Which healthcare providers need to know about the hidden costs of virtual credit cards

Virtual credit card (VCC) payments from insurance companies are increasing and often costs more than they realize. We sat down with Eric Cohen, CEO of TraderTo unpack which providers should know about VCCs, the costs they often do not see and how to fight without changing processors.

Question: What are virtual credit cards exactly, and why are they increasingly common in reimbursement of health care?

Virtual credit cards are randomly generated, credit card numbers for one -time use by an insurance payment or payment aggregator for the provider’s reimbursement. They are often set up as a safe and efficient alternative to paper controls or electronic fund transfers (EFTs). VCCs streamline the payment process for insurance companies, allowing them to earn cashback solutions on the transaction. This makes VCCs attractive for payers, but the convenience costs providers.

Question: What kind of costs do we talk about?

Most healthcare providers do not know that virtual credit card payments can make processing costs anywhere, 2% to 5%. On average we see providers pay between an extra 3% to 4% per transaction with VCCs. Over time, those costs are considerable, especially for practices with a high volume.

Question: Are that not only the costs of doing business in a digital age?

Not necessary. That is a common misconception. The truth is that providers often have a choice, but they do not realize it. In many states, Insurance companies are required by law To offer alternatives for VCCs, including Oh eft -paymentswho have much lower reimbursements, usually only a few cents per transaction. Many insurers are still standard for VCCs, unless the provider explicitly asks for something else.

Question: So if a provider wants to avoid these reimbursements, what should they do first?

Step one is understanding your rights. Different states, Including Coloradohave adopted legislation that prohibits insurance companies to make VCCs the only reimbursement method. Contact the American Medical Association or your State Medical Board to find out what the law says in your jurisdiction.

Assessing your contracts is also crucial. Many providers sign agreements with insurers without realizing that payment conditions are included or negotiable. If you are not sure what your agreement allows, that is a red flag that justifies a further assessment.

Question: What other steps can providers take to lower or avoid these hidden costs?

1. Check your current payments. Understand how you are paid, by whom and how often. Separate VCCs from EFTs and patient payments. Many practices do not even realize how much of their reimbursement is linked to VCCs until they do a line item audit.
2. Request alternative payment methods. If your status allows this, you formally request ACH EFTS from payers instead of accepting standard VCCs. Keep written documentation of those requests and any answers from the payer. If they refuse your request for no reason, you can Serve a complaint Against the health plan with the Centers for Medicare & Medicaid Services.
3. Partner with experts. External experts can help providers by navigating the complexity of payment systems and identifying areas where costs can be reduced. These professionals can help with contract analysis, clarify reimbursement structures and propose more cost -effective payment arrangements, all without requiring a change in processors.

Question: Can you share an example of what reimbursement reduction could look like in practice?

Every medical practice is different, but we often see that providers are not aware of how much they lose to virtual map costs until they look closer. By analyzing how reimbursements come in and go through the details of paying contracts, many practices can shift to lower payment methods, such as ACH, and considerably reduce the overall processing costs. These improvements often do not require changing processors or revision activities, only more transparency and better supervision.

Question: Why is this problem no longer known in healthcare?

I think it’s a combination of coverage and slowness. The payment space is complex and is constantly evolving. Most managers are aimed at providing quality assurance and managing daily activities, not the nuances of exchange costs. VCCs are also marketed as standard, making them easy to accept and difficult to question, unless you know what to look out for.

Question: any final advice for care managers who want to lead this?

Stay informed and proactive. Treat your payment methods such as any other supplier or operational costs; You would not accept a 3% surcharge on your rent or aid programs without asking them. The same check should apply here. A few small changes can make a big difference for your operating results.