By Thomas J. Force, Esq., President & Founder of The Patriot Group, An ANJC Silver Sponsor’

Unfortunately, it is quite common in the healthcare industry for medical providers, both in and out of network, to waive or discount patient cost-share responsibility. Many healthcare providers do this to encourage patients to obtain services at their office. In theory, patient volume will increase if patients believe they will not be responsible for their ordinary coinsurance, deductible, and copays.

Some healthcare providers will discount or waive patient balances to assist their patients with the financial burden of treatment. This practice is extremely dangerous for the healthcare provider. Health insurers require the payment of deductibles, coinsurance, and copays to limit over-utilization of services. Further, Health Plans (both fully insured and self-funded) generally require beneficiaries to be billed for their cost-share responsibility. Almost all health plans contain language requiring members to pay their deductibles, coinsurance, and copays. The same is articulated in Medicare rules and guidelines.

Why is all of this so important? Healthcare providers who routinely waive patient cost-share responsibility could be subjected to both civil and criminal penalties under both state and federal law. If a provider waives these balances, the insurer can sue the provider for tortious interference with a business contract and even for insurance fraud.

Commercial insurers frequently audit healthcare providers to ensure that they are billing their patients for routine cost-share responsibility. These insurers sometimes send questionnaires to patients or even conduct telephonic interviews to ensure that their members are being billed for and are in fact paying their ordinary cost-share responsibility. Commercial insurers spend millions annually funding their Special Investigation Fraud Units. These units are big money-makers for the health insurers.

If a commercial health insurer believes that a healthcare provider is routinely waiving a member’s cost-share responsibility, they frequently will conduct audits, request documentation, and ultimately seek refunds of all amounts paid to that provider, sometimes dating back several years. These refund demands could be in the seven-figure range.

Similarly, CMS, the governing body for Medicare and other federally funded health plans, takes an even more aggressive approach to what they refer to as “fee-forgiveness.” Federal attorney prosecutors quite frequently file lawsuits against healthcare providers alleging violation of the False Claims Act, federal Anti-kickback statutes, and other federal laws. Violation of these laws can not only result in civil penalties but also jail time for the healthcare provider.

How can healthcare providers avoid these compliance pitfalls?

1. Do not waive or discount patient cost-share responsibility except for reasons of extreme financial hardship.
2. If waiving or discounting patient cost-share responsibility for reasons of extreme financial hardship, have a written financial hardship policy that is based upon objective criteria (not inflated income guidelines) applied uniformly to all patients that takes into consideration the local cost of living, patient’s income, assets and expenses, their family size and the scope and extent of the patient’s medical bills.
3. Document discounts and obtain supporting documentation.
4. Never routinely waive or discount patient cost responsibility.
5. Be careful when discounting based on professional courtesy and prompt payment discounting.

ABOUT THE AUTHOR:

Thomas J. Force, Esq. is the President and Founder of The Patriot Group and The Force Law Firm, PC—an attorney with significant experience in the healthcare and insurance industries.