Read the full letter
April 2, 2018
The Honorable Seema Verma
Centers for Medicare & Medicaid Services
Department of Health and Human Services
200 Independence Avenue, S.W.
Washington, D.C. 20201
Re: Reinstatement of Electronic Payments Guidance on the CMS Website
Dear Administrator Verma:
We write today to convey our great concern regarding the recent removal from the Centers for Medicare & Medicaid Services (CMS) website several frequently asked questions (FAQs) instructing providers of their rights and prohibiting unfair business practices regarding electronic payments (e-payments) from health plans to providers. We urge you to expeditiously re-post these FAQs.
MGMA is the premier association for professionals who lead medical practices. Since 1926, through data, advocacy and education, MGMA empowers medical group practices to create meaningful change in healthcare. With a membership of more than 40,000 medical practice administrators, executives, and leaders, MGMA represents more than 12,500 organizations of all sizes, types, structures, and specialties that deliver almost half of the healthcare in the United States.
At issue are the unfair business practices related to two forms of payments made from health plans to providers, “virtual” credit cards (VCCs) and electronic funds transfer (EFT), and the various impediments health plans and third-party payment vendors have implemented that discourage provider adoption of EFT. Health plan use of third-party payment vendors has become a significant issue in the payment environment. A March 20, 2018 MGMA poll with over 850 responses found that nearly 3 in 10 respondents (29%) report that their payment from the health plan is routed through a third-party payment vendor. Of these, 58% reported being charged a fee by the vendor to receive their payment. Less than one quarter of respondents (24%) stated that no fee was attached to their payment and an additional 18% were unsure.
In a VCC payment, a health plan or its payment vendor sends a single-use credit card number to a provider by mail, fax, or email which the provider must then manually enter. This is known as a “virtual” card because a physical credit card is never created or presented to the provider. For these authorizations, providers are required to pay credit card interchange fees, typically ranging from 3 to 5% of the value of the payment.
Not only are these fees unwarranted and unfair, but in the vast majority of cases, the practice did not choose this payment method. Opting out of VCCs and receiving payments via EFT from a reluctant payer or vendor is a manual, burdensome process that further delays payment. Even more disconcerting, the use of VCCs is contrary to the agency’s stated priority of putting “patients over paperwork” and reducing physician administrative burden and cost. Importantly, VCCs do not meet the national EFT standard established by the Department of Health and Human Services (HHS) in the 2012 interim final regulation, nor do they support the Health Information Portability and Accountability Act (HIPAA) standard transaction for Electronic Remittance Advice (ERA), resulting in additional manual processing for practices along with significant associated costs.
The Automated Clearinghouse “CCD+Addenda” standard was adopted as the HIPAA standard transaction for EFT and took effect January 1, 2014. The regulation specified that “if a covered entity conducts with another covered entity (or within the same covered entity), using electronic media, a transaction for which the Secretary has adopted a standard under this part, the covered entity must conduct the transaction as a standard transaction.” In requiring the adoption of a standard for EFT, the 2012 rule clearly states a cost savings intent when utilizing EFT over traditional paper payments. The Impact Analysis from the rule, for example, states that the issuance of an EFT standard: “is based on the assumption that the health care EFT standards will make health care claim payments via EFT more cost effective and will therefore incentivize increased usage of EFT by physician practices and hospitals” (77 FR 1575). The final rule goes on to say “[e]ach move from a non-electronic, manual exchange of information to an electronic transaction brings with it material savings in terms of less money spent on paper, postage, and equipment required for paper-based transactions, as well as cost avoidance in terms of time savings for staff. For health plans, we expect direct savings from the transition from a paperbased payment system (for example, paper checks) to EFT. These savings are found in the amount of staff time saved, as well as material savings such postage, paper, and printing” (77 FR 1582-83).
With industry cost savings as the primary motivation for adopting the EFT standard, it is very disappointing that some unscrupulous health plans and payment vendors have begun to take advantage of providers by charging them a percentage-based fee (typically 2-5%) on every EFT transaction. Providers unwilling to pay these fees are typically offered a VCC as the only other payment option, forcing them to incur fees no matter which option they choose.
Other unfair practices employed by health plans and payment vendors to discourage adoption of EFT by providers include:
• Automatic opt-in for virtual card payments, forcing the provider to opt out to receive payment by another method, including EFT;
• Informing providers wanting to opt out of VCC payments that it takes 60 days or more to reissue the claims payment as either a check or ACH EFT payment, thus negatively impacting business cash flow;
• Creating unnecessarily burdensome processes for opting out of VCC payments, such as not including payer contact information when issuing the VCC number;
• Creating unnecessarily burdensome EFT enrollment processes, such as refusing to permit enrolling all physicians in a group at the same time, to deter use of the EFT standard transaction;
• Communicating inaccuracies about the lack of safety of banking information used in EFT transactions;
• Misrepresenting card system rules such as informing providers that they must accept VCCs for claims payment if they accept patient credit cards; and
• Requiring VCC payments as part of provider contracts by telling providers they are exempt from the requirement or that a VCC payment meets the definition of “electronic payment.”.