payment – Duane Morris Health Law

February 6, 2015 by Patricia S. Hofstra

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.

November 16, 2011August 19, 2014 by Patricia S. Hofstra

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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August 23, 2011September 10, 2014 by Duane Morris

Bundled Payments for Care Improvement Initiative Announced

On August 23, 2011, the U.S. Department of Health and Human Services announced the Bundled Payments for Care Improvement Initiative (“Initiative”). Developed by the Center for Medicare and Medicaid Innovation, the Initiative is designed to give providers “new incentives to coordinate care, improve the quality of care and save money for Medicare.” For providers participating in the Initiative, Medicare will bundle payments for a package of services provided during an episode of care instead of paying separately for each individual service provided. Four different models of bundled care are available. Providers can apply to participate in the program and will be able to choose which episodes of care and services will be bundled together. To apply, providers must submit a Letter of Intent by September 22, 2011 or November 4, 2011 and a completed application by October 21, 2011 or March 15, 2012, depending on which model of the Initiative they choose.

For more information please go to http://www.hhs.gov/news/press/2011pres/08/20110823a.html and http://www.innovations.cms.gov/areas-of-focus/patient-care-models/bundled-payments-for-care-improvement.html#.

June 2, 2011August 18, 2014 by Neville M. Bilimoria

Expansion of CMS Never Events: They’re Not Just For Medicare Or Just For Hospitals Anymore

In 2005 when “Never Events” were proposed for hospitals through the Deficit Reduction Act, no one knew what the overall effect would be on hospitals or patient care. CMS later developed these and implemented these Never Events under the authority of the DRA to prevent Medicare payment to hospitals for certain “never events” or hospital acquired conditions (HACs) which were conditions that were high volume, involved higher payment, and which could be easily preventable. Now, hospitals and other health care providers have to worry about Never Events in the Medicaid space.

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