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Concerns on the part of the Office of Inspector General (OIG) that unusual charitable practices of some providers and ambulance services could be considered illegal has had many practices worried they would be rousted by the fraud police for occasionally waiving the copayments of poorer patients. "Not to worry," says OIG spokeswoman Alwyn Cassil. The OIG does not plan any kind of organized investigation into co-pay waiver practices, she promises.
Providers are permitted under Medicare Part B to waive copayments once they have made a good-faith effort to determine the financial condition of the beneficiary. The OIG, however, was concerned that the routine waiver of copayments could be associated with serious violations of reimbursement rules.
When it comes to creating a workable definition of financial hardship to justify waiving a co-pay, "I recommend my clients use an objective standard, preferably one set by another entity," says Mike Carlson, a health care lawyer in Birmingham, AL. "For example, I have clients who have used their state’s Medicaid eligibility standard. Others have used the food stamp program’s standards and the federal poverty guidelines," he notes. The financial hardship line starts to blur, however, when it comes to what could be considered a temporary situation resulting from an unusual personal circumstance such as divorce, loss of a job, or catastrophic illness.
"Before we will waive Medicare co-pays and deductibles, the patient must apply and qualify for charity services, regardless of the third-party payer or their lack of insurance," says Stephanie David of the Mountain States Health Alliance, a managed healthcare system based in Johnson City, TN.
Waiving medical fees for services provided to other physicians, family, and friends used to be common among most practices. However, the emphasis on fraud — or the appearance of it — has discouraged such professional courtesies. But the practice is not automatically considered illegal as long as the decision is not based directly or indirectly on that person’s ability to refer federal health care business to you, and as long as it is not a consistent practice of waiving the entire fee for services to a group of people, including employees, physicians, or their family members.
Whether waiving fees as a simple professional courtesy is legal generally depends on how you select recipients and how you extend the courtesies. According to attorney Alice Gosfield of Gosfield & Associates, Philadelphia, the following are potential traps to avoid:
— selecting recipients in a way that directly or indirectly takes into account their ability to affect past or future referrals;
— providing professional or other health care services for free or at a discounted rate in a way that creates a financial relationship that violates self-referral restrictions.
"Just providing or accepting professional courtesies can place you in the potentially awkward position of trying to prove that they were not intended to induce referrals," notes Andrew H. Joseph, JD, assistant vice president with Strategic Management Systems, a management consulting business in Alexandria, VA, that specializes in compliance and ethics programs in health care.
Also, waiving copayments for federal health care program patients who are not financially needy can put you in potential violation of the False Claims Act, because the government views the routine waiver of deductibles or copayments as a misrepresentation of the actual charge — in other words, a false claim.