Guides / Virtual card fees

Guide · 6 minute read

Stop paying fees on insurer virtual card payments

A fax arrives with a 16-digit card number. You key it into your card machine and the insurer's payment lands, minus 3 to 4 percent. That fee comes out of money the insurer already owed you, on every claim, every year.

Why insurers pay by card

Card payments are often run by a payment vendor, and the card network's fees fall on the office that accepts the card. For the office, a direct deposit (EFT) of the same payment costs little or nothing.

What federal guidance says

  • A health plan must use the standard electronic funds transfer when a provider asks for it (CMS guidance letter GL-2022-04).
  • A plan may not require you to sign up with its payment vendor to receive the standard EFT and remittance.
  • CMS has also said a health plan cannot require a provider to accept virtual card payments.

Dental plans are generally covered by these HIPAA transaction rules. Check how they apply to a specific plan before relying on them in a dispute.

How to switch each insurer to direct deposit

  1. List every insurer that sent a card in the last three months, with the total it paid you.
  2. Call provider services and ask to opt out of virtual card payments and enroll in EFT. Write down the call reference.
  3. If they refuse or point you to a paid vendor, send a written request for the standard EFT and ERA, citing the CMS guidance.
  4. Enroll for electronic remittances (835s) at the same time, so each deposit arrives with its payment details.
  5. Watch the next two payments. Some insurers switch back to cards after a vendor or address change.

What it's worth

An office collecting $40,000 a month from insurers that pay a quarter of it by card at 3.5% gives up about $4,200 a year in fees. Run your own numbers in the card-fee audit.

Questions

Can a dental insurer force my office to accept virtual credit cards?

Federal guidance says no: CMS has said a health plan cannot require a provider to accept virtual card payments, and that a plan must use the standard EFT transaction when a provider asks for it.

How much do virtual card payments cost a dental office?

Usually 3 to 4 percent of each payment in card processing fees, paid out of money the insurer already owed you.

See which insurers pay you by card, and what it costs. The free check totals what each insurer paid you; the card-fee audit turns that into a yearly cost and the switch letters.

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Sources: CMS guidance letter GL-2022-04 (March 22, 2022); AMA summary of the CMS FAQs; fee range from Dental Managers. General information for dental billing staff, not legal advice. Plan terms, contracts and insurer rules vary: check the patient's plan, your contract and the insurer's provider manual.