Doctors Hit By High Fees For "Virtual Credit Cards," Why You Should Care

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.

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.

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.

See Also: Why Silver May Be Better Than Gold (Or Platinum) For Obamacare

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.

Why You Should Care What Your Doctor Pays To Get Reimbursed

In the process of creating "virtual credit cards" for reimbursing doctors, the insurance companies have eliminated an important element of patient protection. Lumping copays and insurance reimbursement all into one account, the insurance company eliminates an audit number that your doctor can use to post your account automatically.

Here's an example of what the problem may be.

You sign up for Obamacare, and you purchase a plan that allows you four visits a year with a $35 copay. You show up for your appointment, you give your doctor's receptionist your card, he or she bills it for $35, and you have your exam.

Then your doctor submits a bill to your insurance company. Let's say it is for $300. The insurance company has a schedule of discounts, and settles it (automatically, if your doctor is "in plan" for you) for, say, $125. The insurance company sends $125 less a 5% ($6.25) transfer fee to pay for your visit. The insurance company keeps your $35.

However, under the virtual credit card system, there is no way to link your payment or your insurance company's payment to your account. 

Understandably, you're upset, and you call your doctor's office. The staff tells you they have no record of your paying anything for your visit--and they don't. They may treat you like you're a deadbeat. But if you can find the audit numbers on the statement of benefits from your insurance company and wait for them to confirm with the insurance company that part of their lump sum payment (the one the insurance company took 5% for making to your doctor) included the payment for your visit, then they may update your account as paid.

This is a situation that happens over and over again in new insurance plans. And the Affordable Care Act, also known as Obamacare, has introduced hundreds of new insurance plans this year.

So what can you do to avoid being double billed?

• Don't pay a bill for a visit that was covered for insurance without speaking with your doctor's billing manager first. There is yet another accounting system to navigate to collect overcharges your paid.
• Do keep your notices of benefits, or, even better, sign up for online access to your insurance account activity. Print out everything the insurance company tells you about each transaction, including the claim number, the payment status, the last update, and the type of claim. Even better, email the pdf of the Explanation of Benefits you receive from your insurance company to your doctor's billing service when there is a mistake or a question.
• Be nice. Chances are the billing department is learning dozens of new plans and how to integrate them into their ledger system.

See Also: Four Things Every Uninsured American Needs to Know About Health Insurance Exchanges

Once you have met your deductible or your maximum out of pocket limit for the year, you don't have to hand over your credit card any more (until next year). It's a lot harder to get refunds of overpayments you make than it is to get your insurance company to honor your policy.