An occasional discount for a physician's elderly mother or a single parent scraping for money seems like a generous practice policy, but if you don't follow the rules, discounts can put your practice in hot water with your contract payers or even with federal regulators. But you don't have to be a miserly office to satisfy regulations. You can legally offer discounts for services if you heed government and contract stipulations. Offering patient discounts can actually benefit Medicare carriers and private payers, so they're not entirely unwarranted, as long as you abide by the rules.
If you give discounts to uninsured patients, avoid pushing the OIG's buttons: Don't routinely discount the uninsured patients below the Medicare allowable. If you offer discounts below the allowable for more than 50 percent of your services, you risk violating the OIG provision against routinely charging Medicare substantially more than you charge other payers, Sarraille warns. Make sure your discounts don't look like waivers of copayments or deductibles in whole, or in part, Sarraille says. The feds might smell lurking incentives that violate antikickback laws prohibiting you from offering discounts that induce the purchase of services Medicare pays for. Third-party commercial payers voice complaints when you help their clients and not them with this cost of service. They are a guise that makes the out-of-network penalty negligible, Sarraille says. The discounts reduce the services charged, balancing out the penalties that patients incur for using an out-of-network provider. With the discount, the out-of-network provider gets payment from a patient who otherwise might have chosen to avoid penalty and go somewhere else. You may tarnish your reputation by providing incentives to patients that encourage them to avoid their carriers' rules. Plus, you risk violating antikickback laws. Another practice that raises federal eyebrows is discounting "insurance only" billing for professional courtesy, Sarraille says. Writing off only copayments or deductibles risks making your claims look too similar to those deemed fraudulent by the OIG. When you offer professional courtesy, again offer the whole enchilada. " 'No charge or full charge' is their position," Sarraille says. When you dole out financial-hardship discounts, the federal government, again, requires consistency. Apply an office standard, such as 200 percent of the federal poverty guidelines, for what financial conditions exactly qualify as good-faith need, Sarraille says. To avoid issues arising from employee discounts, look into your managed-care contracts, says Ed Bryant, an attorney with Gardner, Carton & Douglas in Chicago, speaking at the American Medical Association teleconference "How to Prevent Fraud and Abuse in a Medical Group Practice." Managed-care contracts may require consistent treatment of patients, so carefully consider whether your discounts to practice employees violate your existing policy, as outlined in those contracts, he warns. Also check out your state insurance laws. Some states prohibit giving discounts to entities that aren't also given to insurance companies. Basic cash discounts to non-insured patients can pose a problem in those states, Sarraille warns. While offering discounts presents a "host of potential issues," a carefully constructed discount program will resolve most of them, Arent Fox say. $ $ $
Don't price discounts below the Medicare allowable for Medicare beneficiaries unless you note the reduced charge on your claim, Sarraille says. When you charge the Medicare patient below the allowable, it no longer applies, and if you don't note this change, your claim will be false. Medicare may penalize you when the practice receives a payment based on the higher fee schedule and not the lower actual charge "meaning that the practice will receive an overpayment," explains a recent alert from Sarraille's law firm. You may have to return the overpayment, or you may even face charges.
The typical third-party quibble happens when you charge patients the cost an in-network provider would charge and then bill the payer the standard charge, not showing the discount as listed, Sarraille says. These alleged cash discounts aren't really even discounts, as they're typically called.
If you offer large discounts to colleagues who can refer other patients, but you write off the retired physician no longer able to offer referrals, then your policy raises red flags.
When giving physicians' colleagues or family members discounts, have one rule for all referrers. Otherwise, your friendly policy might look like an anti-kickback violation, a way to provide incentives to choose your practice over another.
In the addendum to the small-physician-model compliance plans, the OIG articulates its stance on professional courtesy claims. The OIG has no problem with traditional professional courtesy as long as it's honestly given as courtesy, and not as a way to influence referrals, Sarraille says.
Most important, obtain some form of written proof that the patient is indeed in financial hardship, says Catherine Brink, CMM, CPC, president of Healthcare Resource Management Inc., in Spring Lake, N.J. "It's very easy for people to say that they have a financial hardship," Brink warns. "A patient might tell you she earns $200 a week, but sitting in the bank is $2 million to her name."
To make sure a patient isn't scamming your office or the government, obtain various forms of written proof that validate a discount: tax returns, W2 forms, even bank statements. "Bottom line, your backup to prove a patient's financial hardship has to be in writing," Brink says. Put these documents in the patient's financial files, she adds.
But in situations where there is clear, dire financial need, go ahead and waive the costs, he says provided you have written proof, Brink adds.
Also, check your private-payer contracts and make sure you're not violating the "most-favored nations" clause, the statement that promises the payer the lowest charge you give to everyone, Sarraille says. Even if you verify good-faith need, clarify contract policies.