Not if The Government Has Anything to Say About It
The age-old question of Can we offer cash-pay discounts, professional courtesy and/or the waiver of co-payments or deductibles continues to be as relevant today as it was 2-decades ago. There have been a lot of opinions over the years by various investigational organizations in addition to Medicare but yet, here we are, still working towards educating health care professionals throughout our industry. So, I thought I would focus on those opinions that have been the most definitive and consistent over the years.
I will begin with Medicare whereby they state, "Collection efforts to Medicare must be no less than to other beneficiaries (but can have less restrictive efforts for non-Medicare beneficiaries, including the uninsured) and substantial discounting to the uninsured, including the non-indigent, does not render a hospital's charge structure entirely fictitious".
There is a published FAQ for Hospitals on this topic and it can be found here: (https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Downloads/FAQ_Uninsured.pdf). The Office of Inspector General also published documents on this topic for Hospitals and the one provided here (https://oig.hhs.gov/fraud/docs/alertsandbulletins/2004/FA021904hospitaldiscounts.pdf) focuses on "Hospital Discounts Offered to Patients Who Cannot Afford to Pay Their Hospital Bills".
The OIG's position with regard to these issues includes their concern with copay waivers serving as an inducement to Medicare beneficiaries to use an entity's or individual's services. It is critical to keep in mind that by statute, improper copay waivers can result in civil monetary penalties.
The OIG has determined, consistent with the statute, that copay waivers are allowed if:
- There is an individualized determination of financial need;
- The determination is based on uniformly applied criteria;
- The financial need criteria are reasonable; and
- The policy is not advertised.
To take it a step further with regard to determining whether financial need criteria are reasonable, OIG suggests considering the following:
- First is the local cost of living;
- Second is the patient's income, assets, and expenses;
- Third is the patient's family size; and
- Fourth is the scope and extent of a patient's medical bills.
For those in a medical practice, the rules apply to you as well with some minor variances making restrictions a bit less onerous for you to comply with.
Keep in mind that when we are talking about violations, we are tying them for the most part to the Federal Programs and as such, waiving copays and/or deductibles for government program beneficiaries potentially implicates at least the following laws:
- Monetary Penalties Law, which falls under The federal Civil Monetary Penalties Law ("CMPL") and prohibits offering or transferring remuneration to federal program beneficiaries if the provider knows or should know that the remuneration is likely to influence the beneficiary to order or receive items or services payable by federal or state healthcare programs such as Medicare from a particular provider. (42 USC 1320a-7a(a)(5)). Violations may result in penalties of $10,000 per item or service provided, treble damages, repayment of amounts paid, and exclusion from federal programs. (Id.; 42 CFR 1003.102). The CMPL specifically defines "remuneration" to include waivers of copays and deductibles. (42 USC 1320a-7a(i)).
- Anti-Kickback Statute. The federal Anti-Kickback Statute ("AKS") prohibits knowingly and willfully offering, paying, soliciting or receiving remuneration to any person to induce such person to order or receive any items or service for which payment may be made under a federal healthcare program unless the arrangement fits within a regulatory safe harbor. (42 USC 1390a-7b(b)). The AKS is violated if "one purpose" of the remuneration is to induce federal program business and was highlighted in the United States v. Greber, 760 F.2d 68 (3rd Cir. 1985)).
Violations may result in a five-year prison term, $25,000 criminal penalty, $50,000 administrative penalty, treble damages, and exclusion from Medicare and Medicaid. (Id.; 42 CFR 1003.102). The Affordable Care Act also made an AKS violation an automatic violation of the False Claims Act, which may result in additional penalties of $5,500 to $11,000 per claim submitted, and repayment of amounts improperly received. (42 USC 1320a-7a(a)(7); 42 CFR 1003.102).
The Office of Inspector General ("OIG") has interpreted the Anti-Kickback Statute to apply to waiving patient cost sharing amounts if "one purpose" of the waiver is to induce or reward federal program business, a difficult standard to defend against. As promised during my Monday Monitor segment, I have provided for your review the OIG, Special Fraud Alert: "Routine Waivers of Copayments or Deductibles under Medicare Part B".
Understanding the areas of concern raised by the OIG will ensure you mitigate your risks and stay within the lines of what is acceptable (i.e., legal). The OIG has specifically warned against the following practices:
- Advertisements which state, "Medicare Accepted as Payment in Full", "Insurance Accepted as Payment in Full," or "No Out-of-Pocket Expenses."
- Advertisements which promise that "discounts" will be given to Medicare beneficiaries.
- Routine use of "financial hardship" forms which state that the beneficiary is unable to pay the coinsurance/deductible (i.e., there is no good faith attempt to determine the beneficiary's actual financial condition).
- Collection of copayments and deductibles only where the beneficiary has Medicare supplemental insurance ("Medigap") coverage (i.e., the items or services are "free" to the beneficiary).
- Charges to Medicare beneficiaries which are higher than those made to other persons for similar services and items (the higher charges offset the waiver of coinsurance.)
- Failure to collect copayments or deductibles for a specific group of Medicare patients for reasons unrelated to indigency (e.g., a supplier waives coinsurance or deductible for all patients from a particular hospital in order to get referrals).
- "Insurance programs" which cover copayments or deductibles only for items or services provided by the entity offering the insurance. The "insurance premium" paid by the beneficiary is insignificant and can be as low as $1 a month or even $1 a year. These premiums are not based upon actuarial risks, but instead are a sham used to disguise the routine waiver of copayments and deductibles. (Id.).
As I discussed earlier in this article, there are exceptions and one of them includes "Financial Hardship". OIG confirmed that it will not enforce the CMPL and/or the AKS against providers who waive copays or deductibles due to "Genuine financial hardship". The CMPL specifically excludes from the definition of "remuneration" the waiver of copays and deductibles if all of the following conditions are satisfied:
- the waiver is not offered as part of any advertisement or solicitation;
- the person does not routinely waive coinsurance or deductible amounts; and
- the person
1. waives the coinsurance and deductible amounts after determining in good faith that the individual is in financial need; or
2. fails to collect coinsurance or deductible amounts after making reasonable collection efforts.
Beyond the laws discussed above, additional laws could be implicated with regard to waiving cost-sharing amounts. The waiver of copays and deductibles for referring physicians could establish a financial relationship that might trigger the federal Stark law unless that arrangement was structured to fit within a regulatory safe harbor, such as the "professional courtesy" exception, which can be found at 42 USC 1395nn; 42 CFR 411.357(s). It is critical to keep in mind states may also have their own anti-kickback statutes or laws prohibiting the waiver of copays or deductibles. In conducting my research for this article rather than using the typical States such as New York, Pennsylvania, Florida, Michigan and Texas, I looked for a state that most might not think would be restrictive and I landed on Idaho. Their law states, "It is unlawful for a service provider to engage in a regular practice of waiving, rebating, giving, paying, or offering to waive, rebate, give or pay all or part of a claimant's deductible or claim for casualty, disability insurance, worker's compensation insurance, health insurance or property insurance."(IC 41-348).
This is why it is critical to look within your specific state to determine the applicability of the laws, Statutes, Acts, and/or Regulations. Here is the OIG published report from May 1991 I addressed earlier in this article and on my Monday Monitor Segment: (https://oig.hhs.gov/fraud/docs/alertsandbulletins/121994.html)
The other question I often get regarding the matters tied to waiver of co-pays and/or deductibles or cash pay discounts relates to Private Payors. Beyond the laws in your state that all of your private payors will refer to are the conditions of participation outlined by these payors in their contracts, which generally require that the provider collect copays and deductibles. In the event you fail to make a reasonable attempt to collect and should you fail to get the payors' express written consent, you could wind up in violation of your contract terms and conditions, resulting in a breach of contract or the obligation to repay for over-estimating your costs. I do know from history that the majority of payors would not complain if you establish the waiver of the cost-sharing amount was due to financial need. However, don't just do it, get some type of confirmation from the payor.
To ensure compliance with all payors, make sure you have updated policies and procedures and that you have trained your staff appropriately so they know how to respond in the event a situation arises concerning waiver of copays and/or deductibles. If a true hardship situation should arise, make sure to document it thoroughly in the event it causes a dispute with your payors' policies so that you have something defensible. As I tell my clients all the time, addressing issues upfront usually allow you to avoid costly repayments or adverse actions on the back-end.
Sean M. Weiss is a Partner and serves as VP/Chief Compliance Officer for DoctorsManagement, LLC based in Knoxville, TN. DoctorsManagement, LLC services more than 20,000 clients nation-wide and has been in existence since 1956. Weiss serves as an Investigator and expert witness in Federal and State cases as well as an expert or lead in Administrative Law Judge Hearings. During his 25-year career, Weiss has engaged in more than 200 cases working with law firms and health systems across the country. Weiss serves as a third-party compliance and regulatory officer for more than a dozen health care organizations across the country of varying sizes. For more information on Sean M. Weiss or DoctorsManagement, LLC visit us online at www.doctors-management.com or contact us directly at 800.635.4040. You can also follow Sean on his biweekly Blog on LinkedIn (Sean M. Weiss "The Compliance Guy") or at www.thecomplianceguyblog.com
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As first published on RACMonitor January 30, 2020