EFT and the devil in the fine print

Shortly after the new business rules governing electronic funds transfer (EFT) transactions went into effect on January 1, Robert Tennant, MGMA senior policy advisor, began to ask for a show of hands when he spoke to physician groups to get a sense of how many physicians were receiving EFT payment via virtual credit card.  At first, just a few hands would go up. Lately, three quarters of the practice leaders in the room are raising their hands.

The fees are paid by the practice—not the payor or the clearinghouse. According to Tennant, physician practices are reporting credit card fees of between 1 and 5 percent per transaction. When an EFT transaction between a payor and a financial institution costs just 13 to 34 cents—a tremendous savings over the paper-based method—why are payors embracing the use of virtual credit cards?

Money is the reason. The credit card companies are paying cash-back incentives, Tennant says, and some clearinghouses are heavily promoting the practice to payor clients. What makes this trend even more insidious is that many contracts include opt-out clauses from the virtual credit card payments: When you sign a payor contract, you agree to accept the credit card payments unless you opt out. Some practices that have opted out are finding that clearinghouses are charging as much as 2 percent EFT transaction fees.

“Providers are extremely busy; they may not read the fine print in all of these contracts,” Tennant says.

Does that sound like someone you know?

Six months into the year and the launch of EFT operating rules intended to take cost out of the healthcare system, credit card companies have found a way to put it back in—at your expense. Let them know you are onto their game.