Author: Tony Mira
There are times when a medical practitioner may want to give a discount to a patient for altruistic or other reasons. However, it is important that anesthesia providers be aware of the acceptable parameters and potential pitfalls of offering discounts for their services.
Everyone likes getting a deal. Our eyes are drawn to ads touting the “lowest prices in town” or “half off on everything in stock” or “get two for the price of one.” We humans are hardwired to go after a bargain. It not only saves precious financial resources, but it gives us an internal sense of our own shrewdness. Most businesses are all too happy to draw the customers in with such offers, but this kind of enticement must end at the doctor’s door.
When it comes to healthcare, there are certain rules in place that make most offers of discounts inappropriate and potentially illegal. Now, there is nothing to stop a healthcare provider from offering reduced pricing to those who are paying out of pocket. The problem comes when the patient has insurance and the provider bills the health plan the full allowable but deducts or fully forgives the patient’s portion (copay and/or deductible). This amounts to “insurance only” billing or a modified form thereof, and there are laws against this practice.
The federal “antikickback statute” (AKS) prohibits the offering of any monetary incentive to induce an individual to seek a service for which payment may be made under Medicare. Yes, the AKS contains certain “safe harbors” or exceptions to this rule, but an anesthesia provider offering discounts to Medicare beneficiaries is not one of them. The Office of Inspector General (OIG) of the U.S. Department of Health and Human Services (HHS) has removed any doubt about the propriety of discounts to beneficiaries of federal healthcare programs. The OIG has made it clear that safe harbor protections do not apply to any discount offered to beneficiaries in the form of “a reduction in price offered to a beneficiary, such as a routine reduction or waiver of any coinsurance or deductible amount owed by a program beneficiary.”
Waiving the copayment obligations for beneficiaries with commercial insurance can also be problematic. Private health plans have successfully challenged the routine waiver of coinsurance in the courts on numerous occasions. The underlying theories in such cases are two-fold:
- The routine discounting or waiver of the provider’s normal fee for some patients but not others, without a valid distinction for the differing treatment, can be subject to claims of false billing by the party not receiving the discount, i.e., the insurance company.
- The routine waiver of the patient copay can be viewed as breach of contract, as almost all commercial payers impose a contractual duty on providers to make a reasonable effort to collect applicable copayment amounts from the beneficiary.
In addition, we find the following statement in the OIG’s Compliance Program Guidance for Third-Party Medical Billing Companies: “Billing companies should encourage providers to make a good faith effort to collect copayments, deductibles and non-covered services from federally and privately insured patients.”
Well, what about the time-honored practice of offering a discount to members of the medical community? Surely, a professional courtesy discount is still allowed, right? Well, not in the form that some may think. There is no exception found in the Code of Federal Regulations or the AKS or the OIG guidelines that allows you to waive or reduce the patient’s financial responsibility just because the patient is a medical professional or a member of their family. To do so, would be to engage in insurance-only billing or some type of fee reduction, which we have already established is generally inappropriate.
Having said that, there is a loophole in this general restriction. While professional courtesy discounting is always inappropriate in the context of federal health program beneficiaries, there is a potential for providing some measure of reduced pricing for commercial insurance beneficiaries. According to the Stark law, as interpreted by a number of healthcare attorneys, it may be appropriate to provide a professional courtesy discount to such beneficiaries where the following thresholds are met:
- The provider group must adopt a professional courtesy policy.
- The discount must apply to an entire class of patients (e.g., all healthcare providers, their staff and family members) in that market area, and not just their typical referral sources.
- Most importantly, such policy would also require the percentage of discount given to the beneficiary to be applied to the insurer as well. In other words, if you waive the patient’s portion, you must also waive your charge to the commercial payer.
Among other things, the above guidelines would mean the provider can no longer send a message to the billing company concerning a particular patient that says “no bill.” Unless you abide by all of the above criteria, that request is a non-starter. Because of these restrictions, many providers have made the decision to end the practice of professional courtesy altogether.
Some providers are in the practice of offering a discount for early payment of the bulk of the patient balance in order to avoid the cost of collection on the back end. While there is an OIG opinion on record that questioned a hospital’s engaging in this practice but where the OIG ultimately declined to seek negative action against the facility, there is no provision that explicitly allows an individual practitioner to offer a prompt pay discount to beneficiaries of a federal health program, such as Medicare, Medicaid and Tricare.
For commercial payers that do not prohibit this practice, prompt pay discounts may be a possibility; but, even in this circumstance, there is a potential for charges of fraud depending on state law, interpretation of federal law and the manner in which the discount is offered. Because of these considerations, we recommend avoiding the offer of prompt pay discounts.
The Hardship Exception
For every rule there is an exception, or so the old saying goes. In keeping with this maxim, there is one primary exception to the general no-discounting rules we’ve just reviewed. A discount or waiver of the patient’s portion of the bill can occur—for both federal and commercial health plan beneficiaries—where the provider has made “reasonable efforts” to collect AND where the beneficiary has provided notification to the provider of their “financial hardship.”
Accordingly, we recommend the attempt of at least two or three communications (e.g., mailed statements, calls) to the patient before considering any discount based on financial hardship. We further recommend that, where you have an indication of the beneficiary’s financial hardship, you ask the beneficiary to send a written communication providing support for their contention of such hardship. This may involve their providing you a list of their monthly income and bills. That communication should be kept on file. As the government does not provide specific metrics for determining hardship, the group should create its own discount policy that contains financial thresholds for determining what constitutes hardship, and that policy should be applied consistently. A discount or waiver of fees should be offered only after all of the above conditions have been met.
It is important to remember that the hardship discount may not be advertised up front, prior to the service or prior to the reasonable attempts to collect. Furthermore, consideration of fee reduction or waiver must not be routine, but made on a case-by-case determination in accordance with your own internal policy standards.
When it comes to offering deductions for patient services, the legal landscape is a potential minefield. That’s why it is always better to err on the side of caution and simply avoid the “discount rack,” except where true financial hardship exists.