MGMA Calls on CMS to Prevent EFT Fees, Predatory Business Tactics

August 18, 2021 - The Medical Group Management Association (MGMA) penned a letter to CMS urging the agency to use its authority to prohibit unfair electronic funds transfer (EFT) fees imposed on medical groups by health plans, a trend that continuously cuts into practices’ bottom line and exemplifies predatory business tactics.

The letter cited a recent MGMA Stat poll finding that 57 percent of medical practices reported being charged fees by payers that they did not agree to when sending EFT payments. Transaction fees range from two to five percent of the total payment, essentially meaning that providers must pay a fee in order to get paid.

The frequency of EFT fees in healthcare continues to increase compared to past MGMA data.

“We believe this increase is partially a result of the void created by CMS beginning in 2017 when it removed clear and unambiguous guidance from its website prohibiting health plans and their payment processing vendors from engaging in abusive business practices that run counter to an efficient healthcare system,” the MGMA letter stated.

Since 2014, the Affordable Care Act (ACA) required health plans to offer providers an option of receiving their reimbursement through EFT, with the intention of streamlining revenue cycle management and reimbursement processes.

MGMA also pointed out that the Social Security Act directed CMS to establish a standardized process for certain transactions in order to reduce administrative costs.

But in 2017, CMS removed industry guidance that discouraged predatory business tactics and encouraged the adoption of EFT payments.

“Given that CMS has a both a statutory requirement and the authority to prohibit EFT fees, the industry guidance removed by the prior administration in 2017 should be reposted or clearly restated by CMS in a definitive manner,” MGMA wrote.

“If CMS will not provide clear guidance, we ask the agency to expeditiously and clearly state why it is not using its legal authority to prohibit these abuses.”

Payer partners frequently tell providers that the provider must receive payments through a designated vendor, which then charges a seemingly unavoidable administrative fee.

“These ‘value-added’ services are typically not offered as an option, but rather a requirement of payment, regardless of whether the provider wishes to take advantage of these services or not,” the letter explained.

MGMA emphasized that it does not oppose a vendor’s ability to offer services that require administrative fees. But health plans should be transparent about the specifics of these fees and providers should have an option rather than being forced to use the third-party payment service.  

“The lack of clarity created by CMS in removing this guidance has created an abusive and unstable situation that is quickly growing out of control as more health plans and commercial payment vendors take advantage of providers because of an unclear regulatory landscape,” the letter reasoned.

The EFT standard was developed with the hope of driving cost savings, but health plans and vendors continue to manipulate the process by charging providers a fee for every EFT transaction. Because of this growing issue, MGMA urged CMS to reinstate its guidance on EFT transactions.

“Efforts have been underway for more than a decade to create a more efficient U.S. healthcare system and move away from using paper checks in favor of electronic deposits or EFT,” Anders Gilberg, MGMA senior vice president of government affairs, stated in a press release.

“The sad reality is for some health insurers and third-party vendors, it’s simply another way to hinder progress by taking a cut out of what they agree to reimburse physicians.”