Practice Management Alert

No doubt some of your patients are going to fall upon hard financial times, but before you waive a copayment or offer a discount make sure you aren't setting your practice up for major legal problems.

The problem: Routinely waiving deductibles and copayments can violate several federal laws and regulations, including the federal False Claims Act, anti-kickback statutes and compliance guidelines for individual and small group physician practices. It may also violate payer contracts and could result in your removal from a health plan's provider panel.

Good news: If you can prove -- or more accurately, if the patient can prove to you -- that he is suffering financial hardship, you may be able to offer him some payment assistance.

When it comes to financial hardship and making fee concessions, you cannot rely solely on the patient's statement that he is having financial problems. You need to get proof.

Here's how: In assessing whether a patient qualifies for a financial hardship discount, you should ask the patient for proof of the following, says Barbara Colburn, president and CEO of Total Health Care Solutions in Ocala, Fla.:

Request copies of the patient's income-tax returns and W-2 and 1099 forms as proof of income to determine whether the patient's earnings meet state and federal poverty guidelines, Colburn adds.

Caution: Just because the patient has a lot of credit card and loan debts does not mean he qualifies for financial hardship discounts. You should not count non-essential or "luxury" items when determining financial hardship. Simply look at the amount the patient earns and subtract the amount he needs to live, and then you can determine whether the patient can afford to pay your bill.

"Basically, we look at how much the patient makes, how much their debt is, then compare that with the poverty guidelines, and if they have much (a subjective number) left over, then we bill them up to half of what they owe," explains Robin Yazell, CPC, billing supervisor at Cardiology, P.C. in Syracuse, NY. "If they are at or below the poverty level, we will usually write the balance off."

Tip: Your practice's financial policy should state that you have a financial hardship option available for those who qualify and identify who to contact in the organization for additional information, Colburn says.

If the patient truly has financial hardship, you can write off the amount the patient owes your practice, reduce the total payment amount or offer a payment plan.

Tip: Make copies of the proof supplied by the patient. To limit the number of people in your office who see the patient's financial information, experts suggest that you don't keep the financial proof of hardship in the patient's chart. Instead, consider keeping it in a locked file, possibly in the office manager's office. Make a note in the patient's chart that financial information has been obtained, but don't include details. You should write in the medical record that the charge for that particular date of service is being written off due to proof of financial hardship, which is in the patient's file.

Keep in mind that you should only apply the determination of financial hardship to the particular visit or service you are billing for at the time, not to any future services. To waive a deductible or copayment in the future, the patient would again have to prove financial hardship.

Good practice: The patient and the physician should also sign a statement detailing that the practice reviewed proof of financial hardship and listing what charges the practice is waiving, experts suggest. Your practice should keep a copy and provide a copy to the patient as well.

Remember: If you cannot establish financial hardship, CMS requires that you make a "good-faith attempt" to collect money from a patient. Your practice can establish for itself what constitutes a good-faith effort, such as sending two bills, followed by two phone calls and a final notice. Submit documentation of your efforts to Medicare, notifying them that you were not able to collect money from the patient.