by Marty Kotlar, DC, CPCO, CBCS •
President of Target Coding •
Question: Dr Kotlar, “Many businesses including healthcare providers have been passing on the credit card processing fees to patients. Is it appropriate to do this? If yes, how do I do it?”
Answer: Credit card payments offer convenience for patients and efficiency for health care practices, but they also come with a significant and often overlooked cost: processing fees. Each time a patient pays with a credit or debit card, the provider is charged a fee by the card processor, typically ranging from 2% to 4% of the transaction. In an environment where margins are already tight, many health care providers find it necessary to pass these surcharges on to patients in order to remain financially sustainable.
Health care reimbursement rates – particularly from Medicare and commercial insurance carriers have declined, while operating costs continue to rise. Expenses such as staff wages, rent, supplies, compliance requirements, technology, and malpractice insurance leave little room for absorbing additional costs. Credit card processing fees can amount to thousands of dollars annually for even a small practice, directly impacting its ability to operate efficiently and continue providing quality care.
Passing on credit card surcharges promotes transparency and fairness. Rather than spreading these costs across all patients through higher fees, the surcharge is applied only to those who choose to use credit cards. Patients retain the option to avoid the fee by paying with cash, check, or other accepted methods. This approach allows providers to keep base fees lower while offering flexibility in payment options.
When properly disclosed and implemented in accordance with state laws and card network rules, credit card surcharges are a reasonable and responsible business practice. They help balance convenience with cost, protect the financial health of the practice, and ensure that providers can continue serving their patients without sacrificing quality or stability.
Credit card surcharges are allowed in most states. The maximum allowable surcharge on credit card transactions is 4%. Notify credit card companies in writing about your intent to surcharge. Clearly inform your patients about the surcharge and the percentage. Surcharges should be listed as separate line items on invoices, clearly labeled. Here is a sample patient notice:
Dear Patient:
To continue offering convenient payment options, our office accepts credit and debit card payments. Please be advised that payments made by credit or debit card may be subject to a processing fee, which reflects the cost charged to our office by the card processing company.
A processing fee of__ % will be added to payments made by credit or debit card. The processing fee is not covered by insurance. The fee will be clearly disclosed at the time of payment. No processing fee is applied to payments made by cash, check, or other approved non-card payment methods (if applicable).
By choosing to pay with a credit or debit card, you acknowledge and agree to the applicable processing fee. If you have questions about payment options or fees, please contact our billing staff prior to making payment.
Sincerely,
Dr. Signature
Click for more information on credit card surcharge laws: https://merchantcostconsulting.com/lower-credit-card-processing-fees/credit-card-surcharge-laws-by-state/
MARTY KOTLAR, DC, CPCO, CBCS, is the President of Target Coding. Over the last 15 years, Target Coding has helped hundreds of healthcare providers with compliance as it relates to billing, coding, documentation, Medicare & HIPAA. Dr. Kotlar is certified in compliance, a certified coding specialist, a contributing author to many coding and compliance publications and a guest speaker at many state association conventions. He can be reached at 1-800-270-7044, www.TargetCoding.com or drkotlar@targetcoding.com. Email info@targetcoding.com for a FREE practice analysis.
