Waiving Copays & Deductibles

When I was a young boy growing up in North Dakota (yes it was quite a while ago and I did trek both ways uphill in the snow!), my mom would send me to the corner grocery store for a loaf of bread or a quart of milk. We asked the local store manager to put the order “on our bill” and mom would take care of it the next time she made it in.

Well, times have changed my friends, and funny how people can too!

When we moved to Southern California some 5 years later, my father opened his family medical practice in San Juan Capistrano, mom was his RN and ran the office, (I pulled and prepped charts for the next day after school). I remember after a couple of years being open, one afternoon the front office receptionist (our version of a PCC back then) ask mom if we could waive a patient’s $40.00 Copay, mom said absolutely not! The receptionist came back and said the patient is requesting for us to send a bill to her for the Copay rather than collecting her fee at time of service, and I still remember mom saying “No, If you go to the grocery store for a loaf of bread or quart of milk, do you ask the cashier to bill you later?” WHAAATT – HHUUHH – WAIT – BUT !!!

Although at the time I was more than confused, that evening at home I had to bring up the situation and “remind” mom of the good old days back in North Dakota. She promptly responded with “do people go to the gas station and pay every time they fill their car with gas? Are they required to pay the plumber every time he comes to fix a clogged toilet or sink? Can they walk into a grocery store and demand free services and expect to receive goods without any charge? Why do some patients place so much less importance on their health than these other items? Failure to collect these fees owed to us come right out of your father’s and my pocket and we are breaking the Law!”

I could totally understand the revenue piece, but my parents as criminals, Really? Now that hit home since we were a family run organization, much like we are here at Serendipity!!

Properly collecting Copays and Deductibles not only increases your monthly cash and incentive numbers, but it is also THE LAW!!

Let me explain:

To “write-off” a Copay, or to allow a patient in to see the doctor without collecting the Copayment,is indeed, against Federal law.

Copays, cancellation fees, and deductibles are all part of the everyday vernacular of medical practices. Insurance companies negotiate pricing with companies like ours with the understanding that Copays are part of the contracted rate.

It is a felony to routinely waive Copays, coinsurance, and deductibles for patients. Waiving the collection of this portion is a crime of health insurance fraud because your office is claiming the wrong charge for services when insurance claims are created.

Insurance carriers feel thatby waiving the patient responsibility the provider is intentionally charging a different price for the same service.

Here’s a basic example; we charge $3,000.00 for a Hearing Aid. The patient’s insurance/plan max benefit amount is $2,000.00. They pay $1,500.00 and the patient has a $400.00 deductible and a $100.00 Copay. We would contractually write off the $1,000.00 insurance adjustment and the patient would owe the $500.00 ($3,000.00 - $1,500.00 - $1,000.00 = $500.00).

If we waive the amount contractually owed by the patient, the insurance carrier feels that we must be willing to accept only $1,500.00 for the Hearing Aid not the $2,000.00 they approved, thus they overpaid us, and should have paid only a $1,000.00 and the patient would still owe their contractual amount of $500.00. If audited, and it was determined we routinely wrote of the patient owed amounts, they have the right to recover funds paid to us, terminate our contract, file a federal lawsuit against us, or any combination of the three.

So why do they feel this way? Basically, all these concepts, deductible, co-pay and co-insurance, are what are called a “cost share obligation”. The rules of managed care state that the patient CANNOT see a Provider until they make their co-payment. Managed care is governed by federal law and is not open to interpretation.

Most managed care contracts that we 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. The same laws apply to Medicare, Medicaid, and Tricare patients, but the risk is greater if your office does not comply— healthcare providers may be charged with fraud against a government agency. Waiver of coinsurance raises potential Federal Anti-Kickback Statute, Federal False Claims Act, and state law liability.

Also, Federal law never allows waivers of patient responsibility to be offered as part of any advertisement or solicitation. 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 patients into their practice, but this is also illegal.

It would also be considered illegal if a 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.

All of these concerns have led the U.S. Department of Health and Human Services (HHS) to take the stance that it is unlawful to routinely waive coinsurance, including coinsurance for services deemed professional courtesy.

Routinely waiving the patient’s insurance responsibility is a violation of the contract between Serendipity and private insurance company plans. If your office is not able to prove that the patient’s responsibility was collected, or that attempts at reasonable means of collection were made, then the insurance company may demand a refund for any reimbursement paid.

So now that I have scared the Bejesus out of you (or at least I got my point across), what CAN we do?

FOLLOW THE LAW!!! Throughout the information above the one phrase that remains constant is “routinely waiving”. 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.

Additionally, you must apply hardship programs to allpatients. You cannot forgive a patient’s insurance debt for patients with public health insurance during times of crisis yet require patients with private insurance to pay full Copays regardless of their financial circumstances.

If a patient is in financial distress, we may choose not to collect debts in whole or through a payment plan without risking allegations of insurance fraud. We must be able to provide evidence that a good faith effort was made to comply with the law and make exceptions only for specific reasons.

Communication and Patient education is the key to success! You need to be able to clearly explain the rules and responsibilities that both they as insured, and we as Providers have agreed to contractually with their insurance carrier.

We will be adding a financial hardship application and submission instructions to the Serendipity Resources side of the Intranet in the event a patient requeststo submit one for review and approval.

If you have further questions or would like more information, please feel free to email me…. Knowledge is Power!!

in·teg·ri·ty…. the qualification of being honest and having strong moral principles, or moral uprightness. It is generally a personal choice to hold oneself to consistent moral and ethical standards.