2016 Virtual Credit Card Legislation

After two years, the Medical Association successfully saw passage in 2016 of its legislation to prevent physicians from unknowingly accepting virtual credit cards (VCC) and their hidden fees as a form of payment from health insurance companies and RCOs, even though the Medicaid RCO system has yet to officially launch.

Having heard from its members that VCCs were a growing concern, the Association went to work again to pass the VCC bill this year after narrowly losing it at the end of the 2015 session. The Medical Association worked diligently between legislative sessions to build support for the VCC bill and was successful in passing the bill this year.

The legislation – SB 291 by Sen. Quinton Ross (D-Montgomery) and Rep. Kyle South (R-Weaver) – ensures all health insurers and RCOs make physicians aware in their contracts of a physicians’ right to request payment via flat-fee “direct deposit” methods over VCCs, which charge a percentage-of-claims-based fee. The new law requires that all such physician requests for payment preference be honored.

Read Act 2016-320

Q: What is a VCC?

A: A virtual credit card (VCC) is a single-use credit card number. Physicians accepting VCCs are losing a percentage of their contracted rate for any claims paid via this method. The fees may be as high as 5 percent of the total payment amount and health insurers paying claims with VCCs often receive cash back (up to 1.75 percent) or other incentives. The bank or credit card company issuing the VCC is also paid for use of their card network. In other words, unknown to many physicians and their staff responsible for claims and billing, insurers and credit card companies are indirectly charging up to 5 percent of a claim for processing the transfer of money via VCC. In some practices, these fees may add up to substantial sums – and the charges are hidden.

Q: What does this legislation do?

A: The legislation requires health insurance companies and RCOs to place language into all their contracts with physicians outlining that a physician’s request to be paid with an ACH EFT (electronic funds transfer) must be honored. Under HIPAA, payments made via the Automated Clearing House may only be a nominal flat fee – for instance $0.34 instead of the 5 percent attached to some VCCs. The required language for all contracts, which must be in all caps, bolded 12-point font and offset from other language, reads as follows: “If a covered health care provider requests payment under a health insurance plan from a health insurer or its contracted vendor or a regional care organization be made using ACH electronic funds transfer, that request must be honored. Furthermore, such a request may not be used to delay or reject a transaction, or attempt to adversely affect the covered health provider.”

Q: Why is the language that an insurer or RCO cannot “attempt to adversely affect” a physician for requesting an ACH EFT payment over a VCC included?

A: That language protects a physician requesting an EFT payment from being penalized by the health insurer or RCO in some other manner, like denying or delaying payment simply because a physician requested an EFT.

Q: What you still need to do…

A: The Medical Association was successful in getting the law changed to ensure physicians are notified in their contracts of their right to be paid with ACH EFT payments over VCCs. Physicians and practices must individually decide whether or not they want to consent to the percentage-based fees associated with acceptance of VCCs. Additionally, because the Medical Association successfully included specific language be placed in each contract that the health insurer or RCO cannot delay or deny a transaction because of the choice of electronic funds transfer, each physician and practice should look for hidden “value-added” services. For instance, some ACH vendors have attempted to charge a higher fee for providing access to a 24-hour hotline. Under existing law, physicians are not required to enroll in such “value added” programs.

Q: Does this affect patients’ use of credit cards for payment?

A: No.

Legislation Prevents Prosecution for Following a Physician’s Orders

Background

When the Alabama Supreme Court in 2013 interpreted a law intended to criminalize exposing children outside the womb to chemical substances to also include children in utero, it created significant new liability problems for pregnant women and their doctors. The chemical endangerment statute as passed by the Alabama Legislature was intended to criminalize the exposure of children to substances used in the production of methamphetamine and to meth itself.

The Medical Association heard concerns from a number of its members regarding the consequences of the Court’s interpretation for those caring for pregnant women and began examining the issue. That research and consultation with member physicians led the Association to begin discussions with the law enforcement community to produce mutually-supported legislation to prevent the normal practice of maternity care from being considered a crime for either the patient or her physicians. The concept for the legislation soon became part of the Association’s 2016 agenda. The legislation was proposed and passed this year, was signed by the governor and is now law.

Read Act 2016-399

Q: Why was this legislation necessary?

A: To protect pregnant women and their physicians from prosecution under the chemical endangerment law for the prescribing of legitimate medications and for recommendations for FDA-approved OTC medications. The legislation was also necessary to prevent any uncertainty of whether physicians needed to report the prescription or recommendation of such medications for pregnant women to the Department of Human Resources. Without the legislation, both a pregnant woman taking a legitimately prescribed medication or a recommended OTC medication and her physician could be considered to have violated the state’s chemical endangerment law, the state’s child abuse laws and potentially various other state laws and the physician would also technically have been required to make a report to the Department of Human Resources.

Q: Why didn’t the Medical Association stop this from going into effect?

A: Given that the setting was the Court and not the legislature or some other body empowered with rule-making authority, the Association did not have an opportunity to prevent this interpretation of the chemical endangerment law from going into effect or even to put in place exceptions for the normal practice of women’s medicine. Had these changes been proposed in the legislative or even regulatory arena, the Association would have lobbied against criminalizing normal maternity care. The Association did file an amicus brief asking the Court not to expand the purview of the law beyond those the legislature intended but that request was not honored.

Q: What changed through passage of this legislation?

A: The Association’s 2016 legislation that is now law – SB372 by Sen. Clyde Chambliss (R-Prattville) and Rep. April Weaver (R-Alabaster) – clarified that no one shall commit chemical endangerment of a child (including unborn) or any other crime for expoing a child in utero to a chemical substance if that substance was a legitimate prescription issued by a physician or a non-physician working within his/her scope of practice or for the recommendation to take an FDA approved over-the-counter medication. As well, no one is required to report such activities to any authorities. Many thanks are due to bill sponsors Sen. Chambliss and Rep. Weaver as well as leadership in the Senate and House for making passage of this important bill possible.

Q: Does this new law impose any new requirements for newborn and/or mother drug testing?

A: No, this law does not in any way place new requirements for drug testing newborns or their mothers or standardize such testing.

Q: Does this new law govern a situation in which a pregnant woman is abusing drugs?

A: Not necessarily. Under SB372, the mother of the unborn child must be taking the medication pursuant to a “lawful” prescription to be protected. If the mother is abusing drugs, by taking more than prescribed, or something not prescribed, then the woman would not be protected. The physician would be protected if he or she has a good-faith belief that the woman is taking a drug pursuant to a lawful prescription. However, there is no requirement on the physician to inquire.

Q: Do other aspects of the chemical endangerment law need to be reviewed and possibly changed?

A: Yes, this issue is a continuing discussion between physicians treating pregnant women, addiction specialists and law enforcement. The Association, along with a number of specialty medical societies including the American College of Obstetricians and Gynecologists, believe proposals should be explored that emphasize treatment in lieu of prosecution so that addicts can get the professional help and treatment they need.

Summary

The chemical endangerment problem the Association worked on this year prevents the normal provision of maternity care from being deemed a crime, both for the pregnant woman and her physicians. The Medical Association believes only physicians should establish medical standards and treatments. Each year the Association successfully pushes back against such proposals in the legislative and regulatory arenas on behalf of its members and their patients.