There’s room for improvement in medical billing for card not present transactions. The lack of security in the healthcare industry with respect to payment processing is evident in nearly every business I’ve interviewed in the last two years. With all the effort put into HIPAA, you’d think they’d be more likely to be PCI Compliant than other industries, but in my experience talking to and interacting with healthcare companies, I think 50% PCI DSS (Payment Card Industry Data Security Standards) Compliance would be extremely optimistic.
So what’s got my gander up today? A widespread lack of security by healthcare suppliers with my HSA debit card data. Before giving out my credit card information, I always ask what they are going to do with it. As a cardholder, I have a right to know. Like many Americans, I have an HSA account and funds for payments are accessible only via a debit card. That means any misuse could wipe out the account. Under Visa’s Zero Liability policy consumers are not held responsible for fraudulent charges made with the card or account information, but identity theft is another matter the consumer is left to deal with.
I talked to three different personnel for the story that follows. The last one said the first two didn’t entirely follow normal protocol, which does nothing to spare them from the liabilities associated with identity theft.
This article is about a medical industry merchant storing credit card data in a database and the misunderstanding of potential liability exposure as a result. Storing card data even for 24 hours poses a huge risk both financially and criminally. In this article we’ll review their processes and solutions to mitigate risk.
First, let’s review the payments process. Consumers receive invoices in the mail. They can mail a check or pay by Visa or MasterCard by returning a form, or call on the phone. The merchant then uses a multi-step process to collect the information and process it.
PAY INVOICE BY MAIL
This invoice format is quite common for medical billing.
RISK: Merchant collects the CVV code, listed as signature code above, and bills are sent to a their corporate office. Collecting and storing CVV codes is always a bad idea. The mail could be stolen by internal employees familiar with the billing process. Someone could copy or even quickly photo each billing form. It’s doubtful they could prove PCI Compliance and would likely have no safe harbor in the event of a data breach.
SOLUTION: Remove the security code from the form. Have all bills sent to a lockbox. Reduce mail payments by enabling customers to pay their bills online.
PAY INVOICE BY PHONE
The first person to take my payment was covering for someone who was on vacation or otherwise out of the office.
- She took down my invoice number and credit card information on a piece of paper. She entered something into their billing system so there was a record of my call and payment.
- The paper went into an “in box”. It was Friday.
- The person emptying the “in box” and posting payments would be in Monday to complete the transaction.
- Monday the posting person key entered the transaction into a desktop terminal.
- Tuesday, presumably, paper was shredded. The paper is held for a day to ensure the payment went through properly so the customer does not need to be called.
RISK: The paper with full card data was exposed for up to 5 days. Was the ‘in box’ emptied and put in a locked drawer when not being worked on, including breaks? Do cleaning personnel have access to the facility on evenings and weekends?
SOLUTION: Enter the card information directly into our smart virtual terminal. Some flexible options include:
- Entering the card and customer data and instantly charging the account. In this case, you can enter the CVV for extra fraud protection.
- Creating a customer and entering the card information for later billing. Using a process called tokenization, the card data is stored encrypted on PCI Compliant servers, never at the merchant location. CVV is NEVER stored, not even encrypted, since it’s against card association rules.
- Entering the card and customer information and obtaining an authorization only, for other personnel to charge later.
The seccond person to take my payment on a future date was the actual representative for my account.
- She entered information in the billing system so there was a record of my call and payment.
- My card data, including CVV, was entered into a ‘notes’ section of the billing database.
- The customer service representative has no access to see the card data after it is entered.
- An accounting person retrieves the card data for payment in bulk with others within 1 business day.
- The posting person key enters the transaction into a dial-up desktop terminal.
- The next business day, presumably, the computer notes are deleted.
RISK: Full card data is exposed on a computer network. It doesn’t matter that access is restricted to certain personnel. This data storage is certainly a violation of FACTA and PCI Compliance standards, and probably HIPAA too. The merchant is open to both criminal and financial penalties in the event of a data breach. Additionally, the merchant would need to securely wipe or destroy every associated hard drive removed from service in the future to eliminate data theft potential.
SOLUTION: Enter the card information directly into our smart virtual terminal, same as above.
What are the financial risks with this data exposure?
- Replacement cost per card compromised, $25.
- Mandatory consumer credit report service for one year, $12/mth per card holder.
- Reimburse all claims from card associations.
- Fines from FACTA, HIPAA, and PCI Compliance violations
- Your business could come to a screeching halt while a forensics team investigates.
- Bad PR could result in loss of business.
What are the criminal risks associated with card data exposure? Felony.
FINAL NOTES: There is some use of an online gateway within the organization, but those details are unknown. I spoke to staff that believes since the payment processing is via a dial up terminal and is not connected to the card data in the database, that there is no risk. That is completely untrue. The company would not only save time by reducing steps, but would tremendously reduce risk by key entering card data directly into a virtual terminal. Moreover, an intelligent VT would provide a boatload of other benefits.
Ignorance is not an excuse. PCI Compliance standards were established nearly a decade ago. A critical first step to compliance and mitigating risk is a solution that supports all your payment processing needs. We offer that solution.
See also related article, How to reduce time and money for outpatient procedure billing.
On a side note, based on the invoice billing form, the merchant is not accepting American Express cards, probably because they don’t want to pay the high fees associated with Amex. If managing costs to improve EBITDA is important, our hosted payment processing platform with intelligent switch is critical.