Most of us have transferred money electronically, whether to pay an electricity bill or pay a friend back via Venmo. Often these transfers come with small fees, which we accept as the cost of convenience.
But sometimes these fees go too far, as was revealed in a ProPublica investigation published Monday.
Provisions in the 2010 Affordable Care Act sped up the adoption of electronic payments in medicine, and insurers began paying doctors’ claims for reimbursement mostly electronically. This was intended to save money. A 2020 report by CAQH, a nonprofit alliance of health plans and providers, found that paying claims manually, which generally means mailing a check, costs insurance plans $0.57 and doctors $3.18 per transaction, while paying claims electronically costs insurers $0.08 and doctors $1.19, including the labor required to conduct the transaction.
Yet ProPublica reported that instead of resulting in a savings, the switch from manual to electronic payments created a cottage industry of middlemen between insurers and doctors. These companies are charging doctors large fees to get paid electronically, with the money also benefiting the insurers. ProPublica said insurers sometimes charge up to 5 percent of the money they are reimbursing for a doctor to get paid electronically. These fees probably total billions of dollars annually.
In other words, an innovation intended to save the system money is costing money.
The companies say they are charging for “value-added” services, like streamlining recordkeeping or letting providers receive money from multiple insurers through one platform. Companies like Zelis and UnitedHealth Group, which operate these services, told ProPublica that these are opt-in services, and doctors can get their money without paying fees. But doctors — in particular anti-fee crusader and New York urologist Alex Shteynshlyuger — told the publication that they could not opt out.
This is not a new issue. In 2021, the American Medical Association and dozens of physician trade organizations wrote to the administrator of the Centers for Medicare and Medicaid Services expressing concern that physicians were being forced to pay mandatory 2 percent or 3 percent fees that they had not agreed to in order to be paid electronically. The charges were billed as being for “value-added” services like customer service hotlines.
“This outrageous situation is analogous to an employee being required to enroll in a program that would deduct a percentage of each paycheck to receive direct deposit payments from an employer,” the physician groups wrote. The doctors asked CMS to require insurers to offer at least one option for electronic payments without extra fees.
In 2017, CMS had said EFT fees were prohibited. But, as detailed by ProPublica, after lobbying by Zelis and the threat of a lawsuit, CMS removed the notice from its website in 2018. CMS published new guidelines in 2022 allowing fees for electronic transactions but suggesting that physicians cannot be forced to accept — and pay for — value-added services.
The way the guidance is written leaves it open to interpretation, and ProPublica reported that in many cases, doctors continue to be required to pay fees in order to be paid electronically.
Not every insurer charges, and this does not appear to be a major problem in Massachusetts. A Medical Group Management Association poll in 2021 found that 57 percent of responding doctors were charged fees for electronic deposits. According to the Massachusetts Medical Society, there are two main companies that offer virtual credit cards, a form of electronic payment that tends to carry the highest fees. They contract with six insurers, most of which do not have a large presence, if any, in Massachusetts. The state’s largest insurer, Blue Cross Blue Shield of Massachusetts, does not charge fees for electronic payments, and the Massachusetts Association of Health Plans, an insurers trade association, said it is not aware of the practice among its members. The medical society last got a call about the issue in 2021.
But what is clear is that physician groups are already struggling to turn a profit. When money is diverted to administrative fees, there is less to spend on patient care.
If companies ranging from utilities to charities have figured out how to facilitate transfers of money between bank accounts with minimal fees and without lining their own pockets, insurance companies can do the same. Federal regulators should ensure that happens.
Editorials represent the views of the Boston Globe Editorial Board. Follow us @GlobeOpinion.
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