What is a Virtual Credit Card Payment?

June 27, 2014

Wendy Payette, Director of Auditing
Vachette Pathology / Stark Medical Auditing

Our clients are asking about a new phenomenon — insurance companies who send an explanation of benefits (EOB) with “virtual” payment.  The EOB will state, “payment for this remittance is being made via virtual credit card; please process this payment as you would any credit card.”

This brings up several areas of concern.  First, what if you don’t take credit cards?  Some practices have not progressed this far, and they do not have the ability to accept these virtual payments.

Second, you have to pay a fee to get this money; whenever you process credit card payment, you are charged a merchant fee, typically 2.5-3%.  This fee comes out of your payment, lowering your margin.

Also, unlike other credit card payments, you must make a call to get paid. Calling the payer to get the amount approved takes time.

Finally, these virtual credit cards expire after about two months.  This means if you don’t call and process the transaction, you lose the payment entirely.

Why do payers use virtual credit cards?  By not sending a check, they may actually be hoping the biller will never make the call, therefore they do not have to pay the physician. Remember, calling the payer actually increases the cost of billing.

The simpler and easier thing to do is to sign up for electronic funds transfer (EFT) for payments.  This makes the payment process much easier and eliminates the merchant fee altogether.

Do you have questions about virtual credit card payments? Contact Mick Raich, President of Vachette Pathology and Stark Medical Auditing at 866-407-0763.

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