Dealing With Discounts

Geeta Khare, an allergist in Florida, wrote to PhysiciansPractice.com asking how to set up a sliding fee scale -- or even provide pro bono care -- for uninsured and underinsured patients. "These folks are often working hard, but their jobs do not provide insurance coverage," Khare explains. "If they are healthy, it benefits our community and society as a whole. Ours is one of a few professions that takes into account the greater good as well as the needs of the individual."

Our frosty response to Khare's warm-hearted inquiry? Consult an attorney.

The rules regarding fee schedule discounts are unsettlingly vague. This is another instance when a physician who wants to work from the heart is instead forced to work through a legal dictionary.

Medicare doesn't disallow discounts. But it prohibits "unfair" inducements to entice patients, such as offering inexpensive or free initial care, and it can exclude a physician who charges the program substantially in excess of his usual charge. Moreover, commercial payers reimburse physicians according to physicians' "usual, customary, and reasonable" fee schedule or their own, whichever is lower.

So how many discounts must a physician offer before that discounted fee becomes the "usual" one? It's not clear.

There are, however, some general discounting guidelines:

• Don't offer discounts to more than half of your patients -- and start paying attention when your discounted business gets to about 40 percent of your practice. Otherwise, the discounted fee schedule will much more likely be considered your customary fee schedule.
• Only give discounts for occasional, well-documented, and fair reasons -- such as to people who meet federal poverty guidelines (find them at www.ocpp.org/poverty/). Whatever your break-off point, make sure to have it written down and apply it very consistently.
• Never advertise that you discount to certain classes of patients.
• Never bill "insurance only." You are under contract with payers to collect copayments and deductibles. Why should they pay if the patient won't? Billing insurance only could even put you at risk for insurance fraud.

Of course, physicians are not required to offer any discounts. And most would probably be better off if they didn't. Instead, some physicians refuse new patients who don't have insurance and can't or won't pay out-of-pocket. They dismiss patients who repeatedly fail to meet their financial obligations. And good for them.

These physicians aren't without compassion, and under different circumstances most would be glad to offer assistance. What's sad is that physicians who are moved to help their strapped patients (and can afford to do so) don't have the freedom to make that choice. Once again kindness is smashed to bits on the rocky shoals of bureaucracy. 

Send your feedback on discounting fees -- or other topics you'd like to see covered -- to Pamela Moore, senior editor, practice management, at pmoore@physicianspractice.com. We may publish comments received in future issues of Physicians Practice.

This article originally appeared  in the July 2003 issue of Physicians Practice.