If you’re like most Americans, you prefer to be paid electronically instead of with old-fashioned paper checks. But imagine if your employer forced you to pay a 2% to 5% processing fee out of each paycheck just for the convenience of directly receiving the money you’ve earned.
While it may sound ludicrous, that is what America’s doctors are up against as healthcare insurers and their payment-processing middlemen continue to include hidden predatory fees on every electronic fund transfer (EFT) payment transaction. Such “penalties of convenience” create administrative burdens and cut into practices’ often razor-thin margins as they struggle to stay afloat after years of stagnating reimbursement. These fees benefit no one except the middlemen who use them to line their pockets.
Originally outlined in the Affordable Care Act, the requirement for health insurers to offer physicians standardized electronic payments was intended to help reduce healthcare spending by eliminating the need to process checks and receipts manually. In 2017, regulatory guidance from CMS bolstered this, prohibiting insurers from charging a fee when they reimbursed doctors for their services electronically.
However, a ProPublica investigation uncovered that the same proposed guidance was quietly dropped a mere 6 months before it was supposed to go into effect after intense and well-funded lobbying by the insurance industry. Now, insurers can demand up to 5% on every transaction if physicians choose to be paid electronically. Even doctors who decide to go back to being paid by paper check often end up being forced into accepting EFT payments and paying these predatory fees.
In fact, one survey from the Medical Group Management Association (MGMA) found that nearly 60% of responding physician practices reported being forced to pay these fees without ever having agreed to them. Meanwhile, another MGMA report found that two-thirds of physician practices say over 75% of their annual revenue is paid via EFT payments, and larger practices can incur fees of up to $1 million annually. Even smaller practices can pay up to $100,000 in EFT fees annually, which could instead be invested in improving patient care, hiring new staff, or expanding community-based services.
America’s doctors are already facing dwindling reimbursements that fail to reflect the true cost of care, due to a lack of payment updates that keep pace with inflation. These pressures make it hard enough for many practices to keep their doors open, particularly in rural and underserved communities. Ultimately, this financial instability has forced some practices to consider closing their doors for good.
Fortunately, a group of lawmakers in Congress has introduced the No Fees for EFTs Act (HR 6487), which would prohibit insurers from imposing EFT fees on physicians and other providers. It is imperative that Congress pass this much-needed solution to protect physician practices and preserve patient access to care. While Congress works on this bipartisan bill, it must also work to reform the Medicare physician payment system to help put physician practices nationwide on solid footing in order to protect patient access to care.
With so many doctors and practices struggling to balance sharply rising medical costs with steadily declining Medicare reimbursement, the long-term sustainability of our nation’s healthcare system is already on shaky ground. The impact of insurance middlemen skimming even a relatively small percentage off the top for services that should be free is enough to put some practices out of business for good.
Congress should pass the No Fees for EFTs Act as part of broader Medicare reform to prevent this devastating scenario and ensure patients can continue receiving high-quality care.
Nehad Soloman, MD, is a rheumatologist in the Phoenix, Arizona area and is a member of the American College of Rheumatology Board of Directors.
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