Practice Management Alert

Our expert gives you the green - and red - light on new billing ideas

If you're struggling with legal gray areas when dealing with discounts, fee adjustments and collections tactics, try answering the following questions to gauge your mastery of these challenging billing issues.

Question #1: Can we legally increase charges for services when a new provider starts at our practice? For example, if we've been charging $100 for a service that Dr. A performs, can we charge $150 when our new Dr. B performs the same service?

Question #2: Can we legally refuse to refill a patient's prescription until the patient has at least made an effort to pay on an outstanding account? We would never refuse vital drug refills, but perhaps less urgent medications such as allergy pills.

Answer #1: Assuming that you are not talking about a managed-care patient with contractually set rates, you have the legal right to "charge different rates for different providers for the same service," says Wayne Miller, founding partner of the Compliance Law Group in Los Angeles. But you must charge different rates based on legitimate reasons such as varying provider efficiency, varying length of time providers spend with patients, physician experience, etc.

Be careful, however, that the rate differential between providers doesn't discriminate against some patients or payers, Miller says. For instance, if you start charging higher fees for Dr. A, who only sees Medicare patients, your new billing policy will discriminate against Medicare beneficiaries.

Note: You should also check to make sure your state doesn't have a rate-setting law with restrictions on this type of billing practice, Miller says.

Answer #2: State law will determine whether you can legally refuse prescription refills until patients make an effort to resolve past-due accounts, Miller says. But a typical state medical board might consider your practice's refusal to refill medications an issue of patient abandonment and substandard medical practice, he says. The risk of liability most likely outweighs the collections benefit.

Alternative: Instead of delaying medication refills, you should consider discharging patients from your practice who are repeatedly negligent with their accounts, Miller says. Before you discharge a patient, be sure he has a new provider and give the patient sufficient advance notice.

Editor's note: For a checklist of items you must include in your patient dismissal letter in order to avoid liability, see "Use This Letter to Legally Dismiss Patients Who Never Pay" in the March 2005 issue.