Accepting credit cards from patients for co-pays and deductibles is one thing, but it makes zero financial sense for California providers to accept credit card payments from claims administrators for workers’ comp patients.
This practice may be convenient for the payor, but it places a significant — and pointless — financial burden on California providers, with no discernible improvement in payment times.
The Bad Math of Payor Credit Cards
To absorb credit card fees for group health and Medicare patients is sensible from a financial, security and customer service standpoint. Giving up 2-5% of a $10 copay has a return on investment, including eliminating cash transactions, ease and speed of collection, convenience and satisfaction for the patient.
Absorbing 2%, 3%, or even 5% of an entire workers’ comp bill totaling hundreds or thousands of dollars doesn’t make financial sense. Extrapolate those percentages over the course of a week, a month, or a year, and it becomes clear that your office is paying usurious rates.
For example, if a provider accepts a 3% fee to receive payments 14 days quicker, each day of faster payment costs just over .002%. Not much, by itself. But extrapolated over 365 days, it’s the equivalent of a 78% annual fee!
So why do some providers allow this practice?
Often, the alleged wisdom of accepting credit card payment rests on the idea that these payments generally come faster than paper checks. But this is a nonsensical argument, for three reasons:
If your office uses electronic billing, payment shouldn’t take longer than 15 days. The Division of Workers’ Compensation (DWC) mandates that payors remit payment for all electronic bills within 15 days — whether the payment is electronically transferred, mailed, or tied to a carrier pigeon. DaisyBill statistics prove that electronic billing means faster payment.
The return on investment (ROI) is negative when you accept a credit card payment. Even if credit cards were the only form of electronic payment (which is false), and even if your office doesn’t utilize e-billing (which it should), in what perversion of revenue cycle management does it make sense to pay the equivalent of 78% per annum in fees to get payments out of Accounts Receivable a few days sooner?
- Many claims administrators can pay electronically with a secure Electronic Funds Transfer (EFT), without using a fee-requiring credit card. All claims administrators can pay via check.
In some cases, providers may think they have no choice but to accept credit card payments (or “virtual” credit card payments, more commonly). The claims administrator pays with a card, and the provider assumes the fees are part of the cost of doing business.
We’ve seen payors imply that taking credit cards is non-optional. For example, this statement in a letter to a provider from third-party administrator:
In accordance with your MasterCard Agreement, a xxxxxxx is a legal and recognized form of payment for claims administration and therefore must be considered as such. Any attempt to deny payment could be a violation of your merchant agreement and result in non-payment.
The implication is clear. The payor wants the provider to think the office is legally obliged to accept credit cards. But while credit card payment could theoretically be included in a provider’s contract (such as a Medical Provider Network (MPN) agreement, for example), no California law, code, or policy requires providers to accept credit cards.
In principle, federal law supports the notion that it is foul play to burden providers with credit card fees. While it doesn’t apply to payments for workers’ comp bills, HIPAA law specifically forbids health plan payors from requiring providers to accept credit card payments, and offers an approved electronic alternative with a low flat fee. Why should it be any different when a provider treats an injured employee? To the extent it can be avoided, providers gain nothing from such an arrangement.
For their part, the payors themselves certainly recognize the onus of credit card fees. More and more insurance companies refuse to accept credit card payments for premiums, the irony apparently notwithstanding.
Pushing credit card fees onto providers is another example of the unjustifiable burdens workers’ comp can place on the people who treat injured workers. Such examples help explain why workers’ comp can seem like an unattractive proposition for providers, leaving patients with fewer and fewer options. But as long as providers know their rights (and utilize e-billing), this is one burden providers can refuse.
DaisyBill makes workers’ comp easier for providers. With fast, easy electronic billing, RFAs, and payment appeals, our Billing Software takes the hassle out of treating injured workers. Sign up for a free demonstration, and see what DaisyBill can do for your office.