Most people in the medical billing industry are aware that there are compliance issues with professional courtesies or the waiving of patient responsibilities but there still seems to be a lot of confusion surrounding the issue. What they are not aware of is that the practice of waiving the patient responsibility may actually be breaking the law.
Many providers do not understand why they cannot decide to extend a break for services rendered to a family member or friend. They feel that they have a right to choose if they want to collect the money that the insurance carrier deems to be the patient’s share.
The insurance carriers feel differently about the situation. They feel that by waiving the patient responsibility the provider is intentionally charging a different price for the same service. For example, a provider charges $100 for a level 3 established patient office visit and the patient’s insurance carrier pays $80 and the patient has a $20 copay. If the provider waives the $20 copay the insurance carrier feels that the provider is willing to accept $80 for the level 3 established patient office visit. Based on that they feel that they overpaid the provider $20. They should have paid $60 and the patient should have paid $20.
Why does the insurance carrier feel this way? Basically all of these concepts, deductible, co-pay and co-insurance, are cost share obligations. The rules of managed care state that the patient CANNOT see the doctor until they make their co-payment. Managed care is governed by federal law and is not open to interpretation. To “write-off” a co-pay, or to allow a patient in to see the doctor without collecting the co-payment, is against federal law.
Federal law never allows waivers of patient responsibility to be offered as part of any advertisement or solicitation. Basically a provider cannot use the enticement of waving the patient’s responsibility to get a patient in the door. A provider may think that they can advertise a special where they will waive the patient’s co-pay for a new patient consultation to try to get more patient’s into their practice but this is illegal.
Most managed care contracts that providers sign when enrolling to be participating with an insurance carrier forbid waiving patient responsibility. They consider such waivers to constitute insurance fraud, misrepresentation and unfair competition. If an insurance carrier discovers a provider is waiving co-payments the insurance carrier has the right to stop payments on a claim and/or recover amounts already paid on claims.
Professional courtesies must be distinguished from waiving patient responsibilities. A professional courtesy is when the provider waives the entire fee for a physician, or the dependent of a physician. A professional courtesy may also be a discount such as 50% for such an individual or the provider may choose to waive only the patient’s out of pocket expenses as well. This is known as accepting “insurance only” as payment in full. The issue is that this professional courtesy is often extended to many others such as staff, family of staff, friends, etc.
Generally if the professional courtesy is the waiving of the entire fee or a percentage of the entire fee it is considered legal. However, if the professional courtesy is waiving the co-pay or the patient responsibility it is generally considered illegal especially if the patient has a federal insurance plan such as Medicare. This is true even if the patient is a physician.
It would also be considered illegal if the professional courtesy was extended to a patient who is in a position to refer business to the provider. This could be considered fraud and abuse, especially in the case of Medicare patients. Waiving patient responsibility for Medicare patients violates a federal statute that states that the provider knows that waiving the patient responsibility is likely to influence the patient to seek care from that provider.
Some individual states agree with the insurance carrier’s perception and have declared the insurance only courtesy is insurance fraud. If the provider accepts insurance only then the state feels that they are misrepresenting their fees by charging insurance carriers a fee that is higher than the fee that they actually intend to collect.
There are many situations where waiving the patient’s responsibility either in the form of a deductible, co-pay or coinsurance is deemed illegal. Federal plans and managed care plans are covered under federal law and most commercial plans, depending on the state, are covered under state laws. If not illegal, it is most likely a violation of the provider’s contract with the insurance carrier. Violating the contract may result in the provider being removed from the insurance carrier panel.
Basically, providers are not supposed to ‘forgive’ patient responsibilities without proof of financial hardship. Such financial hardship cases must be consistent and not provided routinely and the hardship should be documented in the patient’s chart. Therefore, the best course is to avoid waiving the patient responsibility unless a financial hardship has been established. Office policies should be reviewed regarding any courtesy discounts to make sure that they are compliant.