MGMA: EFT Fees Imposed by Health Plans Are Hurting Providers

Electronic funds transfer (EFT) fees imposed by health plans and third-party vendors are increasing costs and administrative burdens for healthcare practices, according to a position paper from the Medical Group Management Association (MGMA).

The Affordable Care Act required health plans to offer medical practices the option of receiving reimbursement through a standardized EFT method. Initial guidance from CMS instructed health plans that only a provider’s financial institution could impose a fee to process EFT payments through the automated clearinghouse (ACH) network. The guidance also noted that providers were not required to contract with payment vendors for value-added services.

CMS removed this guidance from its website in 2017 but clarified certain payment practices related to EFT transactions in March 2022. However, the update did not solve the issue of EFT fees, according to MGMA.

Some health plans require practices to use their third-party vendors to receive electronic payments, which typically charge a 2 to 5 percent fee on the transaction. Without subscribing to electronic payments, providers must receive reimbursement through checks in the mail or virtual credit cards that require fees.

Additionally, healthcare practices are not always equipped to negotiate with health plans and vendors to receive timely payment.

MGMA surveyed almost 150 medical groups in April 2023 about EFT practices. According to the survey, two-thirds of respondents reported that over 75 percent of their practice’s annual revenue is paid via EFT.

Two-thirds of groups also said that insurers are charging their practices fees they did not agree to when sending payments via EFT. The majority of practices indicated annual fees of $100,000 or less, but reported fees ranged up to $1,000,000.

Around 22 percent of claims are subject to EFT fees, the survey found. In addition, one in five respondents said that Medicare Advantage plans are imposing EFT fees.

Medical groups reported that EFT fees create substantial administrative burdens and limit their ability to provide cost-effective care.

MGMA has called on Congress to codify protections by preventing health plans and vendors from charging excessive fees for EFT payments. Legislation clarifying that plans and vendors cannot impose EFT fees would help minimize burdens for medical groups.

Additionally, CMS should release guidance clearly stating that levying fees for processing EFT payments through the ACH network is prohibited.

This issue has been ongoing, with an MGMA Stat poll from 2021 highlighting that 57 percent of medical practices reported being charged EFT fees by health plans that they did not agree to.