The Risk of Offering Promotions and Discounts While Battling Inflation
PRACTICE MANAGEMENT
Ray Foxworth
DC
Dr Ray Foxworth is a certified medical compliance specialist and the president of ChiroHealth USA. A practicing chiropractor, he remains “in the trenches, ” facing challenges with billing, coding, documentation, and compliance. He has served as president of the Mississippi Chiropractic Association and former staff chiropractor at the G.V Sonny Montgomery VA Medical Center He is a fellow of the International College of Chiropractic. To request a free one-page financial policy, send an email to info fichiroheaIthiisa.com.
From a legal and compliance perspective, routinely providing discounts to patients carries significant risks. Such practices could violate state and federal laws, leading to government investigations.
According to a survey released earlier this year by the National Federation of Independent Business, many small businesses are worried about inflation and the future (Bryan Mena, 2023). The chiropractic profession is primarily made up of small-business owners. According to NorthOne, some of the biggest challenges small-business owners face include (Smith, 2023):
• Cash flow (52%)
• Inflation (48%)
• Revenue (45%)
• Debt (28%)
• Interest rates (19%)
• Supply chain disruptions (16%)
• Staffing (14%)
In the current challenging economic landscape, healthcare providers are actively seeking methods to bolster their cash flow and trim administrative expenditures. Unfortunately, the most common strategy for achieving these objectives involves providers offering patients discounts on their fees, for good reason (Baker Donelson, 2014).
One survey from NORC at the University of Chicago and the West Health Institute published in early 2018 stated that 44% of patients skipped care because of costs, while another study showed as many as 64%. Of those who do seek care, 41% are willing to ask for cost estimates before agreeing to treatment, and 57% check their health plans to ensure coverage (NORC, 2018). Affordable payment options are a must for every chiropractic office, but our current healthcare system is not geared toward allowing chiropractors to provide patients with free or highly discounted care.
Extending time-of-service discounts can be a viable and permissible billing approach under specific conditions, especially when the discount mirrors savings in administrative tasks for the practice. According to Kathy Weidner, CEO and founder of KMC University, the average savings in a chiropractic office is around 7%. The Office of Inspector General (OIG) states that a 5% to 15% discount is considered reasonable when patients pay at the time of service (KMC University, 2018). Providers must proceed cautiously because providing discounts to patients can raise concerns under various federal and state regulations. For instance, a provider who routinely waives or reduces a patient’s copayment or deductible obligations might run afoul of the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b).
The federal Anti-Kickback Statute (AKS) prohibits offering any fonn of compensation to induce the purchase or ordering of services covered by Medicare. Routinely waiving a patient’s copayment obligations could potentially violate this prohibition because it reduces the patient’s payment for services and might encourage the patient to seek more services covered by Medicare.
The OIG has established regulations, referred to as “safe harbors,” that outline payment practices not subject to penalties under the Anti-Kickback Statute. Notably, the OIG explicitly states that safe harbor protection does not extend to discounts offered to beneficiaries as a reduction in the coinsurance or deductible owed. (42 C.F.R. § 1001.952(h)(5) (iv)). The federal Anti-Kickback Statute is a criminal law, and each violation is punishable with a fine of up to $100,000 and up to 10 years in prison. The civil monetary penalties for violating the federal Anti-Kickback Statute include $100,000 per kickback plus three times the amount of the remuneration.
Not only does the waiver of copays and deductibles potentially violate the federal Anti-Kickback Statute, but it could also be considered a False Claims Act violation. Criminal penalties for submitting false claims include up to five years in prison and criminal fines of $25,000. As of January 30, 2023, the civil penalties for violating the False Claims Act increased to a range of $13,508 to $27,018 for each claim.
Another compelling reason to avoid routinely waiving copayments for Medicare beneficiaries is the potential for decreased Medicare reimbursement and government investigations. Medicare reimbursement for physician services is based on the lower of the actual charge or the applicable fee schedule amount.
If Medicare becomes aware that a provider consistently waives copayments for Medicare beneficiaries, except for cases where hardship or indigence is proven, it could lead to reduced reimbursement. This practice could also trigger a referral to the OIG and the Department of Justice for further action, potentially resulting in suspension or exclusion from the Medicare program as well as fines and penalties for an inducement violation. The OIG pennits discounts or incentives up to $15 per item/service but, at most, $75 annually—the civil penalties for an inducement violation range from $10,000 to $50,000 per wrongful act.
Similarly, private insurers have similar concerns about offering discounts and waiving copayments for privately insured patients. Private insurance carriers that do not receive the same discount could accuse the provider of false billing. Therefore, providers must exercise prudent judgment when considering any form of discount for patients. Although occasional accommodations for patients with documented financial limitations might not alarm private insurers or courts, the routine practice of waiving copayments has faced successful challenges in court.
Courts addressing challenges to copayment discounting have focused on two main issues. First, providers who consistently discount fees for some patients without a valid basis for the differentiation might face claims of false billing. Second, routine copayment waivers could be seen as a breach of contract. Most insurers require providers to make reasonable efforts to collect copayments, and benefits are typically available only when the submitted charge aligns with the actual, usual, reasonable, and customary charge.
An illustrative case, Feiler v. New Jersey Dental Association Ass’n, 191 NJ Super. 426 (1983), afFd 199 N.J. 363, sheds light on these issues. In this case, Dr. Feiler discounted copayments for insured and uninsured patients and then billed insurance carriers for the full charge. The court found this practice deceptive and fraudulent since the fees submitted did not represent the actual charges to patients (Gelber, 2013).
From a legal and compliance perspective, routinely providing discounts to patients carries significant risks. Such practices could violate state and federal laws, leading to government investigations. A good chiropractor and business owner should have options in place to remain profitable and still give their patients access to affordable care. Using a discount medical plan organization (DMPO) is one of the simplest ways to keep care affordable for your patients, remain compliant with state and federal guidelines, and remain profitable as a business owner.
References:
1. Baker Donelson. (2014). Health Care Providers May Waive Patients’ Copayment Obligations, But... Retrieved from Baker Donelson: https ://www.bakerdonelson, com/health-care-pro viders-mav-waive-patients-copavment-obligations-but
2. Bryan Mena, C. (2023, June 13). Growing number of small businesses worry about inflation and the economy’s future. Retrieved from CNN Business: https:// www.cnn.com/2023/06/13/economv/ nfib-small-business-optimism/index.html
3. Gelber. D. M. (2013). To Waive or Not to Waive, That is the Question. NJ Lawyer Magazine, (11-14. Retrieved from: https ://www. wilentz.com/about/ publications/2013-02-01-to-waive-ornot-to-waive-that-is-the-question/ res/ id=Attachments/index=0/to-waive-or-notto-waive-that-is-the-question.pdf
4. KMC University. (2018). Time of Service Discounts Explained. Retrieved from KMC University: https://kmcuniversity. com/free-stuff/b log/2018/04/time-of-service-discounts-explained/
5. NORC. (2018). New Survey Finds Large Number of People Skipping Necessary Medical Care Because of Cost. Retrieved from NORC at the University of Chicago: https://www.norc.org/research/librarvV new-sun ev-finds-large-nmnber-of-peopleskipping-necessary-medic.html
6. Smith, R. (2023). The Impact of Inflation on Small Businesses in 2023. Retrieved from NorthOne: https ://www.northone. com/blog/small-business/the-impact-of-inflation-on-small-businesses-in-2023
