House proposes ban on health insurers charging doctors to be paid electronically

A bipartisan group of six U.S. representatives has introduced a bill that would prohibit insurers and their intermediaries from levying fees on doctors for paying them electronically. The legislation comes in the wake of a ProPublica investigation that detailed the toll of such fees, which add up to billions of dollars that could be spent on care but are instead funneled to insurers and payment processors.

The charges are akin to having an employer deduct 1.5% to 5% to provide a paycheck electronically if an employee prefers to receive a payment directly into their bank account rather than via a paper check. Yet that’s the choice many insurers are increasingly forcing on doctors.

“We don’t tolerate paying fees to receive direct deposit of a paycheck, likewise, doctors and patients should not be forced to pay predatory fees on electronic payments on essential health services,” the bill’s lead sponsor, Republican Rep. Greg Murphy of North Carolina, said in a statement announcing the legislation. Murphy’s bill would effectively force the Centers for Medicare & Medicaid Services, the federal government’s chief regulator on health care payments, to prohibit the fees.

As it happens, that would bring the giant agency back to its original position. CMS prohibited fees for electronic funds transfers until it was lobbied by a payment processor called Zelis. The agency changed its position in 2018, then went even further in 2022, explicitly stating that such fees are not prohibited. A spokesperson for CMS said the agency does not comment on proposed legislation. Zelis did not reply to a request for comment on Murphy’s bill, but the company previously told ProPublica that its services remove “many of the obstacles that keep providers from efficiently initiating, receiving, and benefitting from electronic payments.”

CMS’s about-face was detailed in copious internal records meticulously collected by a New York City urologist, Dr. Alex Shteynshlyuger, who has made it his mission to fight the costly fees. His crusade now appears to have found a sympathetic ear in Congress: Like Shteynshlyuger, Murphy is a urologist, and he co-chairs the House GOP Doctors Caucus. Three Democrats and two Republicans thus far have signed on as co-sponsors of his bill.

The proposed legislation has the backing of the American Medical Association, whose policymaking body voted last month to adopt a new resolution opposing “growing and excessive” fees on electronic funds transfer payments. Shteynshlyuger, who has spent six years trying to convince CMS to ban the fees, introduced a proposal at New York state’s medical society that then made its way to the AMA. He said of the new federal bill: “I’m happy that the legislators got involved.”

Administrators at small medical clinics are hoping the bill will bring them relief from the fees, which are “doing nothing for us but costing us money,” said Rebecca Hamilton, who manages an arthritis and rheumatology clinic in Wichita, Kansas.

Often, it’s independent clinics like Hamilton’s that suffer the most from such fees, since medical practices collect the vast majority of their revenues through EFT payments, according to the Medical Group Management Association. The winners are the recipients of the fees: large insurers and payment processors like Zelis.

 One form of electronic fee is not addressed by Murphy’s bill: charges for use of so-called virtual credit cards, which Shteynshlyuger has also been campaigning against. Virtual credit cards are temporary card numbers that are typically used for one payment. Fees for VCC use run as high as 5% versus a typical 2.5% for other kinds of electronic payments.

ProPublica’s investigation showed how Matthew Albright, a lobbyist for Zelis, used a combination of cajoling, argument and the threat of litigation to get CMS to withdraw a 2017 notice prohibiting fees for electronic payment. CMS had posted the notice, which was based on a federal rule from 2000, on its website after hearing complaints from doctors. Internal CMS emails detailed how Albright repeatedly demanded that CMS withdraw and revise the notice, and when CMS ultimately refused, a law firm representing Zelis threatened to sue the agency. Within days, CMS removed the notice. It later stated that fees are allowed.

CMS previously told ProPublica that it reversed its position because it concluded that it had no legal authority to “flat-out prohibit fees.”

Related: Phantom payment fees boost cost of health care, study finds 

Albright, like CMS, has changed his public position on the fees. Before he joined Zelis, Albright worked for the federal agency, where he wrote the rules implementing electronic health care payments. Shortly after his time at CMS, at a 2015 conference for health care business managers in Las Vegas, Albright expressed unequivocal opposition to fees for electronic payments. When Albright outlined the agency’s rules, audio of the event shows, the mere mention of virtual credit cards prompted some members of the audience to cry, “Evil!” Albright asked if that sentiment was unanimous, prompting a wave of yeses.

Laughter ensued, and Albright, who has a master’s degree in divinity, joked that he was preaching to the choir. His sermon? “What other industry does not get paid for the services they’re doing, and when they do get paid, they have to pay for getting paid? What other industry, right? It’s ridiculous!”

Reached by telephone for comment, Albright said, “I can’t speak to you.”

This story was originally published by ProPublica. Sign up to receive ProPublica’s biggest stories as soon as they’re published.