there are still some out there) they can refuse the virtual credit card.  Most of these companies will continue to issue paper checks if the provider calls and informs them that they will not accept the virtual credit cards.  I do think that somewhere in the future they will find a way to mandate that providers accept them but for now that is not the case.

The one thing for sure is that they cannot simply be ignored.  The payment either needs to be run through the credit card system to process it, or the insurance carrier needs to be contacted so that they payment can be received in an alternate manner.  Don’t let your office lose money by overlooking these payments and not processing them.

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2 Responses to “Is Your Biller Filing Money Away?”

  1. Cyndee Weston Says:

    The problem with this type of payment is that providers are paying another 2-3% or even up to 5% to use this form of payment. Fees are not always apparent and your acceptance of these virtual credit cards results in your practice being paid less than your negotiated rate. I find that unacceptable and urge all practices and billers to reject this method by demanding a paper check. You have to know that insurers are getting a kickback for using this method. In an article written by the AMNews (AMA), it stated that “Using credit cards shifts the costs of transferring money electronically from the payer to the practice, said Priscilla Holland, senior director of health care payments at NACHA, the Electronic Payments Assn. NACHA maintains the Automated Clearing House Network system for conducting EFTs.” See http://www.amednews.com/article/20130826/government/130829997/1/ Further, it says “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.” Instead of a paper check, doctors can set up an EFT with the payer.

  2. alicesolutions Says:

    Great information Cyndee. I agree. That’s another whole article! My concern was that people didn’t even notice the payments. But yes, the cost of the transaction is being shifted to the provider and the insurance carriers are definitely getting a kickback. They added a middleman. To me it’s similar to the practice of farming out claims to a third party to try to get the providers to accept a lower negotiated fee for ‘expedited payments’! Another pet peeve of mine.


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