Managing Your Practice

Credit cards FAQ


After my last column on credit cards, I was (as usual) inundated with questions, comments, and requests for copies of the letter we give to patients explaining our credit card policy.

A stack of colorful credit cards on a table. alexialex/Getty Images

I’ve put together an FAQ to answer the most common questions, and a template for our credit card policy letter is posted on my blog at If you have a question not addressed here, feel free to ask, either on the website or via email (

How do you safeguard the credit information you keep on file?

The same way we do medical information; it’s all covered by the same HIPAA rules. If you have an EHR, it can go in the chart with everything else; if not, I suggest a separate portable file that can be locked up each night.

How do you keep the info current, as cards do expire?

We check expiration dates at each visit, and ask for a new number or date if the card has expired or is close.

Don’t your patients object to signing, in effect, a blank check?

They’re not “signing a blank check.” All credit card contracts give cardholders the right to challenge any charge against their account.

There were some initial objections, mostly from devotees of the financial “old school.” But when we explain that we’re doing nothing different than a hotel does at each check-in, and that it will work to their advantage as well, by decreasing the bills they will receive and the checks they must write, most come around.

Dr. Joseph S. Eastern, a dermatologist in Belleville, N.J.

Dr. Joseph S. Eastern

How do you handle patients who refuse to hand over a number, particularly those who say they have no credit cards?

We used to let refusers slide, but now we’ve made the policy mandatory. Patients who refuse without a good reason are asked, like any patient who refuses to cooperate with any standard office policy, to go elsewhere. Life’s too short. And “I don’t have any credit cards” does not count as a good reason. Nearly everyone has credit cards in this day and age. For the occasional patient who does not have a credit card, my office manager does have authority to make exceptions on a case-by-case basis, however.

One cosmetic surgeon I know asks “no credit card” patients to pay a lawyer-style “retainer,” which is held in escrow, and used to pay receivable amounts as they come due. When presented with that alternative, he told me, most of them suddenly remember that they do have a credit card after all.

What’s the difference between this and “balance billing”?

All the difference in the world. “Balance billing” is billing patients for the difference between your normal fee and the insurer’s authorized payment. If your office has contracted to accept that particular insurance, you can’t do that; but you can bill for the portion of the insurer-determined payment not paid by the insurer. (Many contracts stipulate that you must do so.) For example, your normal fee is $200; the insurer approves $100, and pays 80% of that. The other $20 is the patient’s responsibility, and that is what you charge to the credit card – instead of sending out a statement for that amount.
Since we instituted this policy, one patient has called to ask if it is legal, and one insurance company has inquired about it. How do you respond to such queries?

Of course it’s legal; you are entitled to collect what is owed to you. Ask those patients if they question the legality every time they check into a hotel or rent a car.

We have had no inquiries from insurers, but my response would be that it’s none of their business. Again, you have every right to bill for the patient-owed portion of your fees – in fact, Medicare and many private insurers consider it an illegal “inducement” if you don’t – and third parties have no right to dictate how you can or cannot collect it.

In the past, another popular practice management columnist advised against adopting this policy.

Despite multiple requests from me and others, that columnist – who owns a medical billing company – has never, to my knowledge, offered a single convincing argument in support of that position.


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