Medical Billing Payment Processing Compliance Issues

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The health care industry, including medical billing companies, physicians, and hospitals, is required to be compliant with payment processing regulations. Yet, few participants understand the compliance necessary. As a result, the majority of the health care providers are non-compliant.

And, the advent of the Red Flag Rules, promulgated by the Federal Trade Commission set to go into effect at the end of this year, means health care providers have yet another regulatory body breathing down its neck. Failure to comply with Red Flag Rules and non-compliance with PCI-DSS payment processing standards puts medical providers and medical billing companies at risk.

Any medical provider or medical billing company that does not meet compliance standards risks fines of $3500 or more for every incident of non-compliance.In addition, medical providers and medical billing companies can be liable for losses that occur due to security breaches in payment processing and Red Flag Rules.

The Red Flag Rules and PCI-DSS regulations put medical billing companies and medical providers in a precarious position.It is vital that any company in the health care industry take the necessary steps to safeguard their business operations and protect against loss.

How are you handling compliance for your medical billing payments?


The economic downturn has resulted in fewer consumers using credit cards. The number of consumers actively used credit cards dropped to 56% last year, down 31 percentage points from 2007.  Predictions for 2010 indicate further drops, with only 45% of consumers using credit cards for purchases.

Consumers are now using debit cards as their preferred payment method.  Debit card issuers, however, are being hit with big revenue losses on debit card portfolios.

Recent regulation, including provisions allowing the Federal Reserve authority to regulate debit card interchange rates are expected drive profits lower.  This comes on top of earlier legislation which cut fees banks could charge for overdrafts on debit cards.  The double whammy could mean a loss of as much as $12 in interchange and overdraft fee income.  .

Banks are trying to beef up card programs by marketing cards differently.  Expect to see emphasis on special rewards cards for high income consumers.  And rewards will continue to be popular to incentivize buyers to use cards for everyday purchases.

Still, don’t feel too sorry for the banks.  The behemoth financial institutions that issue the bulk of cards had stellar years, thanks to the stimulus package funded by taxpayers.

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Chargebacks and High Risk Processing

Business applying for high risk merchant accounts accounts frequently ask questions about chargebacks.

Card brands consider chargeback percentages over 1% to be excessive.  Other elements that are considered when examining chargebacks are the number of chargebacks in a single month and the total chargeback volume.

Payment processing chargebacks are computed by dividing the number chargebacks into the total number of card transaction in a month.  The dollar volume of chargebacks are calculated by dividing the amount of chargebacks into the volume of processing for the month.

How Chargebacks Affect You

Excessive chargebacks can put high risk merchant accounts at risk.  In addition to fines, high risk you can face termination of processing rights.

Therefore, it is wise for you to carefully mange chargebacks.  Using the fraud protection tools that are available in a high risk gateway can go a long way in mitigating chargebacks and automate the processes.

In addition, you should always fight chargebacks.  While you won’t always win, it can be successful in many cases.  Fighting chargebacks also indicates that a company believes in its business and is proactive in responding to negative responses to customers.


Proper management of chargebacks is particularly important to high risk merchants. Enable the tools available on your payment gateway. Use chargeback prevention services. And fight the chargebacks you can win.

How are you handling your chargebacks?