Deductibles, Copays, and Hardship: How Does Compliance Come Into Play?
FINANCIAL
COMPLIANCE
By Kathy Mills Chang, MCS-P, CCPC, CCCA
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 quick and flippant response we asked him, “Why not?” His next reply was no less stunning. “No one else in my areas does. If I do, everyone will stop coming to me and go to the guy down the street.” 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 very 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% coverage ofyour entire bill. “Bad” coverage was a $250 deductible and that same 80% coverage. My, how things have changed!
That exchange might make the hairs on the back ofyour neck stand up just thinking about how in the world a practice could afford to absorb a $2,000 deductible. The reality was that he could not. No wonder he had profitability issues! He was giving away tons of services hoping that his patients will stay long enough for him to be able to collect starting with dollar 2,001. Clearly, from a financial perspective, this way of handling (or not handling) finances makes no sense, but this doctor’s issues only started with the financial implications. His true issues went far further.
Them’s the Rules
One of the most significant inducement violations in health care is the routine waiving of copayments and deductibles. It is such a serious violation that federal advisory opinions have been written on the subject. Often, providers believe that simply the proclamation of hardship is enough, and 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 the patient demonstrating financial hardship, and the physician verifying that stated hardship. The Office of Inspector General clarified this in a Fraud Alert on the topic when they 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 the context of Medicare and
Medicaid patients, the routine waiving of deductibles and copayments is prohibited in the absence of the patient demonstrating financial hardship, and the physician verifying that stated hardship.
FINANCIAL
COMPLIANCE
In certain cases, a provider who routinely waives Medicare copayments or deductibles also could be held liable under the Medicare and Medicaid anti-kickback statute 42 U.S.C. 1320a7b(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 horn them.
A provider who routinely waives copayments or deductibles is also misstating die 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%, the actual charge is $80. The carrier should be paying 80% of $80 (or $64), rather than 80% 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 agamst the physician who waives the copayments, coinsurance, or deductible.
In fact, the provider’s waiver of copayments or deductibles may also affect the provider’s rights to collect insurance from the payer, based on certain state law related to acceptance of assignment. In Texas, for example, the attorney general has made it clear that “the payment of benefits under an assigmnent does not relieve the covered person of contractual responsibility for the payment of deductibles and copayments. A physician or other healthcare provider may not waive copayments or deductibles by acceptance of an assignment.” This means that when the physician accepts assignment from the patient, he is not relieved h orn seeking payment from the patient of the 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 the prospective patient that these will be waived may be interpreted as an “inducement” for the patient.
Under the legislation creating the Health Insurance Portability and Accountability Act (HIPAA,) it is considered mail fraud to have a scheme intended to “defraud any healthcare benefit program,” which is a crime under federal law. This interpretation was corroborated in an OIG Advisory Opinion in 1997 with the finding that the proposed noncollection of copayments h orn patients with employer-sponsored Medicare complementary coverage would constitute grounds for sanctions under section 231 (h) of HIPAA (42 USC §1320a-7a(a)(5) or under Section 1128B (b) (relating to payment of kickbacks) under the Social Security Act (42 USC §§ 1320a-7b(b) and 1320a-7(b)(7)).
Doesn’t this sound eerily familial' to when the government nailed A1 Capone on charges of tax evasion, rather than all of the other crimes he allegedly committed? This is the reason that these issues can often resemble the pulling of a loose thread on a sweater—pulling unravels much more than you intended. Likewise, looking deeper into these types of violations often leaves the provider in a much deeper hole than originally anticipated.
If all of this sounds just a bit too much for you to handle, take some deep breaths because the road ahead is not that hard. It may mean doing some things differently than in your past, but the process can be very well worth it. By looking at your patient’s care plan as a “process” rather than an “event,” you can communicate to your patients the need for care over time. Not so haid, right? Follow along a bit more.
Many people may view paying for their care on a visit-byvisit basis as expensive over time. If, however, we can package their financial obligations much in the same way that we package their care plan, then it can become easier. Take the focus off the cost per visit and bring it to the cost for the segment of care, and then it becomes far more manageable for the typical patient. It is critical here to know your state’s laws and your contractual requirements when presenting such a plan, but when permissible, it can remove the financial obstacles many patients may experience when paying one visit or one week at a time. This compliant method of handling patient finances has several windfalls. The patient will perceive a level of affordability to be able to access the care they need, the doctor will be able to collect 100% of what they are supposed to by contract and by law, the practice has a compliant method for handling finances, and the practice increases profitability!
So, what of our doctor who was waiving all copayments and deductibles? He overcame his fears of seeing his entire practice flee down the street and brought his practice into compliance. Was it easy? Perhaps not, but the solutions were simple. He was able to work with our team to ensure that he knew the steps to take in order to create financial policies and plans. He learned what to say and how to say it in a way that communicates value. Did every patient stay? No, but far fewer left his practice than he originally anticipated. So few, in fact, that he was able to increase his profitability by over 700% within three months and not have to work himself to death in the process. Not only did he see that he could be legal and compliant, he also could be profitable and be able to put his head on his pillow at night knowing that he was now doing it right.
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. Kathy leads a team of 20 at KMC University and is considered one of our profession’s foremost experts on Medicare, documentation, and compliance. She or any of her team members can be reached at 855-832-6562 or ufo akmcuniversity.com
