Deductibles and financial assistance
Compliance Monitor, April 8, 2005
Q: As chargemaster coordinator for my hospital, I calculate cash prices for patients without insurance. Our written policy states that this financial aid is only for uninsured or for noncovered procedures. (Another person handles financial aid applications that apply to insured and uninsured.) Many times patients call who have insurance but don't want to pay their deductible and therefore, feel they are entitled to the financial aid. I feel I have no choice but to follow the written policy but yet I don't want to encourage patients to lie.
I've been getting mixed messages from within our organization. One is that it doesn't matter if a patient wants to go off their insurance or not so we can offer them the financial aid. The other is that we have contracts with insurance companies to collect deductibles and so the discount doesn't apply.
Do you have any documentation that may address this issue of deductibles?
A: From a high-level perspective, a hospital's financial aid policies should be clearly documented and understood both by patients and by all staff who may be addressing this issue (i.e., registration, billing and collections, customer service, etc.). These policies must be consistent with the mission and goals of the hospital, but should also make clear that patients are expected to contribute to their care based on their ability to pay.
The documentation of the financial aid policies is important because it ensures that aid will be applied consistently and fairly to all patients, rather than being based upon the subjective decisions of staff. As a patient, I want to know that the choices and options offered to me have been applied just as they would to another patient of like means.
That being said, patient copays and deductibles may be waived at the discretion of your hospital. Keep in mind, however, that if you are going to waive them, the circumstances must be clearly outlined and understood. The OIG, in an alert dated March 31, 2004, states that hospitals may write off a (Medicare) patient's deductible and co-insurance regardless of their income level. It goes on to state that "If a hospital does not want to collect, but wants to write off the uncollected debt regardless of income level, as 'charity care' or as a 'courtesy allowance,' Medicare rules don't prohibit that, but Medicare will also not reimburse these amounts."
In addition, most states have rules stating that once a patient's copay and/or deductible is waived, NO OTHER SERVICES may be billed to the payer. Here in California, the Department of Managed Health Care told me that because the patient signed a "contract" stating that they would be responsible for co-pays and/or deductibles any waiving of these fees negate the contract between provider, patient and payer, and thus no charges for any services can be billed to the payer.
You should check with a like department in your state or the Insurance Commissioner to find out specific rules governing your state. In addition, many of these issues are documented within specific payer contracts. Generally, though, it is an accepted industry standard that payers should not be billed, even for only their portion of a claim, if copays and/or deductibles are waived. Patient responsibility is considered one of the determining factors of the negotiated rate between payer and provider, and payers do not look favorably upon patients getting a "deal" while the payers themselves do not.
So the bottom line is that you may waive the copays and/or deductibles, based on a pre-determined set of criteria, but you will likely also be waiving your right to bill for any other services for that claim.
Tip: For more information, visit the OIG's fraud alerts:
1. Under fraud alerts:
2. Under bulletins:
3. Under other guidance:
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