Practice Management Alert

 Waiving the patient’s portion of payment is usually illegal.

Regardless of your opinion on the private health insurance industry and how it fits into the United States’ current health care system, both federal and state health insurance programs, as well as commercial service providers, offer their services with the understanding that all parties involved will play by the rules.

Though you may feel like you’re helping patients out by waiving their out-of-pocket expenses, either through routinely waiving co-pays or co-insurance payments or deductibles, it could land your office in hot water. The U.S. Department of Health and Human Services Office of the Inspector General (OIG) is pursuing some providers who engage in this practice and charging them with filing false claims and other fraudulent practices. Commercial service providers are bringing lawsuits against providers as well.

Understand the Context

Don’t let the ubiquity of health insurance provision blind you to the reality that using health insurance is usually a contractual arrangement.

“Commercial service providers have contracts, legally binding agreements, to provide health insurance to employers and employees, and now under the ACA [Affordable Care Act], to individuals as well,” says Terry Fletcher, BS, CPC, CCC, CEMC, CCS, CCS-P, CMC, CMCSC, CMCS, ACS-CA, SCP-CA,  owner of Terry Fletcher Consulting Inc. and consultant, auditor, educator, author, and podcaster at CodeCast, in Laguna Niguel, California.

“Commercial service providers charge a premium for that health insurance, and then the employer/employee or the individual pays that premium. The health insurance contract establishes mutually agreed upon deductible amounts for both in-network and out-of-network providers,” she says.

These contracts are often feature a financial incentive to use the in-network providers, with the use of out-of-network providers incurring higher rates.

“But because there’s a contract, a legally binding agreement, with an employer or individual, if a provider comes along and decides to unilaterally waive a patient’s deductible or co-pay, then the provider is reducing the covered person’s contractual obligation. So if you waive deductibles and co-pays, the provider interfering with the employer’s or individual’s contract with the insurance carrier, then that’s what puts you at risk at possibly being sued for damages,” Fletcher says.

Waiving Fees Means Risking Lawsuits

Some providers who have waived patients’ out-of-pocket fees are being pursued by individual insurance companies or even the OIG, and the trend toward litigation is likely to grow.

“Commercial carriers are aggressively now enforcing the co-pay and deductible provisions in their contract, and because insurers are experiencing success on this front, I would anticipate, as time goes by, that we’ll see more insurer-led actions against providers who routinely waive co-pays and deductibles for both in-network and out-of-network patients,” Fletcher says.

If you look at these situations through the lens of the contractual obligations, you can see the skew toward criminality. If, for example, a provider who is out-of-network for a patient’s insurance unilaterally decides to charge that patient an in-network rate, the provider is essentially paying the patient to remain with that practice.

“That’s now considered a possible or potential bribe because you’re giving them money to stay in your practice or to influence their decision to stay in your practice. You can’t do that — that’s a Stark violation,” Fletcher says.

Providers cannot make decisions about what a patient pays when she utilizes a practice’s services. “You can’t tell a patient and direct what they’re going to pay outside of that contract that is binding to the subscriber or the beneficiary, not necessarily to the physician, when it comes to patient share of cost,” Fletcher adds.

Waiving Payments Skews the System

Payers consider providers’ “usual charge” when choosing rates and contracts, and a provider who routinely waives co-pays or deductibles or out-of-pocket expenses is skewing those equations.

“The OIG says that a provider who routinely waives co-pays isn’t representing its actual charges. This could potentially be filed as a false claim,” Fletcher says.

Plus, providers who waive these patient payments may be increasing the costs that payers are responsible for, because the patients may be more likely to utilize services that are out-of-network.

Avoid These Particular Phrases

The OIG is looking out for these situations and their eyes are especially drawn by a few key phrases. Avoid the following to avoid OIG and payer scrutiny, Fletcher says:

• “Advertisements that Medicare accepted as payment in full”
• “Insurance accepted as payment in full”
• “NOPE — no out of pocket expense.”

Help patients uphold their (and your) contractual obligations for the provision of health insurance by always accepting co-pays, deductibles, and co-insurance. Don’t risk noncompliance or scrutiny from the OIG or litigation initiated by payers, even if you feel like you’d be helping out a patient.