How Dental Offices Can Opt Out of Virtual Credit Card Payments and Avoid Merchant Fees

Virtual credit card (VCC) payments have become a common method for insurance companies to reimburse dental practices for claims. While they offer convenience, these payments often come with processing fees that reduce the total reimbursement amount. Fortunately, dental offices can take steps to opt out of VCC payments and choose alternative payment methods that avoid merchant fees.

Understanding Virtual Credit Card Payments

VCC payments are issued as single-use credit card numbers that dental offices process just like traditional credit cards. While they provide faster payments, they also come with merchant fees—often ranging from 2% to 5%—which can significantly impact a practice’s revenue.

Steps to Opt Out of Virtual Credit Card Payments

1. Review Your Insurance Contracts

Examine your agreements with insurance carriers to determine if VCC payments are the default reimbursement method. Some contracts may allow you to select alternative payment options. Be aware that if any insurance plan refuses to pay you in any other way than a VCC, the U.S. Department of Health and Human Services (HHS) has established that health care providers have the right to receive payments via the Automated Clearing House (ACH) networking without incurring additional fees. This ensures that providers can opt for electronic funds transfers (EFTs) that deposit payments directly into their bank accounts without the deductions associated with VCC transactions. However, some insurers have attempted to circumvent this by offering EFT payments that still carry fees, prompting further regulatory scrutiny.

2. Contact the Insurance Provider

If you receive a VCC payment, call the insurer’s provider services department and request an alternative payment method. Be prepared with your provider details and claim information.

3. Request an ACH or EFT Payment Option

Most insurers offer Electronic Funds Transfer (EFT) or Automated Clearing House (ACH) payments, which deposit funds directly into your bank account without transaction fees. Request to be enrolled in EFT or ACH to eliminate merchant fees. Be aware that many insurance plans are now charging for ACH or EFT payments. As such, you may want to opt with paper checks for insurance plans that do impose fees to pay you with any other payment method.

4. Submit a Written Opt-Out Request

Some insurance companies require a formal request to opt out of VCC payments. If so, submit a written letter or complete any necessary forms provided by the insurer.

5. Monitor Your Payments

After opting out, review payment statements to ensure that reimbursements are made via your preferred method. If you continue to receive VCC payments, follow up with the insurance company.

6. Educate Your Billing Team

Train your billing and administrative staff on how to identify VCC payments and the process for requesting alternative payment methods. This ensures that the office consistently avoids unnecessary merchant fees.

Additional Considerations

• Some insurers default to VCC payments unless a provider explicitly opts out.

• Payment method options may vary by insurer, so check with each payer individually.

• Some states have regulations that require insurers to offer EFT payments as an alternative to VCCs.

State Regulations:

Several states have implemented specific laws to protect dental practices from mandatory VCC reimbursements:

• California: Legislation requires dental plans and VCC companies to provide clear processes for dentists to opt in or out of VCC payments, ensuring that providers are not compelled to accept payment methods that incur high fees.cda.org

• Georgia: The state prohibits insurers from restricting claim payment methods solely to credit card payments. Insurers must notify providers of any fees associated with payment methods and offer alternatives that do not impose additional costs.ada.org

• Florida: A recent law clarifies that dentists have the right to receive claims via EFT without being charged by insurers and can reject VCCs to avoid unnecessary fees.nacha.org

• North Carolina: Legislation prohibits insurers from mandating credit card payments as the sole reimbursement method, ensuring that providers have access to fee-free alternatives.ada.org

Opt-Out Procedures:

To opt out of VCC payments, dental practices should:

1. Review Contracts: Examine agreements with insurers to identify default payment methods and any clauses related to payment options.

2. Contact Insurers: Reach out to insurance providers to request alternative payment methods, such as EFTs or paper checks, that do not incur merchant fees.

3. Submit Formal Requests: Some insurers may require written documentation to process payment method changes.

4. Educate Staff: Ensure that administrative personnel are trained to recognize VCC payments and understand the procedures to opt for alternative methods.

By staying informed about both federal and state regulations, dental practices can effectively navigate reimbursement options, minimize unnecessary fees, and maintain financial health.

Conclusion

While virtual credit cards may seem convenient, the associated merchant fees can reduce your revenue. By proactively opting out and requesting ACH or EFT payments, dental practices can maximize claim reimbursements and avoid unnecessary costs. Taking the time to manage your payment preferences can lead to significant financial savings for your practice.