Can DSOs surcharge across multiple states? A guide to multi-state compliance

Managing patient payments across multiple dental offices is complicated enough. When a dental service organization (DSO) operates in several states, payment processing becomes even more complex. Different state laws, card-network rules, and disclosure requirements can make it difficult to implement consistent policies across every location.

Credit card surcharging can help dental groups offset eligible payment processing costs, but implementing a program across multiple states takes more than selecting a percentage in payment software. Before implementing a surcharge, DSOs need to understand where it is permitted, which restrictions apply, and how to manage compliance across their locations.

So, can a DSO surcharge credit card payments at offices across multiple states? 

Potentially, yes, but not necessarily under one uniform surcharge policy. A DSO may be able to surcharge in some states while being restricted from doing so in others. The key is understanding the requirements that apply to each location and building a payment strategy around them.

Key takeaways: Multi-state credit card surcharging for DSOs 

• DSOs can potentially surcharge credit card payments across multiple states, but each location must comply with applicable state laws and card-network requirements.

• A successful multi-state surcharging strategy combines centralized oversight with location-specific policies, payment configurations, patient disclosures, and staff training.

• Regular compliance reviews and payment technology that supports multi-location workflows can help DSOs manage surcharging requirements as their organizations grow.

What is credit card surcharging, and why do DSOs consider it?

Credit card surcharging is the practice of adding a fee to an eligible transaction when a patient pays with a credit card. The surcharge helps offset some or all of the cost the practice incurs to process that payment, subject to applicable laws and card-network rules.

For multi-location dental groups, those processing costs can add up quickly.A DSO operating multiple offices may process thousands of patient payments every month. Even relatively small fees on individual transactions can become a significant expense across the organization.

Surcharging may help DSOs manage those expenses while establishing more consistent payment policies across their locations. Rather than absorbing every eligible credit card processing cost, a group may be able to pass some of that expense along to patients who choose to pay by credit card.

However, surcharging is not a universal solution for every transaction or location. Its availability and implementation depend on several factors, including state law, card-network rules, and the payment methods a practice accepts. It's also important to distinguish surcharging from other payment pricing approaches:

• Credit card surcharging: An additional fee applied to an eligible credit card transaction.

• Cash discounting: A discount offered to patients who pay using an eligible alternative payment method. 

• Dual pricing: A pricing approach that presents different prices for different payment methods.

• Convenience fees: Fees that may be permitted under specific circumstances when customers use an alternative payment channel.

These approaches have different requirements and should not be treated as interchangeable. Before choosing a strategy, DSOs should confirm that their proposed pricing structure complies with applicable laws and payment-network rules.

Can a DSO surcharge across multiple states?

Yes, a DSO can potentially surcharge eligible credit card transactions at locations in multiple states, even if surcharging is restricted at some of its other locations.

Visa and Mastercard guidance recognizes that restrictions affecting a merchant's locations in one state do not automatically prohibit surcharging at locations in states where it is permitted. The organization must still comply with the applicable requirements for each location. This distinction is important for DSOs with offices spread across several markets. 

A payment policy that works for one practice may not be appropriate for another practice operating under different state requirements. For example, imagine a DSO with 30 dental offices across 10 states. After reviewing its locations, the organization determines that surcharging is permitted at some offices but restricted at others.

The DSO may be able to implement surcharging at eligible locations while using a different payment strategy at locations where surcharging is not permitted. It does not necessarily need to abandon the strategy across the entire organization.

Understanding state surcharge laws

State laws are one of the most important considerations when developing a multi-state surcharging strategy. Although surcharging is permitted in much of the United States, some states restrict or prohibit it, and others impose specific conditions on how it can be implemented.

Those requirements can also change. Legislative updates, court decisions, and injunctions may affect how a law applies at a particular time. For DSOs, this means a state-by-state review should be part of the planning process rather than a one-time task completed when the program launches.

Related: Should dental practices surcharge patients? Pros, cons, and what to consider

Why a state-by-state review matters

A DSO shouldn't assume that its headquarters determines the rules for every practice it operates. Instead, it should evaluate the requirements that apply to each office and its payment channels. A useful starting point is a state-by-state compliance matrix that documents the requirements for every location.

For example, a group with offices in Connecticut, Georgia, and Colorado should not assume that one surcharge configuration can automatically be applied to all three states. Each location needs to be evaluated under the current requirements that apply to it.

This is particularly important when a DSO expands through acquisitions. A newly acquired office may operate under different state requirements, use a different merchant account, or have payment processes that need to be reviewed before any surcharge program is introduced.

How should DSOs manage surcharging across multiple locations?

Once a DSO understands where surcharging may be permitted, the next challenge is implementing the program consistently and maintaining compliance as the organization grows. A structured approach can help the organization avoid unnecessary complexity while giving its finance and operations teams clear oversight.

1. Map every location

Start by creating a complete inventory of the organization's dental offices.

For each location, document its state, merchant account structure, payment channels, and current payment processing procedures.Include in-person payments, online payments, and payment requests made through other channels. This inventory gives the organization a clear picture of its existing payment infrastructure and helps identify locations that may need additional review.

It also provides a useful reference when the DSO acquires a new practice or changes its payment processing provider.

2. Verify local requirements

Work with qualified legal counsel and payment-processing partners to determine which requirements apply to each location.

This review should cover state and federal law, relevant card-network rules, surcharge limits, disclosure requirements, and any applicable notification or registration procedures.

Card-network requirements may differ, so avoid assuming that satisfying one network's rules automatically satisfies another's. For example, Visa and Mastercard have their own surcharge notification and registration requirements, which may change over time. DSOs should verify the current procedures with each relevant network and acquirer before launching a program. Verify the applicable procedures with each relevant network and acquirer before launch.

Related: Revenue loss in DSOs: The Hidden cost of inconsistent dental billing workflows

3. Configure payment systems accordingly

After confirming the requirements, make sure the payment system reflects the approved approach for each location.

This includes configuring eligible transaction types, applying appropriate surcharge limits, and ensuring that debit and prepaid card transactions are not surcharged. DSOs should also verify that the setup supports the required disclosures and accurately reflects the surcharge on the patient's transaction.

Centralized visibility can help finance teams oversee payment activity across the organization, but the system must support the location-specific configurations the DSO needs. Payment software can help execute an approved surcharge strategy. It cannot replace the legal review necessary to determine whether that strategy is appropriate for a particular location.

4. Standardize patient communication

Patients should understand any additional charge before completing a payment. Clear communication is important for maintaining transparency and avoiding confusion at checkout.

DSOs should establish approved language for signage, payment screens, receipts, and staff explanations. The organization can standardize its communication process while allowing for differences in the disclosures required at individual locations. Staff should be prepared to explain which payment methods are eligible for surcharging, how the fee is calculated, and what alternatives may be available.

For groups with centralized marketing or operations teams, maintaining approved communication templates can help prevent inconsistent messaging across offices.

Build a surcharge strategy that works across your entire organization

To recap, we covered: 

• What is credit card surcharging, and why do DSOs consider it?

• Can a DSO surcharge across multiple states?

• How should DSOs manage surcharging across multiple locations?

For DSOs, implementing credit card surcharging across multiple states is possible in many circumstances, but it requires careful planning. State laws, card-network rules, disclosure requirements, and payment system configurations all play a role in determining how a program should operate.

Payment technology can help make that strategy easier to manage, particularly when a DSO needs visibility into transactions and workflows across multiple offices. However, the technology should support a carefully reviewed compliance plan rather than serve as a substitute for one.

QuantaPay helps dental practices manage patient payments with tools designed to support their payment workflows. For growing DSOs, evaluating payment processing across multiple locations can help identify opportunities for more consistent workflows, centralized oversight, and better financial visibility. 

Managing patient payments across multiple dental offices? Schedule a call with QuantaPay to discuss your organization's payment processing needs and explore options for supporting your DSO as it grows.