Virtual Credit Card Payments

Paying for Health Care by Virtual Credit Card
On January 30, 2015, several healthcare organizations sent a group letter to CMS protesting the use of virtual credit cards by health plans to pay providers. In a virtual credit card payment (a nonstandard type of electronic funds transfer EFT), a health plan or its payment vendor issues single-use credit card information to a provider via mail, fax or email; the payment is “virtual” in that there is not a physical credit card. Providers then manually enter the virtual credit card number into their point-of-sale (POS) processing terminal, and the card processing network authorizes the payment. Virtual credit card programs are generally rolled out as an opt-out function and providers can end up being enrolled without their knowledge or consent.
The letter states that “While the process described above may sound benign and similar to provider processing of patient credit cards, virtual credit card payments can have a significant negative financial impact on a provider. Interchange fees of up to five percent are imposed on virtual credit card payments; these fees essentially reduce the contracted fee rate that has been negotiated with the health plan for a particular service or services. Unfortunately, many providers are unaware of these fees when accepting virtual credit card payments. Yet while providers are losing income from this payment method, health plans and intermediaries can profit from virtual credit cards, as they often receive cash-back incentives from credit card companies.”

The letter recommended that CMS provide the following direction to the health care industry regarding virtual credit card and Automated Clearing House ACH EFT payments:
• Require that a provider explicitly opt-in to virtual credit card payments prior to the issuance of any payments via this method;
• Require that prior to opting in to virtual credit card payments, the provider must receive a complete disclosure of all fees associated with this payment option;
• Require that virtual credit card programs provide clear and hassle-free instructions to providers on how to opt-out of these payments, should they later decide to choose another payment method;
• Prohibit health plans from requiring acceptance of virtual credit card payments as part of their provider contracts;
• Clarify the definition of “excessive fees” in the context of ACH EFT payments to prohibit health plans and their vendors from charging fees for ACH EFT payments in excess of the nominal charge assessed by the providers’ financial institution; and
• Require that any services designed to supplement the standard ACH EFT process be independently selected at the provider’s discretion and be unambiguously separate from ACH EFT enrollment forms.
Providers need to examine the impact of virtual credit cards on their practices and consider the merits of opting in or opting out.

Aetna Sues Surgery Centers Over Billing Practices

In a bold and seemingly unprecedented move, Aetna recently sued several California surgery centers for an alleged “fraudulent billing scheme”. The lawsuit alleges that the surgery centers induced physicians to refer patients to the surgery centers with promises that the patients would not have any financial responsibility for their coinsurance and deductibles. Aetna claims that the surgery centers then turned around and submitted charges for reimbursement that were artificially inflated driving up the cost of health insurance coverage.

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HHS OIG Notice Seeks Comments on Safe Harbors, Special Fraud Alerts

Once a year, as required by the Health Insurance Portability and Accountability Act of 1996, the Department of Health and Human Services Office of the Inspector General (“OIG”) solicits proposals to develop new or revised anti-kickback, fraud and abuse safe harbors. The OIG published its request for proposals for new or revised safe harbors in the December 29, 2011 Federal Register. The notice also seeks comments on developing special fraud alerts.

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Proposed Physician Payment Disclosure Rule Published

The Centers for Medicare and Medicaid Services (“CMS”) released its proposed rule regarding the required reporting of device, biologics and pharmaceutical manufacturer payments to physicians on December 14, 2011. The proposed rule includes templates for physicians and manufacturers to use when logging payments and gifts.

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Don’t Just Pay the RAC

Medicare Recovery Audit Contractors (RACs) mine data using automated systems to detect and recover improper Medicare payments. RAC audits pick up billing and coding errors and deny claims based on those errors. In many instances, the service was provided and was billable. In some cases, the coding error makes no difference in reimbursement, sometimes reimbursement should be higher, sometimes lower, but still reimbursable, under some code. In some cases, the RAC’s automated systems deny claims that were properly billed, because of software coding flaws. RAC auditors don’t correct billing errors, they just take the money back.

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2011 Uncertainty Brings Worry and Change

2010 brought significant changes in the law for the healthcare industry with the passage of the Patient Protection and Affordable Care Act (“PPACA”), the Provena decision regarding real estate tax exemption, and the Lebron case invalidating Illinois’ cap on noneconomic damages in medical malpractice cases. 2011 brought more changes in the law, new PPACA regulations, worry and uncertainty to the healthcare industry.

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On-Call Issues Persist

I have been asked to speak at the Orthopaedic Trauma Association’s 2011 meeting in San Antonio on October 15. The Association recently polled its members asking them to identify a topic for the plenary session and orthopaedic on-call compensation emerged as a common concern. In preparing for the presentation, I came across the OTA On-Call Position Statement posed on OTA’s web site.

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Thoughts on Physician Employment and Corporate Bookkeeping

More thoughts on physician employment by hospitals

One of my clients, who was approached by a hospital for possible employment, proposed a trial period of 12 months. During that 12 months, she would be employed by the hospital and at the end of 12 months either party could walk away for any reason with no strings attached. No strings in this case meant no non compete and the hospital would pick up any tail insurance liability.

Since I always recommend an exit plan just in case hospital employment doesn’t work out, this trial period seems like a good idea. The hospital is seriously considering it and will let us know this week. Stay posted.

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Some Thoughts on HIPAA

A few thoughts on HIPAA

Real case scenario. A health care provider’s car gets broken into and private health information (“PHI”) is stolen, along with other items. Next steps? Once the provider determines that a breach of unsecured PHI has occurred (an incidental disclosure of PHI does not constitute a breach), the provider should perform a risk assessment to determine whether the event poses a significant risk of financial, reputational or other harm to the patient.

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Hospital Employment of Physicians

Those of us who have been in the health care industry for awhile have seen hospital employment of physicians come and go several times. In my early years as a health care attorney, I was an in-house counsel in the hospital industry. I represented hospitals in the rush to jump on the band wagon of physician employment. I am now in the private practice of law and while I continue to represent hospitals, I also represent physicians and physician groups exploring various relationships with hospitals including employment.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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