The Middlemen of Private Healthcare

It wasn’t until I recently received a “Virtual Payment” from a company called VPayUSA that I thought about the massive number of middlemen involved in the delivery of payment for services. If you’re not intimately involved with your revenue cycle, then you may not be aware of what this company does. It’s this sort of interference of the payment cycle that drives physicians crazy, out of business, or shifting into employed medicine.

           This company is the last step in a very long chain of middlemen somehow involved in our payments. They receive an amount of payment from a payer, an administrator, or, I’m finding out, even a patient, and then that payment gets delivered to us by VPayUSA. This company issues this payment to us defaulted as a virtual credit card payment. You get a charge amount, a one-time credit card number, and expiration date, and your staff (or you) are supposed to run the card through your credit card machine. Bing, bang, boom, you’re paid! Right?

           Well, you’ve just taken a percentage hit to your fee schedule. For me, it averages about 2.3%. That’s a fairly big drop. In fact, that may be the entire amount I’m due for my MIPS/MACRA bonus. If you use SquareUp, it’s 2.9%. PayPal can be even more. Most physician offices really don’t do a good job about keeping merchant collections inexpensive, and they’re landing at about 3.5 – 4% of a subtraction from their payment. Don’t you think that’s huge? If you collect $1000, it’s $40. If it’s $2000, it’s now $80. That’s one full patient visit.

           So, think about this. Your practice management software or your EHR, if it includes PM functions, charges you either a flat fee, a percentage fee on collections, or a per transaction fee. Doing the math, typically this gets to be about $1 per charge. For an average primary care physician charge, about $100, that’s 1%. Now here’s where the opaque fun starts. The payer you just sent that claim to pays a charge to a company to be able to receive the claim. They pay another fee to the same company or another company to screen the claim for errors, including eligibility issues, improper modifiers, unmatched age to preventive code, etc. Once they’ve decided that the claim is clean, they then send the claim to another company, because they’ve decided to have a different company cut you the check. That would be VPayUSA. Each step of the way, they are paying some vendor to process these ever increasingly complex claims. Because someone keeps changing the rules--the American Medical Association owns the Common Procedural Terminology, or CPT codes, and each company that uses CPT codes to process claims must pay a royalty to the AMA--insurance companies and administrators must pay other companies to make sure everything is up to date and being processed correctly. And they still get it wrong. And when they get it wrong, they do what’s called a “Take Back”. That’s when a company (not typically the insurer) retroactively goes back on claims and finds an error, then sends you a letter telling you a claim was filed improperly, and they want their money back.

           That is yet another company.

           I just paid four Take Back claims from a company named Loomis. Wait! I thought Loomis was an armored car company. I think it’s the same company. So now what they do is go through old claims, find improperly paid ones, let the insurance company know, and then get the money back. And guess what. Loomis gets a percentage of the money they find in a take back as payment for finding the error.

           All of these steps, all of these checks, double checks, retroactive checks, payments, payment processing, all cost money. They are part of the reason for our diminishing payments, lack of competitive fee schedules, and misery in the current healthcare payment system.

           By the way, VPayUSA requires me to notify them any time a new payer tries paying me by Virtual Card. I can tell them I would like all of my payments by XYZ Insurance to come by check. But if ABC Insurance pays me, VPayUSA tries to send me a virtual card. Because it’s a different company. Because I have to request it specifically for each different administrator and carrier. Never mind that VPayUSA is the same company in each case. Never mind that my Tax ID and Group NPI are the same for every payer. They can’t just set a default payment method of “check”. Nope. Each and every time.

           This is honestly one of the stupidest middle men companies I’ve ever dealt with. And here’s why it’s such an obvious money grab.

           They explain that being paid by Virtual Card is cost effective and rapid. I’m sure there’s a kickback or discount fee being paid to them by using the card (a means of them getting paid even more money). They do offer the ability to get all of my payments by direct debit to my checking account, and that can be applied globally. Hey, yeah! That would be fantastic.

           It would cost me $1.50 for every payment made by EFT.

           No thanks. I’ll make you guys send me checks. That’s going to cost you all more money. And I’ll continue to tell you how stupid I think the whole thing is each time I have to email you every time a different carrier pays me.

           And I’ll ask all of my Family Physician friends to stop letting these companies steal from us. Those of us at the front line. Those of us healing people. As you pickpocket us into bankruptcy, for no reason other than lining your own pockets. You offer no improvement to the payment system at all.

           It’s time to say no to our the current revenue system. It’s time for a new way.