The Value of Choosing the Right Health Insurance Electronic Payment Method

The health insurance payments industry is changing – consider the benefits of ACH to get paid faster and improve payment transparency.


The United States continues to have amongst the highest healthcare costs in the world. Although the rate of increase may be slowing, spending still rose 3.9% in 2017 and 2018 was projected to be up approximately 5%.

From a healthcare provider perspective, what can be done about these rising expenses? In a world dominated by innovative technology, there should be ways to reduce costs.

There is–with electronic payments.

Healthcare Payments Landscape

For many decades, healthcare payments have been paper-based with long explanations of benefits documents and reimbursement forms, envelopes and checks.

Let’s pause and consider these drawbacks to paper checks:

  • Time to arrive
  • Time to be opened
  • Time to be accounted for
  • Time to deposit
  • Time to clear

Additionally, there are monetary costs to paper-based payments. According to an Association for Financial Professionals (AFP) survey, the all-in cost for processing a check can be up to $75 per check.

Shocking, isn’t it? We walk around with near supercomputers in our pockets, but healthcare payments are still largely completed via paper check. It just doesn’t make sense.

Not only are checks costly, they are prone to problems such as getting lost in the mail and fraud, where criminals can forge a signature or alter a payment amount.  Yet checks remain the standard way of business for many.

There is good news. Technology has made its way into the payments realm.

As with any repetitive, administrative task, there’s tremendous potential for efficiency gains and cost savings by using technology. The Council for Affordable Quality Healthcare (CAQH), an alliance of health plans and other interested parties, has long been advocating for greater use of electronic healthcare transactions to reduce administrative costs and improve accuracy.

The current state of payments paves a landscape with two primary options.

  1. Virtual Card

Virtual cards are a one-time use credit card number for a specific amount and claim. They are key entered into a credit card or virtual terminal for payment to the provider’s bank account. The major advantage is the low effort to get started and a familiar process. Virtual cards can be downloaded from a portal, faxed or mailed. Notably, fax and mailed virtual cards have higher risk of fraud or error. Zelis’ new capability, its consolidation feature, allows for all daily card transactions to be combined, reducing time spent keying card numbers.

The cost from the provider’s payment processor of a virtual card transaction is typically made up of three parts: interchange fees, brand fees (such as Mastercard’s) and the payment processor’s markup. Collectively, this is the “discount rate”. Typically, costs range from 3-6% of a payment, plus the staff cost of keying a card.

Paying by virtual card also carries a time delay. While faster than check, it’s still not the fastest or lowest cost option available.

  1. Automated Clearing House (ACH)

In an ACH transaction (a.k.a., direct deposit), funds are transferred to the provider’s bank through the Federal Reserve. Set up can take a little more time up front because a provider must share their bank deposit information, but the savings, speed and efficiency of future payments are worth it.

ACH just makes sense, especially once you look at the benefits:

Lower Costs

The fees are also much lower with ACH than virtual credit cards. Another often overlooked form of cost savings comes from time savings. On both ends, for the payer and the provider, paper checks require administrative work. ACH reduces the amount of time needed for this task, freeing up administrative staff to focus on other important tasks.

CAQH and NACHA provide these estimates:

  • $10.39: average amount providers saved per the cost of claims via ACH
  • 40 minutes: time providers saved by automating key claims management processes

If that’s not enough of a case to switch, read on.

Increased Transparency

Electronic transfers provide greater transparency into your payments. Both parties will know almost immediately if the transaction went through and was received.

Better for the Environment

We’re sure you recycle, but wouldn’t it be easier if you didn’t have to deal with the copious amounts of paper still in the healthcare system? It’s less of a hassle for you and better for the environment.

Improved Data Accuracy

With ACH, there’s no chance for human error since the transfer is between two banks. Also, ACH can give you nearly real-time visibility into your financial situation as transactions clear faster. As healthcare payments get more complicated, it will become more important to have a system in place that can guarantee accuracy.

Enhanced Security

This method is less prone to fraud than other payment methods. Some may be concerned about online security when entering their bank details into a portal. Data security has come a long way since the early days of the internet. It is now much more secure to transfer money digitally, with more security enhancements being developed every year.

Low Cost

Pricing for ACH is less than 2% and becomes even more efficient with larger volumes of payments. It is fast, efficient and flexible, with payments available individually by claim, by payer or all payers combined.

Healthcare Payments Vendors: An Even Better Way to Use ACH

Recognizing the potential for ACH to become a new standard of doing business, payments vendors such as Zelis Payments have been taking ACH one step further.

By working with Zelis Payments, you can benefit from:

  • A shortened revenue cycle because payments can occur nine days faster than with paper checks, increasing cash flow and enabling better management of your business.
  • Improved data quality since more detailed and error-free data are coming directly from the payer.
  • Increased accuracy due to less manual entry.
  • More choices for payment and data delivery options to suit your needs depending on your workflow.
  • Exceptional and additive service with fraud monitoring, clearing house and bank assistance as well as dedicated service to address any of your questions.

Billing companies, providers, hospitals and health systems gain access to a central portal where they can manage payments to and from multiple payers and payer groups from a single account. With our single sign-on portal, data is aggregated into one location and one file, making it easier to understand and consolidate.

Zelis is also CAQH CORE® certified. This means our service has been tested and approved to support standards that ensure a high volume of smooth transactions across the healthcare industry.

We manage payments for more than 175 payers including health and dental plans, workers’ compensation payers and healthcare benefits administrators, representing over 32,000 individual groups.

That’s a lot of checks we help eliminate.

The Future of Healthcare Payments

Technology is transforming healthcare. While the current method of paying by check works, there’s clearly a more efficient way of doing things. Paper-based payment is not the way a technologically-advanced society should be handling payments.  As ACH becomes more widely accepted and as the digitization of the healthcare industry continues, it seems inevitable that electronic payments will help lead the way.

Whether the benefit of speed, cost, accuracy or eco-friendliness appeal to you, adopting ACH, especially in conjunction with the support of payment services like Zelis Payments, will be the way of the future.

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About the author: Ian Drysdale is the President of Zelis Payments, where he leads a strategic, growth-oriented payments team. Ian is a 25-year veteran in the payments industry and has deep payments expertise across multiple sectors, including healthcare. He is focused on growth through value-added capabilities and disruptive healthcare payments technology that influence organizations. Ian is married with three children and enjoys playing tennis on the weekends in sunny St Petersburg, Florida. Follow him on Twitter @ianmdrysdale