Think More Than Twice Before You Waive Co-Payments

One of the most frequent issues I discuss with therapists is the practice of waiving co-pays as a gesture of good will to their patients, and a coping mechanism during times of increased medical  costs. Some  have the best intensions in doing so, while others see it as a “loop hole” to overcharge for services and then accept what the insurance companies pays. The Office of the Inspector General ( OIG) has long taken the position that the routine  waiver of copayments constitutes an illegal kickback, which is a felony.

The routine waiver of copayments also constitutes a violation of the terms of the majority of private insurance company plans. This contractual violation serves as a basis for a recoupment audit, during which insurance companies request proof of collection of copayments for multiple randomly selected patients. If the practice  cannot prove it collected, or exhausted reasonable means of collection, then the carrier may demand a refund for any benefits paid across the board. Routine copay waivers constitute fraud. If a patient is charged $150 and the insurance carrier is billed $100, the patient is supposed to pay $50. If you never attempt to collect the $50, this means the actual charge is $100.  Therefore, the insurance company should only pay 80% of that.

I bring this up in a public forum because of a January 6th NYTImes article –  Justice Department Sues Doctor Paid Richly by Medicare.  Among other things federal officials  accused Dr.  Qamar of paying kickbacks to patients by waiving their portion of the bill, regardless of their ability to pay.

There are provisions for waiving copayments in cases of financial hardship. At a minimum, you should document the financial hardship, and obtain a release from the patient to turn the financial document over to the insurance company, if requested. State laws vary regarding waivers.

The OIG states the following criteria for waiver on the basis of financial hardship:
The waiver must be based on a good faith determination of the patient’s financial need and  not be applied routinely. The government does not specify the financial status that would justify a waiver, so you can develop your own approach, apply it routinely, and document your efforts. For example, if your efforts to collect on a patient’s bill fail, or if it’s obvious that a patient is struggling to pay the amount owed, ask the beneficiary to fill out a form noting their employment status and average household income and expenses. Then make your determination based on the information provided.

The waiver must not be based on the amount of the charges. The decision about whether to waive what a patient owes needs be based on the patient’s ability to pay without regard to what the carrier  may have paid or the total charges for the service.

The waiver cannot not be offered as part of an advertisement or solicitation.


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