Healthcare service providers sometimes waive patient financial responsibility i.e., Copays and Deductibles as an accommodation to the patient, professional courtesy, and employee benefits. However, waiving co-pays and deductibles may violate fraud and abuse laws and payer contracts. For a payer, waiving co-pays and deductibles creates two problems. First, payers require co-pays to discourage overutilization and reduce costs. Second, payers often contract with providers to pay based in part on the provider’s usual charges. The Office of Inspector General (OIG) has argued that a provider who routinely waives co-pays is misrepresenting its actual charges. Waiving co-pays and deductibles removes the disincentive for utilization, thereby potentially increasing payer costs.
Involved Federal Laws
Waiving co-pays and deductibles for government program beneficiaries implicate at least the following laws:
- Monetary Penalties Law: The federal Civil Monetary Penalties Law (CMPL) prohibits offering or transferring remuneration to federal program beneficiaries if the provider knows or should know that the remuneration is likely to influence the beneficiary to order or receive items or services payable by federal or state healthcare programs (e.g., Medicare) from a particular provider.
- Anti‐Kickback Statute: The federal Anti‐Kickback Statute (AKS) prohibits knowingly and willfully offering, paying, soliciting, or receiving remuneration to any person to induce such person to order or receive any items or service for which payment may be made under a federal healthcare program.
- Stark law: Waiving co-pays and deductibles for referring physicians would usually establish a financial relationship that would trigger the federal Stark law unless the arrangement was structured to fit within a regulatory safe harbor, such as the ‘professional courtesy’ exception.
When You Can Waive Copays
There are different scenarios in which healthcare providers may feel it is appropriate to waive the patient’s insurance responsibility. Scenarios may include patients who would like to extend professional courtesy to colleagues or their families, when patients are in financial distress, and when collection efforts have negligible results. Each example involves regulatory and legal issues that healthcare providers must consider.
If a patient is in financial distress, healthcare providers may choose not to collect debts without risking allegations of insurance fraud. For example, if the physician does not collect the patient’s insurance responsibility during a period of severe financial hardship, the physician can choose not to pursue collection activity against the patient for the co-pay that is owed. However, physicians cannot routinely forgive debt; they must reserve this only for patients who are suffering a financial crisis or emergency.
The Federal anti‐kickback statute does not prohibit discounts to uninsured patients who are unable to pay their hospital bills. However, the discounts may not be linked in any manner to the generation of business payable by a federal health care program. Discounts offered to underinsured patients potentially raise a more significant concern under the anti‐kickback statute, and hospitals should exercise care to ensure that such discounts are not tied directly or indirectly to the furnishing of items or services payable by a federal health care program.
Document Collection Efforts
If your office has a good reason for waiving a co-pay, co-insurance, or deductible or failing to pursue debt collection against a patient, records of all conversations with the patient should be kept. You should be able to provide evidence that a good faith effort was made to comply with the law and make exceptions only for specific reasons. Furthermore, healthcare providers should keep track of all payments and note any payment that was waived as evidence that the patient’s insurance responsibility is not routinely waived.
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