Does this sound familiar?
A new patient pulls up to your clinic in a late model, high end European sedan. It’s the middle of winter, but the gentleman is sporting a tan and tells you that he hurt his back sleeping on a hotel bed during a Caribbean vacation, from which he’s just returned. You perform a stellar examination, order some X-rays, and deliver a reasonable care plan that should get your patient back to boot camp with his personal trainer in short order.
Now the time comes to conduct the financial side of the conversation. In your mind, you have built up tremendous value for what you proposed for care. Miraculously, the patient’s $3,000 deductible has been met and he “only” has a copayment of $50 per visit. The patient sits there thoughtfully, then tells you, “Sorry doc, but I can’t afford that!”
You feel the angst in your gut that has become commonplace in this new healthcare economy and are tempted to move into hardship mode and give this person a “deal.” But do you?
You know you need to have a hardship policy but have neglected to put anything in writing that guides you and your practice’s ability to determine what your hardship criteria should be. Do not overlook this aspect of your practice’s compliance program. Not only does it spell out what can be offered to a patient claiming a hardship but it also outlines who is eligible to receive it in the first place.
Assuming you have a compliance program for your practice, you may recall that much guidance can be taken from Medicare policy and procedures. Medicare policy is often a good litmus test as it is frequently the most conservative. Many private insurers look to Medicare when setting their policies and it can often be your default for guidance.
Medicare prohibits the routine waiver of copayments and coinsurance to beneficiaries. Medicare views discounts and coinsurance waivers as an inducement to patients to choose a particular provider, especially if the discounts are offered at or before the time of service. The only way to offer hardship discounts to Medicare beneficiaries without incurring increased risk is to meet the following criteria:
- The waiver is not offered as part of any advertisement or solicitation,
- Waivers are not routinely offered to patients,
- The waiver occurs after determining in good faith that the individual is in financial need, and
- The waiver occurs after reasonable collection efforts have failed.
The most important exception to the prohibition against waiving copayments and deductibles is that providers may forgive the copayment in consideration of a patient’s financial hardship. This hardship exception, however, must not be used routinely. It should be used occasionally to address the special financial needs of a particular patient. Except in such special cases, a good faith effort to collect deductibles and copayments must be made.
Otherwise, claims submitted to Medicare may violate the statutes discussed above and other provisions of the law. If you read between the lines, Medicare seems to be saying that they’d rather you let patients make payments to your office toward their balance than to simply excuse their financial responsibility.
Hardships do exist. Undoubtedly, a patient’s hardship scenario—if genuine—is something you occasionally see in practice. If something that is expected to be an exceptional situation occurs with such frequency that it is now your norm, expect it to be looked upon with suspicion. So, what to do?
One of the most important components of a good hardship policy is a clear explanation of how you will verify a financial hardship. As you formulate your policy, it’s essential to
strengthen its validity with strong verification criteria. Whether you are offering relief for the copayment and deductible to an uninsured patient or a patient with insurance, this strong statement of your willingness to verify should indicate your commitment to fee-schedule compliance.
The Office of Inspector General advises: “One important exception to the prohibition against waiving copayments and deductibles is that providers, practitioners or suppliers may forgive the copayment in consideration of a particular patient’s financial hardship. This hardship exception, however, must not be used routinely; it should be used occasion- ally to address the special financial needs of a particular patient. Except in such special cases, a good faith effort to collect deductibles and copayments must be made.”1
Hardship exceptions for insured patients who are in-network should be verified with the carrier to insure you don’t commit a violation of your contractual obligations by offering a hardship waiver.
Develop a hardship policy that a patient who is requesting an exception from your office’s financial policy can agree to. There are many options for the criteria and verification methods possible in a compliant hardship policy. Yours can include situations such as the loss of a job, increased and unexpected medical bills, a divorce, or simple systemic financial hardship.
Most often, hardship policies follow the federal poverty guidelines. Based on family size and actual income, and where that patient fits with respect to the federal poverty level (100 percent, 125 percent, or 200 percent, for example), you can then charge a fee based on a sliding scale. But first your practice must write a policy, the verification procedure, indicate the length of time of the hardship extension, and outline procedures followed by the team that ensure compliance with the policy.
A case study
Recently, a colleague shared how patients who pay something for their care place more value on what they are receiving, which illustrates the importance of a hardship policy. This doctor said one of her first new patients was an elderly woman who lived in subsidized housing two blocks from the practice. She had Medicare but no secondary insurance. Her meager Social Security check was eaten up almost entirely by her rent and food costs.
She demonstrably could not afford the coinsurance payment she was required to pay. This doctor had implemented a hardship policy as part of her compliance program, but realized that this patient would struggle with even the low end of the sliding scale.
She decided that this case was the most exceptional she had encountered and thought about waiving the copayment entirely. Her patient would not hear of it. She insisted on paying something. As all she could pay was $2, that was the amount accepted.
Each time this patient came in, she proudly paid her $2 at the front desk every time she needed care. Yes, the hardship form was signed and implemented, but this Medicare patient kept her dignity and the practice didn’t run afoul of the strict Medicare rules about this subject.
The lesson here extended well beyond that of compliance. The patient reminded her chiropractor of the value of the care she was providing.
Something for nothing is worth nothing and the patient brought this valuable lesson to life.
Kathy Mills-Chang MILLS CHANG, MCS-P, CCPC, CCCA, is a certified medical compliance specialist and, since 1983, has been providing chiropractors with Reimbursement and compliance training, advice, and tools to improve the financial performance of their practices. She leads a team of 20 at KMC University and is known as one of the profession’s foremost experts on Medicare. She and any of her team members can be contacted at 855-832-6562, firstname.lastname@example.org, or through kmcuniversity.com.
1 Office of Inspector General.“OIG Speical Fraud Alert.” Department of Health and Human Services. https://oig.hhs.gov/fraud/docs/ alertsand bulletins/121994.html. Published December 19, 1994. Accessed March 2017.