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Do you have to pay insurers to get paid? Here’s how to avoid that

March 1, 2021
Did you know that accepting virtual credit cards comes with significant, undisclosed fees, often upwards of 5%? If you're tired of the extra fees, here's what you can do about it.

The past few years, it has become common for insurers to reimburse medical practitioners with virtual credit cards. While insurers tout this practice as more convenient and secure than paper checks, not only are there better alternatives, but accepting virtual credit cards comes with significant, undisclosed fees, often upwards of 5%. Furthermore, insurance companies are likely getting a kickback on this fee from the credit card issuers. What this comes down to is telling doctors that they have to pay to get paid.

The reason this form of payment has become more prevalent is due to the 2014 Affordable Care Act (ACA). As part of that legislation, all HIPAA-covered health plans were told to offer an electronic payment option via the newly mandated Healthcare Electronic Funds Transfer (EFT) Standard. According to the Council for Affordable Quality Healthcare (CAQH), the main benefits of the Healthcare EFT Standard for health-care providers are ease, security, efficiency, and cost.1 Notably, it is evident that legislators thought insurance companies would use the cheapest and most secure method of moving money—automated clearing house (ACH)—and did not foresee what has actually happened: the wide adoption of virtual credit cards as a form of payment. 

Doctors need to know that there are better and cheaper ways to get paid than virtual credit cards, and that the law is on their side when it comes to dictating how they want to be paid. In my opinion, the best way to get paid is via ACH, which is a financial network used for electronic payments and money transfers. Not only is it significantly cheaper than payments made via credit card, it’s quicker and more secure.2 Instead of having to go through emails or regular mail to key in credit card numbers, you provide your bank account and routing numbers only once, and then the insurer can directly deposit the money into your account. In fact, ACH is the method used for direct deposits or e-checks (figure 1).
To illustrate how these fees can add up, let’s assume a $2,500 insurance reimbursement. For this transaction, the ACH fees are estimated to be 34 cents, and for a virtual credit card they could be as high as $125. Add all the reimbursements taken over the course of a year, and these transaction fees can easily reach into the thousands of dollars. It’s as if insurance companies have a 5% royalty on your business without you even knowing. The CAQH recently performed a study on this issue and concluded that potential savings related to health-care payments were nearly $13 billion per year (figure 2).3

Quit paying to get paid

When it comes to how they are paid, medical providers need to know that they have the right to choose the payment method that best suits their needs. Specifically, 45 CFR 162.925 in the US Code of Federal Regulations gives providers the right to receive the Healthcare EFT Standard of their choosing for all reimbursements.

As credit card reimbursements have become more common, industry bodies and government agencies have issued opinions on the matter. The Centers for Medicare and Medicaid Services (CMS) have gone on the record stating, “A health plan cannot require a provider to accept virtual credit card payments. A provider has the right to request that a health plan use the electronic funds transfer (EFT) transaction. If a provider makes the request, the health plan must comply.”4

Furthermore, the regulation also states that insurers “are prohibited from charging fees or costs . . . in excess of the fees they incur when they directly transmit or receive a standard transaction.”5 ACH transactions have significantly lower risk than credit card transactions, and thus the associated transaction fees are dramatically lower. Therefore, under no circumstances should you pay fees as a percentage of the transaction, but rather fees should be several dollars per transaction at most. 

Steps to ensure best payment of your choosing 

1. Call your insurance rep. Call your insurance representative and tell them how you want to be paid. If you no longer want to accept virtual credit cards, they may say they don’t know what you’re talking about, or worse yet, resist your request. By law they are required to comply. Some tactics they may try to use to justify virtual credit cards include plan contracts and payment terms.

Regarding plan contracts, many insurance providers include language in their contracts that states they’re allowed to pay via virtual credit cards. Although it’s best to object to this language prior to signing, if you have already signed, you still have the right to switch to your preferred payment method. As for payment terms, insurance providers may tell you that by not accepting virtual credit cards your payments will be delayed. This is not only not true, it is illegal and you can file a claim with the CMS on their website.6 

2. Negotiate. To avoid any disputes, we advise that when it is time to negotiate or renew insurance plans, you insist on your preferred method of payment. If you want to get paid via ACH, let the insurer know and they must accommodate your request.

3. Send a letter. Dealing with insurance companies has become such a frustration that the CAQH has provided a letter template for you to send to insurers that very clearly lays out providers’ rights and insurers’ responsibilities when it comes to reimbursement.7


Doctors have enough headaches without worrying about how they are paid. Although it may be painful, making sure that you’re paid in the most secure and efficient manner possible can add tens of thousands of dollars to your bottom line annually. While insurers may be able to dictate prices, they cannot dictate how you receive payment.  


1. Understanding the healthcare electronic funds transfer (EFT) standard. Council for Affordable Quality Healthcare (CAQH). https://www.caqh.org/sites/default/files/core/phase-iii/reference/NACHA_HC_Fact_Sheet.pdf
2. Healthcare EFT standard: a quick reference guide. National Automated Clearing House Association (NACHA). https://www.nacha.org/system/files/resources/Healthcare-EFT-Standard-A-Quick-Reference-Guide.pdf 
3. 2019 CAQH index. Conducting electronic business transactions: why greater harmonization across the industry is needed. Council for Affordable Quality Healthcare (CAQH). 2020. https://www.caqh.org/sites/default/files/explorations/index/report/2019-caqh-index.pdf
4. Physicians protected from health plan credit card fees. American Medical Association. October 5, 2017. https://www.ama-assn.org/practice-management/claims-processing/physicians-protected-health-plan-credit-card-fees
5. U.S. Code of Federal Regulations. CFR 45§162.925. Additional requirements for health plans. Gov Regs. https://www.govregs.com/regulations/expand/title45_chapterA-i1_part162_subpartI_section162.925
6. File a complaint. CMS. Updated January 25, 2021. https://www.cms.gov/Regulations-and-Guidance/Administrative-Simplification/Enforcements/FileaComplaint
7. Requesting EFT payments from health plans and status of implementation of operating rules. Council for Affordable Quality Healthcare (CAQH). December 2013. https://www.caqh.org/sites/default/files/core/template/letters/Sample_Provider_EFT_Request_Letter_to_Health_Plan.pdf

THANASIS SKAFIDAS, a graduate of the Wharton School and Imperial College London who has 15-plus years of experience in financial services, is the cofounder of Zilment Technologies, which strives to give small business owners the tools to lower their credit card processing fees in minutes. He comes from a family of doctors and is passionate about empowering small businesses with the tools, resources, and knowledge usually reserved for large corporations. To learn more about ways doctors can save money, visit zilment.com. Contact Skafidas at [email protected].

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