Waiving Patient Payments a Kind, but Problematic, Gesture

HHS' Office of Inspector General (OIG) has long taken the position that routine waiver of patient responsible amounts can constitute a type of healthcare fraud. I recently discussed collection of copayments and coinsurance topic with Amanda Ward, president of Dallas' business process outsourcing firm Best Receivables Management (BRM).

Martin Merritt: As early as 1994, the OIG published a Special Fraud Alert warning that routine waivers of copayments can constitute Medicare fraud. Why?

Amanda Ward: The OIG takes the position that a doctor who routinely waives Medicare copayments or deductibles is misstating the actual charge. The example cited in the alert states, if a doctor states that his charge for a visit is $100, but routinely waives the 20 percent copayment, the OIG feels 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, the Medicare program is paying $16 more than it should for this item.

MM: Are private payers picking up on this as well?

AW: Insurance network contracts have long contained a provision that the physician will seek to collect the patient-responsible portion. As dollars become increasingly scarce, benefit managers or insurance auditors have begun to request evidence of attempts to collect coinsurance. More recently, manuals state that the physician must actually collect this payment. If the physician cannot provide proof, the insurance company may demand repayment of benefits or terminate the contract.  More troubling, the insurance company can pick and choose when to enforce this provision; often targeting physicians with the highest utilization rates.

MM: But a requirement that a physician can actually collect seems to run contrary to AMA Ethics Opinion 6.12 "Forgiveness or Waiver of Insurance Copayments"?; (which I've previously discussed). Do you agree?

AW: A March 2015 cover story in Money Magazine states that 39 percent of people earning $75,000 a year would not be able to cover a $1,000 unexpected expense from savings. It is frankly absurd to think that the average person can afford to pay the out-of-pocket annual limit, say $7,500 for an individual, or $15,000 per family, particularly where the illness occurs in December, and the new annual limit must be met beginning January of the next year.

MM: So what is your advice to physicians?

AW:  First, always read your network provider manual and check your state's medical board rules. As AMA Opinion 6.12 states, it's never a good idea to advertise that you waive copayments or are willing to accept what insurance will pay; writing off the rest. This can be considered insurance fraud or at least unfair competition. Advertising that you waive coinsurance may also violate your state board rules. Secondly, where an insurance plan goes too far, requiring actual collection of coinsurance, which is discussed in Opinion 6.12, this can act as a barrier to necessary care. This can be taken up with your state board of insurance.

In many cases, there simply is no clear rule. It is best to approach this with a common-sense plan which takes into account the various interests involved. While it is not possible to always actually collect the entire patient responsible amount, it is important that a physician make the attempt. At BRM, we take a sensible and compassionate approach. We contact patients to find out if they have the ability to pay some amount, and offer a payment plan. If they cannot, we document the attempt so that our physicians can demonstrate good faith. Sometimes, that makes all the difference.

The key is treating everyone with respect and that includes the insurance plan. We find insurance companies can be reasonable, if there is evidence that the physician's office is attempting to respect the provisions of the insurance plan.

It is the failure to do anything, albeit with the best intentions, which can land physicians on the wrong side of a private payer audit or worse, on the wrong side of the OIG.