Revenue Cycle

Beware of waiving copays and deductibles

Patient Financial Services Weekly Advisor, April 1, 2005

The network/nonnetwork and preferred/nonpreferred issues are always top of mind for providers facing potential exclusion from restricted network managed care plans, and many providers consider waiving or writing off copays to help gain business if they're out of network.

But there can be serious consequences, says Maria Buckley, of counsel at Nutter, McClennen & Fish, LLP in Boston. She provides the following consequences of writing off copays and deductibles:

1. It can be seen as an inappropriate and unlawful inducement or a kickback. Such action would appear to incent a patient to get care or more care at that provider, she says, noting that state and federal laws apply. Medicare ruled that the routine waiver of deductibles and copay is a violation of the federal anti-kickback law. One concern is that overutilization of services could results in higher costs to the health plan.

2. It can be characterized as a false and deceptive practice. "From a consumer protection standpoint, it could be viewed as falsely implying that the patient can get the same benefits by seeing you as they could can by seeing someone who is in the network," says Buckely.

Example: If a patient is in a preferred program that requires a gatekeeper or primary care physician (PCP) to make referrals, the actual referrals are only good under one of the two following scenarios:

  • When the PCP makes the referral
  • When the referral is covered at the preferred level of benefits, only when referred by the preferred PCP

    If a patient sees a nonpreferred provider who waives the copay and then makes referrals, the services the patient receives the referral may not be covered benefits. Or they may come with higher copayments, which a patient wouldn't have to pay if the referring provider was in network.

    3. It could be considered a false claim. If in-network providers have a contract with the health plan, out-of-network providers cannot. Reimbursement to providers may be on a percentage of charge basis, so a plan may reimburse 80% of charges. "Since the patient's copay is 20%, the plan is assuming that you're actually billing the patient 20% of the charge you're billing the health plan. If you're not billing the patient that 20%, it can be considered a false claim," says Buckley.

    Example: The charges are $1,000. In a normal scenario, the plan pays $800 and the patient pays $200. If the patient isn't being billed that $200, the plan is paying 100% when its liability is 80%. The provider is misstating the actual charge, so it could be viewed a false claim.

    Tip: The OIG issued a fraud alert specifically related to the waiver of deductibles and copays. To view, click here and scroll down to the 12/19/94 "Publication of 5 Special Fraud Alerts."

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