Fight payment processing fees in medical payments

Your Business Credit columnist Elaine Pofeldt
Elaine Pofeldt is a journalist whose articles on entrepreneurship and careers have appeared in Fortune, Working Mother, Money and many other publications. She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of, a website for independent professionals. She writes "Your Business Credit," a weekly column about small business and credit, for

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Question Dear Your Business Credit,
Can medical and dental insurance companies require us to accept credit card payments for benefit payments? Can we refuse to accept them, and insist on a check or EFT? Thank You. -- Cynthia

Answer Dear Cynthia,
You mentioned in your note that you are claims administrator at an oral surgery and implant practice, and I can understand why you are concerned about this. Credit-card processing fees can make a big dent in revenue at your practice.

If, say, you receive a payment of $1,000 and the processing fee is 2 percent, you will lose $20 on the transaction. Multiply that by a bunch of transactions and you will be losing thousands of dollars over the course of the year.

It does look like you may be able to get paid another way -- if you are willing to push back.

Insurance companies and entities such as the Department of Veterans Affairs have been increasingly using plastic and "virtual" credit cards to reimburse medical offices in recent years to avoid the use of paper checks, according to an article that appeared in American Medical News.

Physicians don't like the fees that come with credit cards -- which are even higher with virtual card numbers that have to be keyed in, according to the article. It says that some doctors have had to pay fees of up to 5 percent. The American Medical Association has been helping physicians in their battle against these credit card payments.

One physician told American Medical News he had successfully persuaded an insurance company to pay him by electronic funds transfer directly deposited into his practice's bank account -- but he got some help from the North Carolina Medical Society. According to the article, the insurer dropped its use of the virtual credit card payments for that practice. EFT payments come with much lower fees.

Based on this account, I would suggest contacting your local professional organization to see if other practices in your area are also being hit with unwanted credit card payments. The organization may have some suggestions for you on negotiating a better arrangement.

Your article is a good reminder to all entrepreneurs and practice owners to pay close attention to the fees you are being charged for processing payments. A charge that seems small on a single transaction can add up over the course of a year. While you may be willing to accept these fees to make payments convenient for patients, it may be harder to justify when the payments are coming from an insurance company or the government.

Many medical and dental practices are finding that in today's climate, it is hard to keep pace with rising costs, so assigning one person on the team to keep an eye on fees in all areas can be an important way to stay in the black. If you must accept fees, shopping around for a better credit card processing deal can help you offset them somewhat.

See related: Can a doctor's office charge a credit card surcharge?, Choosing a credit card processor for a medical practice, Is it OK for merchants to accept credit cards from minors?

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Updated: 03-18-2019