NYSDA’s Virtual Credit Card Legislation Provides Protections

The American Dental Association has developed a template letter that affected providers may send to Delta Dental of California. A copy can be found here:

DOWNLOAD EMAIL OPPOSITION TEMPLATE

Delta Dental of California has notified its contracted (in-network) providers that, beginning January 1, 2027, electronic funds transfer (EFT) will become its standard method of payment. EFT is offered free of charge from Delta Dental. The notice also states that providers may continue to receive paper checks; however, doing so will result in a $15 weekly processing fee. This change in policy affects not only New York dental practices but also practices located in California, Nevada, Utah, Texas, Louisiana, Mississippi, Florida, Georgia, West Virginia, Washington, D.C., Delaware, Maryland, and Pennsylvania.

As a result of NYSDA's virtual credit card (VCC) legislation, which was enacted during the 2026 legislative session and became effective on June 17, 2026, Delta's processing fee for paper checks would be considered illegal in New York State because it effectively reduces the amount of the contracted plan fees. Under the new law, Delta (or any dental insurance carrier) must offer in-network providers at least one fee-free method of payment.

Aetna has also sent notification that they will no longer offer payment by check to non-contracted providers (out-of-network). Providers can choose to join Aetna’s network and receive payment by EFT with no fee involved or continue as an out-of-network provider and pay a processing fee. Of course, out-of-network dentists can always make the difficult decision to collect their fee directly from the patient, submit the dental claim on their behalf and indicate that payment be sent directly to the patient.

The VCC law applies to any new contract issued after June 17, 2026, as well as to any existing contract that is renewed, amended, or otherwise modified after that date. In these situations, the insurance carrier must notify the provider of the available payment methods and any associated fees. The provider then has 30 days to either accept the offered payment method or select an alternative. Regardless of the provider's choice, the insurer must offer at least one payment method without an added fee, whether that be EFT, a virtual credit card, or a paper check. Once the provider makes a selection, that designation remains in effect until the provider notifies the insurer in writing of a change.

For that reason, it is important for providers - and their office staff - to watch carefully for these notifications and respond promptly. If a provider does not select a payment method within the 30-day period, the insurer may issue payment using the fee-free method identified in the notice, provided it has the information necessary to do so, such as the provider's banking information for EFT. If the insurer does not have the required information, it must instead use another fee-free payment method.

New York's VCC law applies only to providers who have entered into a contract with a dental insurance carrier. Out-of-network providers are not entitled to advance notice from insurers or the 30-day opportunity to select a payment method. Nevertheless, whether a provider is in network or out-of-network, the provider may always contact the insurance carrier to request a preferred payment method.

The key distinction is that insurers are legally required to offer in-network providers at least one fee-free payment method. Because out-of-network providers have no contractual relationship with the insurer, they are not afforded this protection under the VCC law. As a result, insurers are under no legal obligation to send payment directly to an out-of-network dentist, even if the patient directs on the dental claim form that payment be made directly to the treating dentist.

If a contracted provider is charged a fee based on their selected payment method, they may file a complaint with the New York State Department of Financial Services at https://www.dfs.ny.gov/complaint. Providers should also notify NYSDA.

Questions regarding this issue may be directed to Jacquie Donnelly at jdonnelly@nysdental.org.