Credit Card Surcharges and Chiropractic Physicians in Illinois

As chiropractic physicians in Illinois, it is essential to understand the legal and business implications of adding credit card surcharges to patient bills.  Chiropractic practices are subject to credit card laws that apply to all businesses.  Additionally, as health care practitioners, physicians are subject to a myriad of professional laws and regulations.

Surcharges to credit transactions may refer to various charges above and beyond the health care fee (for example, a concierge fee), but the most common surcharge is the credit card service charge (“swipe fee” or “transaction fee”). In the past, the ICS has recommended against any form of surcharges, due to the possibility that doing so could violate the Medical Practice Act’s overcharging section, as well run afoul of network contract provisions. 

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However, with regard to credit card service charges, changes in common practice and the economy have impelled businesses to pass along these fees to offset decreases to the businesses’ bottom lines.  The Medical Practice Act and Rules do not specifically provide guidance regarding credit payments.  Therefore, the ICS now believes that physicians are not prohibited from implementing credit card service charges if done with proper disclosure to and acknowledgment by patients. This article discusses important factors and recommendations for chiropractic physicians who are considering adding credit card service charges to patient credit card transactions.

The Complexities of Credit Card Surcharges for Chiropractic Physicians

A common form of surcharge to credit card transactions involves passing along to the purchaser the “swipe fee” or “transaction fee” that credit card companies charge the merchant. Any physician considering this practice should consider the following:

1. Variations in State Law:

The legal permissibility of surcharges varies from state to state and continues to evolve.  Illinois does not ban surcharges for general merchants.  Nonetheless, to date no published cases specifically address credit card surcharges related to healthcare services in physician offices

 2.  Compliance and Uniformity:

To ensure compliance with various healthcare programs, it is crucial for physicians to maintain consistency in their fee structures. The ICS would argue that the transaction fee is separate from the physician’s fee and that the physician’s fee remains the same, whether paid by charge or otherwise.  However, physicians must be aware that payers may consider the transaction fee to be part of the overall fee, resulting in multiple pricing structures.  These payers may raise concerns about impermissible discounts or inducements, particularly in programs like Medicare and Medicaid Managed Care Provider Agreements:

Providers should also review their agreements for the networks in which they participate.  Managed care agreements require the provider to accept the plan’s fee schedule listed amount as full payment for in-network patients.  Again, the ICS would argue that the transaction fee is separate from the physician’s fee and that the physician’s fee remains the same, whether paid by charge or otherwise.  However, a health plan could view some types of surcharges to be a violation of the provider agreement, where the physician and patient are in-network for that plan. For example, BCBSIL states the following in their Billing and Reimbursement policy, “A Contracting Provider shall not bill or collect from the member, or BCBSIL, charges itemized and distinguished from the professional services provided. Such charges include, but are not limited to, malpractice surcharges, overhead fees or facility fees, concierge fees or fees for completing claim forms or submitting additional information to BCBSIL.” The list does not include credit card transaction fees; however, we do not have an official interpretation from any payers or regulators.

Legal Considerations for Credit Card Transaction Fees

If, after reviewing the information above, you plan to charge credit card transaction fees to your patients, major credit card institutions have set forth specific rules and regulations that must be followed. It is crucial for chiropractic physicians to adhere to these guidelines when considering the implementation of credit card surcharges:

1. Notify the Credit Card Institution:

Physicians must inform major credit card institutions, in writing, of the physician’s intention to surcharge. This notification process can typically be completed by sending a letter to the financial account representative or through paperwork provided on the credit card company’s website. Check with your credit card processing merchant account representative as to that merchant’s process.

2. Notify Your Patients:

Clear communication with patients is vital. Physicians must inform their patients explicitly about the surcharges, ensuring the information is not buried within contracts or obscured by fine print. The ICS recommends including this information in the physician’s Financial Policy that is acknowledged by the patient prior to treatment.  ICS members may access a template Financial Policy here:  financial-policy-template-update.  Additionally, we recommend including the surcharge on invoices or displaying signage in the office. For online payment solutions, the surcharge should be clearly stated on the payment page.

3. Reasonable Surcharge Amount:

Typically, surcharges range from 1.5% to 3%.  Chiropractic physicians must not implement surcharges that exceed the actual cost of their credit card processing fees within the 1.5-3% range.

4. Restrictions on Debit Card Transactions:

Surcharges are limited to credit card transactions only. It is not permissible to apply surcharges to debit card transactions, even if processed as credit transactions. Additionally, prepaid cards are exempt from surcharge fees.

5. Transparent Line-Item Reporting:

To ensure transparency and facilitate accurate record-keeping, each surcharge should be listed as a separate line item on invoices. This practice clarifies to patients that they are being charged an additional fee for credit card usage while simplifying financial reconciliation for chiropractic physicians.  Additionally, it supports the argument that the transaction fee is separate and apart from the health care fee.

Recommendations

Due to the lack of specific laws or precedential court cases, the legality of physician practices adding credit card surcharges is uncertain at this time.  However, the ICS has observed the growing acceptance of this practice by all types of health care facilities and clinics.  Therefore, the ICS recommends that practices follow the guidelines noted above to mitigate potential legal risks and maintain compliance with managed care network agreements. 

For more information regarding the processing of credit cards in the chiropractic practice see our article Credit Card Payments for Physician Fees: A Regulatory Tapestry.