Hospitals concerned about virtual credit card payments

Some health plans use so-called virtual credit cards when paying hospitals for claims, subjecting the providers to significant fees associated with such transactions, AHA News Now reported.

Virtual credit cards serve as proxies for payment information that keeps it more secure. Numbers are used only once, and are therefore worthless if a hacker infiltrates a computer system holding payment data--something that has been known to happen with patient information.

However, merchant and intercharge fees--typically a small percentage of the amount of the transaction plus a fixed charge--are usually added on when a credit card number is used to pay a bill, whether or not the number is virtual, according to testimony hospital finance executives provided to the Department of Health and Human Services' National Committee on Vital Health Statistics subcommittee.

Heather McComas, director of administrative simplification initiatives for the American Medical Association, testified that such fees can comprise up to 5 percent of every payment a provider receives from a payer.

Hospitals do not object to the use of virtual credit cards in all situations, but do take issue when they must accept them without advance notice, according to AHA News Now. When such an opt-in occurs automatically, it is an onerous administrative process to revert back to accepting another form of payment, testified Doug Downey, an HCA assistant vice president in its treasury department.

"While many health plans proclaim a high rate of acceptance of the virtual card by providers, this does not mean that providers would voluntarily accept the card if asked," testified Priscilla Holland, a senior director with the National Electronic Payments Association. "Many providers accept virtual cards only because they have no choice, and due to the extended time it takes to optout of programs and to receive a replacement payment."

The HHS has not yet made any policy changes regarding how to structure payments between health plans and providers.

To learn more:
- read the AHA News Now article
- check out McComas' testimony (.pdf)
- here's Downey's testimony (.pdf)
- read Holland's testimony (.pdf)

 
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