by Linda Walker
May 30th, 2018
Medical billers often encounter the dilemma of a physician who wants to be the hero to his or her patients and waive their out-of-pocket expenses. Out-of-pocket expenses include a patient's co-payment, coinsurance, deductibles, charges above U&C (Usual and Customary), and even services a plan may not cover in some situations. For the most part, physicians don't intentionally set out to break the laws or rules by waiving patients' out-of-pocket expenses.
However, a medical practice can be contracted with a particular carrier or insurance plan and a patient may still need to meet a high deductible, co-payment, or coinsurance. Many participating provider contracts require participating providers to submit claims directly in exchange for receiving a discounted rate (fee schedule). It is important to first remember that this contract exits only between the provider/practice and the insurance carrier. Likewise, a patient's policy is between the insurer and the plan beneficiary. Much of the conflict arises out of how Federal and State laws co-exist with insurer contracts and out-of-network insurers and how all of the rules and regulations collide with the common intentions of the Federal Anti-Kickback Statute along with the False Claims Act.
Federal Anti-Kickback Statute
Federal law states, "Whoever knowingly and willfully offers or pays any remuneration (including any kickback, bribe, or rebate) directly or indirectly... in cash or in kind, to any person to induce such person to refer an individual [for] any item or service for which payment may be made ... under a Federal health care program ... shall be guilty of a felony.."
In regards to the waiver of patient out-of-pocket, the Federal Anti-Kickback Statute can mean that providers waiving a patient's government health plan out-of-pocket deductible, co-payment, or coinsurance is indeed an enticement, meaning that it entices the patient to come back to the provider in hopes of having no cost-sharing obligation.
False Claims Act
The Federal False Claims Act states, "Any person knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval":
(1) the terms "knowing" and "knowingly"- (A) mean that a person, with respect to information- (i) has actual knowledge of the information; (ii) acts in deliberate ignorance of the truth or falsity of the information; or (iii) acts in reckless disregard of the truth or falsity of the information; and (B) require no proof of specific intent to defraud;
In looking at part B, simply put, a provider may not have to intend to defraud; they need only "act" in disregard to the Federal False Claims Act. To explain further, the following is an example of how a provider can violate the False Claims Act by merely waiving a patient's Medicare deductible.
Mrs. Smith asks Dr. Jones if they can avoid her annual deductible prior to her visit. Dr. Jones assures her that it would be ok to do so. He in turn instructs his billing department not to bill Mrs. Smith after Medicare has sent payment.
In the example above, Dr. Jones is knowingly waiving Mrs. Smith's deductible even before the claim is submitted. Thereby any claim submitted without respect to showing the "discount" or "waiver" of deductible is considered a false claim; likewise, this can also be a violation of the Federal Anti-Kickback Statute since the patient is being enticed by the waiver to return to Dr. Jones.
Non-Government Plan Claims
Providers that sign contracts with insurers and are considered "In network" will often have a contract with the insurer that states they will accept a negotiated or "participating" rate thereby known as the "plan allowable." These contracts allow for patients' claims to be processed using an allowable fee schedule the provider has agreed to, but take into account a patient's out-of-pocket deductible, co-payment, and/or coinsurance. A patient is still obligated under their policy, as well as the provider's contract with their insurer, to pay their out of pocket "cost sharing" in order for benefits to be paid. When a provider decides to waive the out-of-pocket expenses without offering the insurance carrier the same courtesy discount, it can easily be considered as insurance fraud because the discount was not provided to the insurance in turn. This could potentially violate the patient's sharing portion of their policy and a provider's in network contractual agreement.
The same dilemma exists for "out of network providers" if a provider waives a patient's out-of-pocket expenses, since, again, an insurer is not being billed the same amount as the patient. This could be construed as submitting a false claim if the provider has agreed to only accept what the insurance carrier has paid.
Private insurance companies have been successful in both state and federal courts with medical providers and facilities for failure to collect a patient's out-of-pocket cost sharing. An example is a case from March of 2015 where North Cypress Medical Center filed suit against CIGNA for failure to pay claims. In turn, Cigna filed a countersuit (to which they won) because North Cypress failed to attempt at collecting patient deductibles and other out-of-pocket expenses. Case: 12-20695
Is there a proper way to offer a patient with insurance a discount or waive their out-of-pocket expenses?
Yes there is, but there must be an established office financial policy for which billing personnel can refer to when a patient requests a discount or the waiver of their patient responsibility. The office financial policy should include written procedures on how a patient may qualify for a "hardship" discount or waiver of their out-of-pocket. Medical offices that have one financial plan can refer patients to their procedure on establishing how a patient would qualify for such a hardship exemption. Since Federal laws state the "routine waiver" of patient deductibles, co-payments, and coinsurance, it is wise for the practice to establish these hardship cases on a case-by-case need as well as on a scale that meets the financial hardship criteria set by the office. The patient's file should clearly be documented with the details of the hardship and include their signed agreement of hardship. These hardship cases should come into consideration once an insurance claim is processed. Without a documented financial hardship agreement, the procedure should be to file the claim with the proper procedures and should reflect the exact charge the patient would pay. Likewise, the procedures can be billed showing the practice's actual charge, but it must show the discount so that in turn, the insurance carrier is given the same discount. This is where it gets tricky. The insurance carrier is still only going to pay their portion and the patient is still going to be responsible for any coinsurance, deductible, and/or co-payment. This puts the office right back where it started.
In conclusion, it is always recommended that healthcare providers and facilities have established clear and definitive financial policies to accommodate all patients fairly. In addition to Federal laws that oversee government health plans such as Medicare and Medicaid, several state laws also have specific laws to prohibit a provider from waiving patient out-of-pocket costs. For example, a physician in NY who, as a general business practice, waives otherwise applicable co-insurance, co-payments, or deductibles, where such waiver would affect the amount the insurer would pay might be guilty of insurance fraud according to N.Y. Penal Law § 176.05(2) and N.Y. Ins. Law § 403(c).
Always err on the side of caution and remember to treat all patients equally.
Linda Walker is the owner of Practice Managers Resource and Networking Community. She has almost 30 years of health insurance and medical claims experience and is focused providing the most up-to-date resources and services to the medical billing industry and promises to deliver the most honest and ethical services to her members.