Kickback rules kick in if Medicare co-pay waived

A recent advisory opinion from the Department of Health and Human Services Office of Inspector General (OIG) serves to remind providers that no matter the circumstances, any time you waive a patient copayment, coinsurance, or deductible, you also risk running afoul of federal anti-kickback provisions.

HHS offers the following scenario as an example: A Medicare-certified ambulatory surgical center organized as a limited liability corporation does not pursue collection of certain payment from a group of patients with employer-sponsored complementary Medicare or Medigap coverage.

Under Medicare, payments for the services received is divided into two parts, a facility fee and a professional fee, notes the Alexandria, VA-based American Group Medical Association. In turn, the facility fee is determined on a prospective basis, while the professional fee is based on Medicare’s physician fee schedule.

The patient’s Medigap coverage is provided by a previous employer with a policy that pays any Medicare copayments. The employer has also hired a separate Firm X to administer and pay any Medigap claims.

This Firm X administrator gladly pays the Medicare copayment related to the professional fee, but refuses to pay the facility fee on the grounds a limited liability corporation (LLC) is not an ambulatory surgical center.

The LLC repeatedly — and unsuccessfully — tries to be paid in full by the Firm X administrator. However, it does not try to ask the patient to pay the facility part of the claim, nor does it intend to.

According to the OIG, not pursuing payment from the patient could violate section 231(h) of the Health Insurance Portability and Accountability Acts’ "prohibited remuneration" provisions, which say any "waiver of coinsurance and deductible amounts that a provider knows or should know is likely to influence a beneficiary’s choice of a particular provider."

The OIG says, "providers who routinely waive Medicare copayments may be held liable under the anti-kickback statue. "

"When providers forgive financial obligations for reasons other than genuine financial hardship of the particular patient, they unlawfully may be inducing the patient to purchase items or services in violation of the . . . statute’s proscription against offering or paying something of value as an inducement to generate business payable by a federal health care program," OIG says.

In other words, if an insurer or third party claims processor refuses to pay all or part of a claim, then you must try to get the Medicare beneficiary to pay, unless the patient is really too poor to pay. Otherwise, you risk having federal auditors think you are engaged in some kind of kickback scam.