Some insurance companies are starting to move to virtual credit cards to send payments, versus the traditional paper check or direct deposit into a bank account. This type of payment can prove to be more work then it's worth.
With a virtual credit card the insurance company provides a piece of paper with an image of a credit card and the credit amount, along with the credit card numbers, expiration date and security code. The office runs the credit card through the terminal for the exact amount of the payment, similar to when a patient pays over the phone via credit card.
While this seems like a good option there are some downsides to this type of payment system:
- LESS REVENUE FOR THE PRACTICE: The practice pays the merchant account fee, which is typically 2-4%. This reduces the amount you are receiving in payment from each patient that is processed this way. While it may not seem like a lot for each individual patient, it can add up to thousands of dollars over the course of a year. Money that could boost your bottom line.
- ADDITIONAL TIME INVESTMENT: Chances are your dental team is already stretched thin. With the insurance credit card payment system there may be more follow-up time required for any questions that come up on payments. You will likely have to call both the insurance company and the third party payment processing company, because the insurance company often can't disclose if the payment cleared and many times the third party company doesn't have patient names. This results in extended time on the phone for your team members.
Manual entry of payments into the practice management software can be another time inefficiency. Many practice management software systems are set-up for a paper check or electronic check, but not credit card payments.
- HIGHER POTENTIAL FOR ERROR: Because it requires more manual entry work, there is more of a chance of errors, making payments tracking more difficult. It is essential that the management system reflect the exact method of payment for bookkeeping purposes. We had a dental client who ran into this issue, the insurance MasterCard payments looked like patient payments and the claims appeared outstanding, when they were actually paid. This created extra work trying to track down the claim payment.
While some insurance companies are instituting this practice without permission of the dental office, there is a way to cancel the credit card payments and receive a paper check or electronic payment instead. Typically it is a two-step process. First, you should call your insurance company and ask to "opt-out" of the credit card payment system. Then, call the third party company that handles the credit card payments and confirm on their end that you want to opt-out of the system.
Working with insurance companies is already a time consuming process, so it is important to make sure the right payment processes are instituted to help you get paid without adding more work (and costs) for your practice.