Recently, a chiropractor contacted us looking to get his compliance and HIPAA programs in order.
In the process, he asked for an analysis of his profitability, because it was not what he thought it should be. During the conversation, he casually mentioned that he never collects copayments and deductibles. “Never?” we asked. “Never!” he replied. Stunned by his response, we asked him why not. He replied that no one else in the area did, and that if he started, he feared that his patients would desert his practice.
Gulp!
Once upon a time, in a land not so far away, before the healthcare world ever heard of the Office of Inspector General (OIG) and compliance programs, it was normal to see doctors playing “let’s make a deal” with deductibles and copayments. That’s because “good” insurance coverage meant you had a $100 deductible and 80 percent coverage of your entire bill. “Bad” coverage was a $250 deductible and that same 80 percent coverage.
How things have changed.
Today’s patients are more likely to be facing a $2,000 deductible— or more. No wonder our doctor had profitability issues—he was discounting services hoping that his patients would stay long enough to clear their deductible, yet few insurers would authorize active care for that number of visits. From a financial perspective, this way of handling (or not handling) finances makes no sense, and his issues only started with the financial implications. His true problems went further.
“Rules is rules”
One of the most significant inducment violations in healthcare is the routine waiving of copayments and deductibles. It is such a serious viola- tion that federal advisory opinions have been written on the subject.
Often, providers believe that a simple proclamation of “hardship” is enough; that high copayments or deductibles constitute a hardship on the patient. This is absolutely not so.
In the context of Medicare and Medicaid patients, the routine waiving of deductibles and copayments is prohibited in the absence of a patient demonstrating financial hardship, and the physician verifying that hardship. The Office of Inspector General clarified this in a fraud alert on the topic when it stated:
Routine waiver of deductibles and copayments by charge-based providers, practitioners or suppliers is unlawful because it results in (1) false claims, (2) violations of the anti-kickback statute, and (3) excessive utilization of items and services paid for by Medicare.
In certain cases, a provider who routinely waives Medicare copayments or deductibles could also be held liable under the Medicare and Medicaid Anti-Kickback Statute [42 U.S.C. § 1320a-7b (b)]. The statute makes it illegal to offer, pay, solicit, or receive anything of value as an inducement to generate business payable by Medicare or Medicaid.
When providers forgive financial obligations for reasons other than genuine financial hardship of the patient, they may be unlawfully inducing that patient to purchase items or services from them.
A provider who routinely waives copayments or deductibles is also misstating the actual charge. For example, if a physician claims that the charge for a service is $100, but routinely waives the copayment, where the coinsurance percentage is 20 percent, the actual charge is,$80. The carrier should be paying 80 percent of $80 (or $64), rather than 80 percent of $100 (or $80). As a result of the provider’s misrepresentation, the carrier is paying $16 more than it should for this service. Such waivers of copayments and deductibles by an “out-of-network” provider may be viewed as a potential kickback, insurance fraud, or grounds for disciplinary action against the physician who waives copayments, coinsurance, or deductibles.
In fact, a provider’s waiver of copayments or deductibles may also affect the provider’s rights to collect insurance from the payer, based on certain state laws related to acceptance of assignment. In Texas, for example, the attorney general has made it clear that “the payment of benefits under an assignment does not relieve the covered person of contractual responsibility for the payment of deductibles and copayments. A physician or other health care provider may not waive copayments or deductibles by acceptance of an assignment.” This means that a physician accepting assignment from a patient is not relieved from seeking payment from the patient of any applicable copayments and deductibles.
Although the opinion does not impose a mandatory obligation on the collection of copayments and deductibles, it does suggest that telling a prospective patient that these will be waived may be interpreted as an “inducement” to the patient. Under the Health Insurance Portability and Accountability Act (HIPAA), it is considered mail fraud to have a scheme intended to “defraud any health care benefit program,” and that is a federal crime. This interpretation was corroborated in an OIG Advisory Opinion in 1997 with the finding that the proposed non-collection of copayments from patients with employer-sponsored Medicare complementary coverage would constitute grounds for sanctions under HIPAA law or the Social Security Act.
Doesn’t this sound familiar to Al Capone being charged with tax evasion, rather than the other crimes he allegedly committed? These issues can often be like pulling a loose thread on a sweater—pulling unravels much more than intended. Likewise, looking deeper into these types of violations often leaves the provider in a much deeper hole than expected.
The right way
If the foregoing sounds alarming, take a deep breath; you may need to do things differently, but the path to compliance is worth it. By framing your patient’s care plan as a process rather than an “event,” you can explain to your patients the need for care over time.
People may view paying for care on a visit-by-visit basis as being too expensive. If, however, you can package their financial obligations much as you package their care plan, it can make things more manageable for the typical patient.
You need to know your state’s laws and your contractual requirements when presenting a plan such as this but, when permissible, this kind of plan has several compelling benefits:
- The patient perceives their care as being more affordable.
- You are more likely to collect what you should (legally and contractually).
- Your practice will have a compliant method for handling finances.
- Your practice increases profitability.
What happened to the doctor who was waiving all copayments and deductibles? He overcame the fear of seeing his entire practice flee down the street and brought his practice into compliance. The solutions were simple. He learned the steps needed to create financial policies and plans. He learned what to say and how to say it in a way that communicated value.
Did every patient stay? No, but far fewer left his practice than he had anticipated. In fact, he was able to increase his profitability by more than 700 percent within three months. Not only that, but he was able to lie down at night secure in the knowledge that he was legal and compliant.
Kathy Mills Chang is a certified medical compliance specialist (MCS-P), a certified chiropractic professional coder (CCPC), and certified clinical chiropractic assistant (CCCA). Since 1983, she has provided chiropractors with reimbursement and compliance training, advice, and tools to increase revenue and reduce risk. She leads a team of 20 at KMC University and is considered one of the profession’s foremost experts on Medicare, documentation and compliance. She or any of her team members can be reached at 855-832-6562 or info@kmcuniversity.com.
