Gone are the days where most patients bring in checks or cash to pay for their mental health care. At this point, patients expect that their clinician takes credit cards, especially as more care has shifted to be virtual during the pandemic. 

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Being able to accept credit card, debit card and FSA/HSA card payments also allows clinicians to keep card information securely on file, saving time and hassle for all involved. However, choosing a credit card processor and opening a merchant account for your practice can seem daunting. 

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Choosing the wrong credit card processor can make a significant difference to your bottom line. Any reputable credit card processor will have appropriate security and legal precautions to process and store payment information. Beyond that however, there are many nuances that vary between processors. 

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Here are 10 questions to ask when evaluating potential credit card processors for your practice and how they will work with your EHR and practice management systems:

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1. Does the company use “Interchange Plus” or a “Flat Rate” payment processing?

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There are two ways credit card processors can charge per transaction.

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The first is a cost-plus pricing model that starts with a base of interchange fees and network fees that the credit card processor must pay. They then add on a slight markup so they can stay in business that usually is a per transaction fee along with a percentage of the transaction (the “Plus” part). Interchange fees vary between the different credit card companies which set them and so knowing what the actual rate is will depend each month on the mix of credit cards your patients choose to use.

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The second is a simple flat fee that doesn’t vary based on the type of card. Companies like Stripe and Square use the flat rate model but more traditional processors favor the Interchange Plus model.

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Some companies offer both depending on your transaction amounts and volume. One model is not inherently better than the other but when comparing two processors, it is basically apples and oranges if they each use a different model.

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2. What additional fees are there on top of the standard rate?    

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Many credit card processing companies, much like cable companies, love to tack on a bunch of one-time and recurring hidden fees like setup fees, early termination fees, cost to rent or buy a Point-of-Sale terminal, compliance fees, recurring payment fees, and more.

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If a rate sounds too good to be true, it probably is—so ask about these fees in advance of signing a contract. This is the case regardless of whether or not they use “Interchange Plus” or “Flat Rate” processing. The slight silver lining is that merchant fees are considered a tax-deductible business expense.

3. Is there a different rate depending on how the patient makes their payment?

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Due to increasing rates of credit card fraud, it’s very common for processors to charge a different tiered rate (even in a “Flat Rate” model) based on whether:

a) The credit card payment was made in person by swiping it at a Point-of-Sale terminal.

b) It was entered directly by a patient via an online terminal.

c) The clinic keyed the information in themselves after taking it down from the patient or family member.

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The latter method usually has the highest fees because it is most prone to fraud. Cards presented in person that are swiped usually have the lowest rates in a tiered model. Given how many mental health practices operate, including some that are 100% via telehealth, chances are you’ll want flexibility in how you collect payment.

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If the processor does not use tiered pricing and has one simple model regardless of how the payment is made, that is a big win for practices as long as that rate is competitive.

4. How long is the turnaround time for payouts to reach my bank?

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When a charge is run and reconciled at the end of the day, it typically takes 24-72 hours for most credit card processors to issue a payout to the bank account you have designated. However, some credit card processors can take up to a week and can vary based on the type of card.

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I recall working with one processor that had faster payments for American Express but took 5-7 business days for everything else.

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Aim to work with a processor that takes the standard time frame or less and ask what type of visibility is available regarding the timing and amount of upcoming payouts. Also make sure the merchant processor will connect with your bank if you use one of the newer online banks—as not all will.

5. Do I need to worry about HIPAA when it comes to accepting credit card payments?

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Well, it depends. Health and Human Services defines standard payment processing as outside the scope of HIPAA and it does not require a Business Associate Agreement for HIPAA-covered entities for simply accepting a payment:

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‍Section 1179 of HIPAA exempts certain activities of financial institutions from the HIPAA Rules, to the extent that these activities constitute authorizing, processing, clearing, settling, billing, transferring, reconciling, or collecting payments for health care…(US Dept. of Health and Human Services, 2013).

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If the credit card processing company engages in services beyond simply processing transactions on behalf of your business, that would fall within the scope of HIPAA. Examples could include sending a receipt to the patient via email or text or engaging in any type of collection activities (“accounts receivable functions”) on your behalf. You also should refrain from providing more information to a processor than is needed to process the charge. For example, the processor doesn’t need to know diagnostic codes that would appear on a superbill for insurance reimbursement.

6. Do the terms of service allow payments for telehealth, medical care and any specialized services like ketamine or in-office goods sold?

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Before Covid, many credit card processors didn’t allow telehealth as a service that could be billed on their platform. However, at this point, most processors allow this.

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Credit card processors have very strict guidelines, however, around the sale of any federally illegal goods—so things like medical marijuana or psilocybin would pose a problem for most processors, even if they are legal in a given state.

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We’ve seen some credit card processors reject clinics who offer ketamine so it is important to check with the processor if that’s a service you offer. Many also don’t allow you to charge for any medications sold on site or mailed to patients, so be sure to reach the terms of service carefully and try to find a processor that is able to handle those types of transactions if you offer them. Otherwise, for certain types of goods, you may not be able to accept credit cards.

7. Can I charge a surcharge when patients pay using a credit card instead of a cash or check?

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The answer is that it depends on the state. At this time, ten states prohibit credit card surcharges: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.  If you’re not in one of those states and plan on charging a surcharge, patients need to know this in writing in advance and they cannot be charged it for a debit card or a FSA/HSA card.

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There’s a bit of a loophole in some states like New York where although you can’t charge a surcharge, if you make the price paid by credit card the regular “sticker price”, you can offer a discount if someone pays by cash or check instead.

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We recommend checking with your attorney and the laws in your state if you’re planning on imposing any surcharges or discounts like this since the regulations change frequently. Note that you can also impose a minimum purchase requirement for accepting a credit card.

For most mental health practices this wouldn’t be relevant unless:

a) you sell other types of very low cost items in your practice, or

b) if a patient has a very low copay or unusual residual balance.

8. Are HSA/FSA cards accepted and do I need to do anything special to accept them?

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Most credit card processors accept Health Saving Account (HSA) and Flexible Spending Account (FSA) cards for eligible medical and wellness expenses. However, be mindful when you’re setting up your account to choose a  Merchant Category Code (MCC) that is clearly healthcare related.

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If your account isn’t designated as one that provides healthcare goods or services, these payment methods will be rejected. Keep in mind that the patient’s HSA/FSA card could also be declined if it’s designated by their employer for a very specific type of healthcare MCC or if it has insufficient funds.

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If you’re using a Point-of-Sale terminal, make sure it also can accept HSA/FSA cards as not all can. Also keep in mind you’re never allowed to charge a surcharge for HSA/FSA cards in any state!

9. What is the process like if there is a disputed charge, fraud or other issues requiring customer support?    

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Most modern credit card processors have built in protections against fraudulent charges so ask about end-to-end encryption and full PCI compliance, which is the industry standard. Nonetheless, fraud sometimes still occurs and sometimes patients dispute charges because they don’t recognize the merchant’s name on the statement or if they are dissatisfied with the service or cancellation/no-show policy. 

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There are things you can do in your practice policy documents to ensure patients agree to your policies around charges, such as encouraging patients to speak with you directly if they have a dispute with their bill. However, some will go directly to their credit card company to dispute a charge. When this happens, the credit card processor should have clear guidelines as to how they handle disputes and what information you’ll need to provide within certain timelines to provide to support the claim the charge is valid. 

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If a charge is truly fraudulent or if you are simply issuing a refund due to a billing error or other issue, ask what fees these entail and what the turnaround time is. To avoid these fees, you’re often better-off simply offering the patient a credit on their account than issuing a refund if they’re still receiving ongoing services at your practice.  Also keep in mind a refund is not instant and can take several business days for the patient to see the money returned from their credit card company regardless of what credit card processor you choose.

10. What type of integration is available with my EHR? Does it allow the storage of cards?

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Having your credit care processor integrate with your EHR or practice management is a major advantage. You’ll save time and reduce the chance of errors and omissions. Not all integrations are created equal.

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Make sure the integration includes the ability to store credit card information with the merchant and store and label multiple cards per patient account. You should never store these numbers on your own or have patients write them down on a form, as it exposes your practice and patient to significant risk! Instead, find an integration that allows patients to enter their credit card information themselves on an app or portal.

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Also ask the EHR company if they’re able to work with your current card processor (if you have one) to transfer stored customer information into their processor. Companies like Stripe offer this but it involves some work on the part of the EHR—so it is important to check what their policy is and if there are any additional fees.

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Finally, accepting credit cards as a mental health practice is not like setting up a Shopify storefront to tell T-shirts; medical billing is complex and patient situations are nuanced. That’s why you should choose an integration that’s sophisticated—one that works hand-in-hand with a ledger within the EHR platform to carefully track all payments and services.

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At Osmind, when we set out to integrate credit card processing for our clinics, we took all of the above into account and ultimately selected Stripe for our integration. Stripe is a best-in-class payment processor that patients and clinicians can trust.

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READ: "How to process payments with Osmind"

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Plus, Stripe has been very collaborative in partnering with us to serve clinics that offer breakthrough treatments like ketamine and virtual mental health care. We recognize how complicated it can be to choose the right payment processor, so we wanted to do most of the heavy lifting to make that one less thing you need to worry about!