How to Be Caring Yet Compliant
by Cheryl Nash
We are frequently asked when it is appropriate and legal to write off a patient’s balance. There are some contractual and legal elements to this question. While we are not giving legal advice, the information we do have may be helpful.
When a provider becomes contracted with an insurance company, they agree to make a reasonable attempt to collect this amount from the patient. That includes any deductible, co-insurance, and co-payments the patient is shown to owe by the payer. When a provider consistently waives these balances they are now in violation of their contract. The penalties for this can be as mild as having the commercial insurance payer drop the contract should they ever audit the issue. With Medicare or Tricare, the penalties may be as severe as fines and possible jail time. Why is that? You were just trying to help the patient out!
Medicare cites the reason behind this as “Routine waiver of deductible and co-payments by charge based providers, practitioners, and suppliers is unlawful because it results in 1. False claims, 2. Violations of the anti-kickback statute, and 3. Excessive utilization of items and services paid for by Medicare.
Medicare will act as if you are submitting False Claims because your claims now misstate the true fee for the service (what was paid versus what was allowed). In most cases providers are paid based upon a set fee schedule. When a provider routinely waives a portion of this amount it in effect sets a lower fee schedule.
For Medicare the Anti-kickback rules are very stringent and can be found at the source noted below. By routinely waiving the patient’s portion of the Medicare allowable, it can be considered a kickback or illegal inducement for services. You may find further information on this at: http://oig.hhs.gov/fraud/docs/alertsandbulletins/121994.html.
So what can be done for the patient that truly can’t afford to pay due to extenuating circumstance?
A patient will need to file a letter of hardship to the practice. This will need to be fairly detailed as to the financial circumstances that cause the hardship, and be reviewed on a case by case basis. Not all letters of hardship should be approved. They should always be reviewed to see if the patient has any resources to remit payment. Good faith payments from the patient should be tried prior to forgiving an entire balance. Reducing a balance and setting up a payment plan shows proper attempts to collect, and if that is still unable to work for the patient, only then should hardship steps be followed.
As with all things in the Healthcare business, having good documentation on file is very important. It is better to have it and not need it, then to need it and not have it. Especially when it comes to Insurance Audits.
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