The American Medical Association is warning medical practices to beware private payers bearing virtual credit cards. The “convenient” payment method is increasingly being used to conceal hefty—and avoidable—fees.

Doctors who accept the VCCs, which the insurers send them in lieu of paper checks or standard electronic funds transfer (EFT) info, typically shell out 3% to 5% of the payment they’re receiving, according to an April 8 AMA Wire post.

That could mean, for example, a practice banking only $4,750 on a $5,000 bill it’s contractually owed.

Last year, the Medical Group Management Association sent a letter to Marilyn Tavenner, who was then CMS administrator but has since stepped down, complaining about unreasonable fees charged for ETF transactions.

To thwart insurers from pulling this bit of wool over practices’ eyes, AMA advises practices to take three actions.

• Ask the insurer to pay by standard EFT through the Automated Clearing House Network, a payment system implemented the Electronic Payments Association. These EFT processing fees are minimal, on the order of 34 cents per transaction. And HIPAA requires all health plans to offer standardized EFT to physicians who request it, AMA points out. But HIPAA only mandates that insurers are set up to pay by EFT, not that they promote the option or draw any special attention to it.
• When contracting with health plans, be on the lookout for language committing the practice to accept payments via VCC. “Be cognizant of any restrictions on payment methods,” advises AMA, “and avoid signing contracts with inflexible payment terms.”
• Educate practice staff. VCCs do a good job making off with the goods because they’re familiar to the eyes and easy to use. Make sure staff members who handle payments know how to tell a VCC from a normal credit card. “If your practice staff processes both patient and health plan payments,” says AMA, “their education on the matter is crucial.”

AMA has posted a toolkit to help practices get on board the EFT express. It is also asking practices that accept VCCs to take a brief survey by May 8, stating that such input will help the association fine-tune its advocacy work around health plan payment issues.