November 20, 2023

Secure Your Practice Revenue Against Health Plan Credit Card Leaks

The emergence of electronic payments was a groundbreaking shift that propelled physicians into a new era, freeing them from the cumbersome constraints of manual claim processing. You can devote more time and energy to delivering high-quality patient care, shaping a transformative healthcare landscape.

Another turning point arrived in 2014 with the introduction of the Automated Clearing House (ACH) Electronic Funds Transfer (EFT). This novel initiative aimed to establish fair and transparent payment practices, empowering physicians to regain control over their revenue streams and minimize revenue leakage.

However, amidst this technological revolution, a new challenge has arisen. Some payers have exploited the electronic payment system, coercing healthcare providers into accepting specific payment methods with hidden costs. As a result, revenue leaks have become a prevalent concern, causing financial strains on private practices across the healthcare industry.

Let's discuss the techniques to safeguard your practice from various revenue leaks associated with electronic transfers.

Techniques to Secure Your Private Practice From Revenue Leaks

Revenue leaks stemming from electronic money transfers may initially appear minor and are occasionally overlooked. However, their cumulative impact can result in substantial revenue losses.

Unfortunately, many providers are unaware that most of these revenue leaks can be prevented. Let's delve into simple yet effective steps to avoid such losses.

1. Address Virtual Card Leakages

According to CMS guidance, health plans can utilize Virtual Credit Cards (VCCs) for physician payments. But, despite HIPAA requiring health plans to provide Automated Clearing House (ACH) EFT as an alternative payment method upon request, some plans may try to enforce mandatory VCC payments in their contracts with physicians.

Unfortunately, this approach has several drawbacks. VCC transactions can increase administrative burdens on medical practices, complicating payment processes. Moreover, you may experience significant financial losses due to transaction and interchange fees associated with VCC payments, which can be as high as 5% of the payment amount. These extra costs can reduce physicians' contracted payment rates, impacting your overall revenue and financial stability.

The good news is CMS emphasizes that any payment involving Virtual Credit Cards (VCCs) must result from a mutual agreement between health plans and physicians, with health plans refraining from compelling physicians to accept VCC payments against their will. HHS's National Standards Group has released FAQs on HIPAA standards for EFT and ERA transactions between health plans and providers.

Physicians should be aware of their right to request payment through the HIPAA-mandated standard Electronic Funds Transfer (EFT) or Electronic Remittance Advice (ERA) transaction, and health plans are obligated to respect this choice and comply accordingly.

To safeguard your interests, you must remain vigilant about any restrictions on payment methods when entering into contracts with health plans and avoid signing contracts with rigid or inflexible payment terms. By being well-informed about these potential pitfalls and confidently asserting your right to opt for secure payment options, you can navigate contracts wisely and maintain control over your preferred payment methods.

2. Object Improper ACH EFT Transaction Fees

Health plans may sometimes employ third-party vendors to process ACH EFT payments to meet HIPAA EFT compliance standards. However, these vendors may impose a processing fee of up to 2%, which can significantly impact physician payments.

While you may need to collaborate with health plan business associates for specific services, CMS prohibits health plans from coercing physicians into exclusive partnerships with specific business associates for EFT processes.

Providers aren't obligated to work with vendors that contradict their interests, as health plans are responsible for sending payments and transactions to an endpoint designated by the physician. Additionally, you can choose your preferred business associate to receive deposit notifications, ERAs, and other payment and reassociation services. This gives you greater control over your payment processes and ensures you can select a business associate that best suits your needs.

3. Avoid "Value-Added" Service Fees

Health plans often require physicians to accept unwanted payment and reassociation ("value-add") services from a vendor before receiving electronic payments, even though these services may not be essential to the EFT transaction or necessary for physicians.

However, CMS has clarified that the only permissible fee for EFT transactions is a small charge, typically around 34 cents per transaction, applied by the provider's bank.

Under 45 C.F.R. 162.925(a)(2) of the HIPAA Administrative Simplification Regulations, health plans are prohibited from hindering or discouraging standard transactions through delays, rejections, adverse actions, or offering incentives to discourage their use. If a health plan attempts to force physicians to accept unwanted payment or reassociation services from a specific vendor as a condition for receiving EFT/ERA, it may be considered as adversely affecting the transaction.

Providers like you can safeguard themselves from unnecessary expenses by avoiding "value-added" service fees for HIPAA EFT transactions. Furthermore, it's necessary to carefully review the payment agreement to ensure that medical practices are not obligated to accept unnecessary additional services. You can navigate EFT payments with greater financial control and efficiency by being aware of these guidelines and standing firm against unwanted fees.

4. Adopt Electronic Payments to Maximize Practice Efficiency

According to the 2022 CAQH Index report, switching from manual to electronic processes can save medical health plans and providers an estimated $9.4 billion in direct costs yearly.

During the COVID-19 pandemic and the subsequent staff shortage, electronic transitions have proven to be a lifesaver, as they are both cost-effective and less burdensome than manual processes. This allowed providers and staff to prioritize patient care effectively.

Electronic payments offer numerous advantages, including faster payment processing, automatic reconciliation of accounts, and enhanced accuracy in financial records.

With electronic funds transfer (EFT) and electronic remittance advice (ERA), healthcare providers can experience:

  • Faster reimbursements
  • Reduced risk of lost or delayed payments
  • Minimized manual data entry errors
  • Improved workforce optimization
  • Improved financial efficiency

The AMA's electronic transaction toolkits offer a wealth of information for practices to harness the power of EFT and other HIPAA standards. By leveraging these toolkits, you can enhance the efficiency of your practice and stay at the forefront of streamlined electronic transactions in the healthcare industry.

Plug-in Revenue Leaks with Glenwood

Glenwood has been helping several private practices boost their practice revenue using advanced technologies that prevent leaks in the revenue cycle management (RCM) process. Leveraging our expertise in every step, from claim submission to payment, we empower practices to work seamlessly and efficiently.

With integrated GlaceEMR and GlaceRCM tools, we simplify revenue cycle management, ensuring your practice stays on top of its game and maximizes its earnings. Get in touch today to see how we can enhance your practice's efficiency and financial success!

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