- The Health Insurance Portability and Accessibility Act (HIPAA) has its standard Automated Clearing House (ACH) Electronic Funds Transfer (EFT) payment method, which health plans must now offer to physicians for the payment of claims. Businesses have been making the switch from paying with checks to paying electronically for several years, but some physicians and healthcare providers might still be hesitant about which option is best for them and their practice.
The American Medical Association (AMA) hosted a webinar on Tuesday (Sept. 16) to clarify the different payment options, explain ACH EFT regulations and dispel any myths surrounding those types of payments.
Virtual credit cards
One increasingly common form of electronic funds transfer (EFT) methods is virtual credit cards, explained AMA Senior Policy Analyst Terrence Cunningham. This is where health plans fax, email or mail credit card payment information to the physician. A physician’s office then manually processes the claims payment through their credit card terminal and the physician is charged transaction and interchange fees. The AMA said that interchange fees range from 2 percent to 5 percent of the payment amount, while transaction fees are approximately 10 cents.
However, fees, payment processing reconciliation and remittance posting, as well as the implementation process are all common concerns that physicians have with virtual credit card payments, Cunningham said.
Citing an AMA survey of providers, Cunningham explained that 68 percent of respondents had received payment virtual credit cards. Of that 68 percent, 96 percent said they received virtual credit card payments without prior consent or notification. Additionally, 40 percent said that they were unaware of the interchange percentage fee associated with virtual credit cards.
There are also some misconceptions about virtual credit cards, according to Cunningham. Some providers believe that if you accept patient credit cards, then you must accept virtual credit cards for claims payments by plans. However, the acceptance of patient cards does not mandate acceptance of corporate credit cards.
Another myth is that there is a same-day funds transfer with virtual credit cards, when in reality, credit card payments must be processed over a banking network that could take one to six days. Lastly, virtual cards do not provide enhanced payment guarantee over checks. Rather, because of mandated reserves, health plan payments do not carry the risks associated with patient payments – regardless of the chosen payment method.
Automated Clearing House (ACH)
Another increasingly popular method – that has several benefits over virtual credit card payments – is the Automated Clearing House (ACH) standards.
As of Jan. 1, 2014, the HIPAA standard form of EFT — ACH — is being processed by the banking industry through the National Automated Clearing House Association (NACHA). According to Robert Poiesz, an AMA Principal Policy Analyst, ACH EFT payments could be more beneficial than virtual credit card payments.
All health plans are required to use this payment method if physicians make the request, Poiesz noted. Other payment options may be used if the physician does not specifically request ACH EFT. However, this payment method can be carried in compliant HIPAA ERA transactions — virtual credit cards cannot.
Moreover, ACH EFT payments cost approximately 34 cents per transaction. This is a constant price, regardless of the payment amount, which will be more cost-effective in the long-run. There is also a reduced risk, Poiesz said, as ACH EFT payments will not get lost the same way a physical check could. There will also not be the risk of fraudulent processing, which virtual credit cards can have.
Poiesz also discussed misconceptions surrounding ACH EFT. This form of payment does not require an extensive technology upgrade. In fact, it only requires a bank account. ERA pairing does require some technological changes, but those would occur in any transition to ERA, Poiesz said.
Additionally, some providers might think that they are putting their money at risk by giving bank information to health plans. On the contrary, Poiesz said that overpayment recovery cannot be done via ACH debit, and that it is a per ERA standard.
Know your rights
The AMA estimates that ACH EFT will help physicians and hospitals save billions of dollars over the next decade. However, both speakers underlined the point that physicians need to understand their rights in order to best make ACH EFT payments work for their practice.
The following things are important to keep in mind, according to Cunningham and Poiesz. For starters, health plans must provide ACH EFT payments upon request. Additionally, this payment model is also not subject to percentage-based payment fees. Although vendors might be allowed to charge for value-added services to supplement the standard ACH EFT payments, health plans have to make ACH EFT available at no additional cost.
Finally, ACH EFT enrollment does not grant health plans the authority to process unauthorized debits. Overall though, physicians are encouraged to read over their EFT enrollment and registration information.