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Waiving deductibles, copays

Compliance Monitor, May 27, 2005

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Q: I have a question regarding the waiver of copays and deductibles. What is the ruling if a physician chooses to bill a non-Medicare patient less than the Medicare allowable rate?

Example: A 35-year-old comes into the office to be evaluated for acne. After examination and treatment of the patient, the physician indicates that he only wishes to bill the patient $10 for the visit. Of course, this amount is less than the Medicare allowable rate. Is this legal?

I have always informed all of my physicians that if they wish to bill a non-Medicare patient less than our published rates that it should never be below the Medicare allowable rates. My belief here is that it avoids the fraud and abuse issues with Medicare.

A: In general, Medicare pays physicians on an RVU-based fee schedule, regardless of the hysician's actual charge. A physician is not prohibited by Medicare from charging a non-Medicare patient a charge that is lower than the Medicare fee schedule (or the physician's usual and customary charge).

There may be an issue vis-a-vis other payers with whom the physician participates, including the applicable state Medicaid program. Other payer agreements may have a "most favored nations" or a "lower of" type provision that reimburses the physician the lower of the contract rate or the lowest price the physician routinely makes available to others.

Additionally, because of the various fraud and abuse concerns you allude to, there can be an implication that a lower than customary charge may be some sort of quid pro quo or unlawful inducement, depending on the facts and circumstances of offering the discount.

As a general rule, discounts to patients outside of the discounts arranged through bona fide third-party payer agreement are most defensible when they are based on patients' ability to pay.

This question was answered by Maria Buckley, of counsel at Nutter, McClennen & Fish, LLP in Boston.

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