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Insurance companies are extracting up to 5% of your doctor's income with "virtual credit card fees." Doctor groups are demanding enforcement of the Affordable Care Act for fairer compensation from your insurance company.

In the the USA today, most financial transactions are conducted electronically. We buy gasoline at the pump with a credit card. We pay for our groceries with credit cards or debit cards. We pay bills online, and even vending machines accept cards instead of coins or cash.

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We also have progressed a long way from the days doctors might take payment in chickens. We make our $10, $20, or sometimes $50 or $100 copays at the doctor's office usually with credit cards, and our doctors pay a 1 to 4% fee for the service.

It's just a cost of doing business. But an unexpected complication of the implementation of the Affordable Care Act, also known as Obamacare, has been that some doctors are paying a great deal more than the 1 to 4% on your copay to get insurance reimbursement for treating you. And chances are your doctor isn't too happy about it.

What Happens When You Give Your Doctor's Office Your Credit Card

When you don't have insurance, your doctor's office will collect payments from you (or not) with its own accounts. If you do have insurance, however, typically your doctor's office collects your copay through a virtual credit card account.

You give your card to your provider, and the copay is charged to your card. This payment doesn't go to your doctor, however. It goes to your insurance company.

When your office visit is complete, your doctor's staff person enters the data for the visit and a few days later the insurance company sends the payment for the entire visit (including your copayment) to the doctor's bank account.

Increasingly over the past few years insurance companies are applying the credit card fee not just to the co-payment but to the entire cost of the visit. It costs the insurance company $0.13 to $0.34 to make a deposit to the doctor's account, not matter how large or small, but some companies are charging 5% as a credit card fee not just on the copay but on the entire cost of treatment, even if charges run into the thousands of dollars. And given that doctors have to pay for their offices, their equipment, their insurance, their front desk staff, their physician's assistants and nurses, and their ongoing education, many are feeling the pinch.

Doctor Groups Asking for Protection Under Obamacare

A doctor's group known as the Medical Group Management Association (MGMA) has filed a complaint with the Centers for Medicare & Medicaid Services (CMS), demanding protection under the Affordable Care Act.

The Affordable Care Act encourages reducing paperwork by the use of electronic record keeping whenever possible, including electronic funds transfers, also known as EFTs.

It also encourages the standardization of electronic record keeping to make the practice of insurance reimbursement more transparent for doctors and patients alike.

The MGMA argues that if doctors are going to pay for the cost of getting reimbursement from insurance companies, it should be limited to the $0.13 to $0.34 they pay the bank. But more importantly, the MGMA argues that virtual credit cards eliminate an important layer of patient protection.

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