New law on ‘virtual credit cards’ preserves pay options for providers

The term “virtual credit cards’’ sounds like some futuristic version of the typical plastic.

But to many doctors, dentists, hospitals and other medical providers, it’s very much a part of their present day. And not always desirable.

The Georgia General Assembly, in fact, took action on the virtual credit cards this year.

Here’s how the virtual cards work: A medical provider bills an insurer for a $100 service. The insurer can pay through an electronic funds transfer or a physical check, but instead delivers a virtual credit card to the provider.

There’s no actual plastic involved. The ‘‘card’’ is just a single-use series of numbers that the provider can enter into a credit card terminal or web portal. Then the payment is transferred into the doctor’s account.

But it won’t be the whole $100. There are fees involved, somewhere between 2 percent and 5 percent of the amount paid. So the provider could end up with $95.

For a large hospital, all those fees can add up to a loss of thousands of dollars.

In one such payment notice to a provider, shared with GHN, an insurer stated that if the provider processes a first virtual card payment, then the provider agrees to get all future payments by virtual cards.

One of the advantages of virtual credit cards, experts say, is data security. The sequence of numbers in a virtual transaction is used only once, so it would be worthless to a hacker who infiltrates a computer system holding payment data. And virtual credit cards can save insurers money that otherwise would go toward producing and mailing paper checks.

But provider groups, citing the credit card fees, got behind House Bill 818 in the General Assembly. The legislation sought to prohibit insurers from requiring a medical practice to accept virtual credit cards as the only form of payment.

The Georgia Dental Association and groups representing hospitals, physicians and pharmacists supported the bill, which passed the General Assembly unanimously.

Under the law, health plans must notify the provider if any fees are associated with a particular payment method; advise the provider about available methods of payment; and provide instructions to the provider on how to select an alternate payment method.

The Medical Association of Georgia was among the groups advocating for House Bill 818. “Credit card fees cost physicians and other health care providers between 3 and 5 percent of their total revenue,’’ the group told GHN.

Graham Thompson, the executive director of the Georgia Association of Health Plans, an industry group, said the new law will foster better communication between health providers and insurers.


Supporters say Georgia was the second state, after Alabama, to adopt such legislation. It becomes effective Jan. 1, 2019.

Republican state Rep. Lee Hawkins, a Gainesville dentist, was the lead sponsor of the bill. “Interest companies were charging us 3 to 5 percent,’’ he told GHN recently.

Hawkins said it added to the administrative burden that providers already faced. “Over the years — I’ve been doing this for 40 years — we’ve become more of an insurance office or small bank,” he said.