Arne Pedersen, MBA, FACMPE
Vice President Practice Management, Anesthesia Management Partners, Lake Bluff, IL
Anesthesia providers are losing thousands of dollars in hidden fees due to CMS’ lack of oversight in electronic payments pushed by the Patient Protection and Affordable Care Act, or PPACA (a.k.a. “Obamacare”).
According to an August 14, 2023, article published on ProPublica, CMS forwarded email responses to questions and complaints from Zelis Executive, Matthew Albright. Mr. Albright also happens to be a former CMS employee who authored a key federal rule on electronic payments in 2012.
This seems to be a clear case of the fox watching the henhouse.
From the Duane Morris Health Law website, author and attorney, Patricia S. Hofstra, describes what is a virtual credit card payment and how the payers use it. She also discusses how the programs implemented as an opt-out function only, without the knowledge and consent of the providers. She goes onto share parts of a letter dated January 15, 2015, sent to CMS by a group of several healthcare organizations complaining about virtual credit card payments and the excessive fees. The letter refers to a 5% fee charged on each transaction. 
Section 1104, Administrative Simplification, clearly states that Electronic Funds Transfers, or EFTs, need to be in place. According to subsection (B) ADOPTION REQUIREMENTS; EFFECTIVE DATES., CMS was required to develop a set of operating rules for EFTs and ERAs no later than January 1, 2011, and have them effective no later than January 1, 2013. In accordance with Section 1104, the language clearly states that the purpose of going electronic with payments and remittance advice was to simplify and reduce paperwork, which was to have a positive net effect on the administrative burdens of healthcare providers. It does not state whether a private entity can become a middleman and charge fees.
An important note is that electronic claims submission was already in play when the PPACA was passed and signed into law in 2010.
While it is true that EFTs and ERAs are reducing the administrative burden on anesthesia providers, it is also true that the electronic transaction fees are adding to the healthcare costs with anesthesia providers bearing those costs. In another section of the ProPublica article, the author details how these middlemen play the game. He names a few industry-known names who are participating in these schemes. “A brochure for one payment company, Change Healthcare, boasted of automatically enrolling 100,000 doctors and hospitals in a plan to receive virtual credit cards and sharing some $8 million a year in revenues with the large insurer it was working for. (Virtual credit cards are a form of electronic payment in which a payer sends a string of numbers that are typed into a credit card reader to generate a one-time payment. Fees for VCCs run as high as 5%.)
Payment processors often boost insurers’ revenues by sharing the fees from virtual credit cards. One processor, VPay, says in its marketing materials that insurers can “make money on every virtual card transaction.” In response to questions from ProPublica, UnitedHealth, which owns Change and VPay, asserted that its services help medical clinics streamline recordkeeping, reduce administrative burdens, and accelerate payments.”
An example of how costly this is for an anesthesia practice is when a large payer pays with a virtual credit card, or VCC, on several claims, say, for $20,000. The moment that card is run, the practice pays $1,000 in transaction fees. Let us say the practice has net collections of $300,000 per month. Of that, say, $100,000 is on the virtual credit card. That is $5,000 per month or $60,000.00 per year in transaction fees.
We encourage anesthesia practices to transition away from many of these electronic payment types. This will save thousands of dollars each month. For our newer clients, their previous billing company signed them up for these electronic payments without their knowledge. They had no idea the money they were losing each month to these transaction fees.
Start with a plan. There are two options that will help your group save money.
- Accept only EFTs with ERAs in accordance with Section 1104 of the PPACA.
- Accept both Paper checks and EFTs with ERAs and little to no transaction fees.
As a company, we recommend accepting only EFTs or paper checks from the payers. For every new client we onboard at Anesthesia Management Partners, we audit the payment types. From there, we develop a client specific plan to transition from their current setup to one that will save them thousands of dollars monthly. As an example, recently, one new client was paying over $3,000 in monthly transaction fees. With our proven work, we’ve virtually eliminated those fees within the first 90 days of our relationship.
In our Billing and Practice Management Service offerings, we provide a multitude of strategies, Analysis, Negotiations, Forecasting, and Budgeting services. We have expertise in helping our clients with the above strategies and more. If you are interested in learning more about these strategies and other services to help your group address the multiple threats to your practice, please contact Anesthesia Management Partners via email at firstname.lastname@example.org or via phone at (800) 444-6110.