MGMA: One in Six Practices Pay Fees for Electronic Payments

Ken Terry

September 11, 2017

Seventeen percent of physician practices pay a fee of 2% to 5% to health plans and their contracted vendors to receive their payments through electronic funds transfer (EFT), according to a new survey from the Medical Group Management Association (MGMA). MGMA called on the government to ban this practice.

Fifty percent of the more than 900 medical practice executives polled said no fee was attached to their EFT payments. About 32% of the respondents said they were unsure whether their practices paid these fees. Of those who said that there were fees, almost 60% said that health plans used third-party vendors for EFT.

In a news release about the survey, the MGMA pointed out that EFT saves practices money on payment posting because the electronic payments can be linked automatically with electronic remittance advice (ERA). Health insurers also save millions of dollars by sending payments to practices via EFT, the association noted.

"Even though health plans save money not printing and mailing paper checks, some bad actors are fleecing physician groups by charging them to simply receive an electronic paycheck," stated Anders Gilberg, MGMA's senior vice president, government affairs, in the press release. "It is critical that CMS [Centers for Medicare &  Medicaid Services] issue long-overdue guidance explicitly prohibiting this practice."

CMS is developing guidance "addressing a number of electronic payment issues," Robert Tennant, director of health information technology policy for MGMA, told Medscape Medical News. On August 11, he said, CMS posted an EFT-related FAQ (frequently asked questions) on its website that it rescinded 3 days later, saying that the FAQ required further legal review. It is unclear whether the agency will ban EFT fees.

Following an Affordable Care Act mandate to reduce administrative inefficiencies, CMS required that health plans offer EFT and ERA to healthcare providers. After standard electronic transaction and operating rules were developed, this rule became effective in January 2014.

However, the Coalition on Affordable Quality Healthcare (CAQH), which created the operating rules for EFT and ERA, says that only 62% of healthcare payments were made electronically in 2015, the latest year for which there are data, and 55% of remittance advice was electronic that year. Among the barriers to greater use of EFT, the CAQH says, are inconsistent use of the required codes, inconsistent data elements that payers require for EFT and ERA enrollment, the inability of providers to specify the identifying number to which the payments should be made, and issues with provider reassociation of the EFT and ERA in payment posting.

Besides automatic reassociation, the benefits of electronic payments and electronic remittance advice for practices include faster receipt of payments and improved cash flow, improved efficiencies, reduced costs, and reduced potential for fraud, according to NACHA (the Electronic Payments Association), which worked with CAQH in developing the EFT and ERA standards.

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