“Dismissing Patients for Violating Financial Policies”
by Sean Weiss, Partner & VP of Compliance
Part of doing business in any industry includes dealing with royal pains but, again that is the cost of doing business. That is what I was always taught from mentors throughout my career and has carried with me until a few years ago when all of that changed for me. The truth is, and I am sure I will upset a few folks with this blog post, you do not have to “Just accept it.” As business leaders and owners, we have rights as well and I am of the position that a person’s rights end when they infringe on the rights of another. I remain apolitical to avoid engaging in political discussions but I have trouble with egregious behavior being demonstrated by those who believe they are entitled!
Something has happened in this amazing country of ours over that past decade that has eroded the values and pride that used to exist with previous (WWII in my opinion was the greatest) generations. Growing up in the south and being raise by my grandparents instilled things (family, God, respect, honor, pride, appreciation and honesty to name a few) in me that I look back on today and am thankful for. So, by now you are asking yourself how does any of this apply to discharging a patient? Simple, we have allowed patients to dictate how we run our business. What with Facebook, Twitter and other online means for trashing a business that does not acquiesce to unreasonable demands, the backlash becomes too much so it’s just easier to let the inmates now run the asylum. The problem with this, is that once you allow bad behavior or the patient to dictate how you run your business, you have forever altered the course of your business and regaining control can be impossible.
I am a stickler for rules and, more importantly, rules that are enforced (make sure you have a policy regarding financial requirements). For example, I was in a practice a couple of weeks ago and when I first walked in, I noticed a sign at the front desk that said, “Payment is due at the time services are rendered.” That is a great sign if you actually enforce it. I sat in the reception area for 10 – 15 minutes watching and listening to patients check in and during this time, 6 patients checked in and 6 patients were asked for their photo ID and insurance card. I thought to myself, we are off to a great start. Then, each patient was told they have a copayment and asked how they would like to pay (cash or card). The first 2 patients ponied-up their $30 and $40 copayments. Then the third patient said, I cannot pay that amount today and the front desk person said, “no problem, we will send you a bill.” The next person said, “I don’t get paid until next Friday and I cannot afford to leave myself short in the bank as I have other bills due in the coming days.” The front desk person again said, “we will send you a bill.” The next patient was asked for their copayment for which they replied, I met my deductible for the year and as such I do not have to pay anything else for the remainder of 2019, and the front desk person simply said, “okay.” The last of the six patients to check in during the time I was sitting there was not even asked for their copayment and took a seat after checking in. So, out of 6 patients checking in during the time I sat there, the practice collected only $70 out of most likely $180 – $200 to which they were entitled.
During my opening conference with the practice administrator and the senior physician in the group, I brought up what I saw and they both just shrugged and for about 10 seconds there was this awkward silence before I literally said, “Sooooo, any idea as to what is going on up there?” The administrator said, and I quote, “There is nothing we can do. We ask for the money but if they do not want to pay, we cannot force them to and it is just easier to take what insurance pays and write-off the rest of it as a bad debt than to upset the patients even more and have them say bad things about us online.” I honestly was in complete shock and disbelief in what I was hearing. So, I asked this next question: If you walked into the food-store, grabbed a cart and filled it with all of the groceries you need to survive (basic food groups) and then pushed the cart to the cashier and after ringing it all up and telling you how much your bill was you responded with I cannot afford that right now, send me a bill and you walked out with the groceries – how far into the parking lot do you think you would get before a security guard tackled you and said “what are you doing?” It is the same concept in a medical practice, you are rendering a service and thus you have the right to be paid for it. Besides, you are contractually liable for collecting those fees, and if you do not, you are in breach of your contract. Additionally, if you routinely waive copayments and/or deductibles you are potentially violating federal law (most likely the False Claims Act).
In 1994, The Office of Inspector General (OIG) published Special Fraud Alerts, which is still in effect today. Here is one of the most interesting parts of the alert:
“This fraud alert is not intended to address the routine waiver of copayments and deductibles by providers, practitioners or suppliers who are paid on the basis of costs or diagnostic related groups. The fact that these types of services are not discussed in this fraud alert should not be interpreted to legitimize routine waiver of deductibles and copayments with respect to these payment methods. Also, it does not apply to a waiver of any copayment by a Federally qualified health care center with respect to an individual who qualifies for subsidized services under a provision of the Public Health Service Act.
Here is the specific language on the waiver of copayments and or deductibles:
What Are Medicare Deductible and Copayment Charges?
The Medicare “deductible” is the amount that must be paid by a Medicare beneficiary before Medicare will pay for any items or services for that individual. Currently, the Medicare Part B deductible is $100 per year (Obviously this amount has changed in 2019).
“Copayment” (“coinsurance”) is the portion of the cost of an item or service which the Medicare beneficiary must pay. Currently, the Medicare Part B coinsurance is generally 20 percent of the reasonable charge for the item or service. Typically, if the Medicare reasonable charge for a Part B item or service is $100, the Medicare beneficiary (who has met his [or her] deductible) must pay $20 of the physician’s bill, and Medicare will pay $80.
Why Is it Illegal for “Charged-Based” Providers, Practitioners and Suppliers to Routinely Waive Medicare Copayment and Deductibles?
Routine waiver of deductibles and copayments by charge-based providers, practitioners or suppliers is unlawful because it results in
- false claims,
- violations of the anti-kickback statute, and
- excessive utilization of items and services paid for by Medicare.
A “charge-based” provider, practitioner or supplier is one who is paid by Medicare on the basis of the “reasonable charge” for the item or service provided. 42 U.S.C. 1395u(b)(3); 42 CFR 405.501. Medicare typically pays 80 percent of the reasonable charge. 42 U.S.C. 1395l(a)(1). The criteria for determining what charges are reasonable are contained in regulations, and include an examination of
- the actual charge for the item or service,
- the customary charge for the item or service,
- the prevailing charge in the same locality for similar items or services.
The Medicare reasonable charge cannot exceed the actual charge for the item or service, and may generally not exceed the customary charge or the highest prevailing charge for the item or service. In some cases, the provider, practitioner or supplier will be paid the lesser of his [or her] actual charge or an amount established by a fee schedule.
A provider, practitioner or supplier who routinely waives Medicare copayments or deductibles is misstating its actual charge. For example, if a supplier claims that its charge for a piece of equipment is $100, but routinely waives the copayment, the actual charge is $80. Medicare should be paying 80 percent of $80 (or $64), rather than 80 percent of $100 (or $80). As a result of the supplier’s misrepresentation, the Medicare program is paying $16 more than it should for this item.
In certain cases, a provider, practitioner or supplier who routinely waives Medicare copayments or deductibles also could be held liable under the Medicare and Medicaid anti-kickback statute. 42 U.S.C. 1320a-7b(b). The statute makes it illegal to offer, pay, solicit or receive anything of value as an inducement to generate business payable by Medicare or Medicaid. When providers, practitioners or suppliers forgive financial obligations for reasons other than genuine financial hardship of the particular patient, they may be unlawfully inducing that patient to purchase items or services from them. At first glance, it may appear that routine waiver of copayments and deductibles helps Medicare beneficiaries. By waiving Medicare copayments and deductibles, the provider of services may claim that the beneficiary incurs no costs. In fact, this is not true.
Studies have shown that if patients are required to pay even a small portion of their care, they will be better health care consumers, and select items or services because they are medically needed, rather than simply because they are free. Ultimately, if Medicare pays more for an item or service than it should, or if it pays for unnecessary items or services, there are less Medicare funds available to pay for truly needed services. One important exception to the prohibition against waiving copayments and deductibles is that providers, practitioners or suppliers may forgive the copayment in consideration of a particular patient’s financial hardship. This hardship exception, however, must not be used routinely; it should be used occasionally to address the special financial needs of a particular patient. Except in such special cases, a good faith effort to collect deductibles and copayments must be made. Otherwise, claims submitted to Medicare mat violate the statutes discussed above and other provisions of the law.
What Penalties Can Someone Be Subject to for Routinely Waiving Medicare Copayments or Deductibles?
Whoever submits a false claim to the Medicare program (for example, a claim misrepresents an actual charge) may be subject to criminal, civil or administrative liability for making false statements and/or submitting false claims to the Government. 18 U.S.C. 287 and 1001; 31 U.S.C. 3729; 42 CFR 1320a-7a). Penalties can include imprisonment, criminal fines, civil damages and forfeitures, civil monetary penalties and exclusion from Medicare and the State health care programs.
In addition, anyone who routinely waives copayments or deductibles can be criminally prosecuted under 42 U.S.C. 1320a-7b(b), and excluded from participating in Medicare and the State health care programs under the anti-kickback statute. 42 U.S.C. 1320a-7(b)(7). Finally, anyone who furnishes items or services to patient substantially in excess of the needs of such patients can be excluded from Medicare and the State health care programs. 42 U.S.C. 1320a- 7(b)(6)(B). Indications of Improper Waiver of Deductibles and Copayments to help you identify charge-based providers, practitioners or suppliers who routinely waive Medicare deductibles and copayments, listed below are some suspect marketing practices.
Please note that this list is not intended to be exhaustive but, rather, to highlight some indicators of potentially unlawful activity.
- Advertisements which state: “Medicare Accepted As Payment in Full,” “Insurance Accepted As Payment in Full,” or “No Out-Of- Pocket Expense.”
- 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.
Let’s discuss a few of the above areas in more detail to ensure we are all on the same page with why we have to make a “Good-faith” effort to collect from patients their portion(s):
Waiving copays and deductibles for government program beneficiaries implicates at a minimum the following laws:
Monetary Penalties Law – The federal Civil Monetary Penalties Law (“CMPL”) 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 (e.g., Medicare) from a particular provider. (42 USC 1320a-7a(a)(5)). Violations may result in penalties of $20,000 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. (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.
Exception: Financial Hardship: The OIG has confirmed that it will not enforce the CMPL and 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
- waives the coinsurance and deductible amounts after determining in good faith that the individual is in financial need; or
- fails to collect coinsurance or deductible amounts after making reasonable collection efforts.
(42 USC 1320a-7a(i)). The AKS also contains an exception for cost-sharing waivers for inpatient hospital services if certain conditions are satisfied (see 42 USC 1001.925(k)); however, even if this exception does not apply, the OIG has stated:
In addition to the above, waiving cost-sharing amounts may violate other laws. For example, waiving copays and deductibles for referring physicians would usually establish a financial relationship, which could implicate the federal Stark law unless the arrangement were structured to fit within a regulatory safe harbor, such as the “professional courtesy” exception. (See 42 USC 1395nn; 42 CFR 411.357(s)). Keep in mind that states may also have their own anti-kickback statutes or laws prohibiting the waiver of copays or deductibles.
In addition to relevant federal or state laws, private payer contracts generally require providers collect copays and deductibles. The failure to do so without the payer’s written approval would violate the contract terms and could result in claims for breach of contract or repayment. In my experience several private payers have allowed the waiver of the cost-sharing amount due to financial need, but you need to confirm this for yourself with the payers you participate with.
So, in wrapping up this blog post, I will provide you with a template (you must change for your practice) to get you started with discharging patients. When writing a discharge letter, use the KISS principal and avoid giving specifics to minimize the patient’s ability to blow-back on you.
Our practice is here to serve the needs of the sick and those wanting to ensure their body is functioning at an optimal level. Unfortunately, your needs as a patient are incompatible with our philosophy of patient care, including our practice financial policy.
We find it necessary to inform you that we will no longer be available for your request for an appointment. We will be available for emergency medical care for the next thirty (30) days. This will allow you time to seek medical services from another physician you select.
We urge you to continue regular medical care. At your request, we will forward your medical records to the physician you designate.
Disclaimer: This blog post is not intended to provide any legal advice, guidance or opinion. The information contained in this blog post is a non-legal interpretation of statutes, acts, laws and should not and does not substitute for the advice, guidance or opinion of legal counsel. The author bares no liability and make no warranties for the information provided if implemented as is without confirmation of its applicability by the end user.
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