Genesee County’s Economic Downturn: Should I Waive Co-Payment or Deductible?
by JOSÉ T. BROWN, ESQ.
CLINE, CLINE & GRIFFIN
Charles Dickens second historical novel, A Tale of Two Cities, opens with “It was the best of times, it was the worst of times”. This reference contrasted the high life of English nobility to the French nobles’ abuse of peasants resulting in the French Revolution. The Dicken’s quote statement crystallizes the present state of affairs regarding Medicare fraud and abuse; the Federal Governments view of Medicare reimbursement (the best of times) contrasted to the patient’s ability to pay (worst of times). I have been frequently asked in these declining economic times whether it is appropriate for a professional corporation or an individual physician to forgive or avoid collecting a co-payment or deductible. I am mindful that many physicians, as a professional courtesy wish to waive a deductible or a co-payment on behalf of an economically down and out patient. There is a proper legal and documented method to avoid anti-kickback violations and Medicare fraud and abuse.
I do not have a political agenda on this issue but there are financial incentives from the Federal government via Qui Tam (an action brought by an informer) of the False Claims Act to encourage private individuals (billing clerks, insurance agents, accountants, drug representatives) to report fraud being perpetrated against the government. There is an ever increasing number of whistle blower claims for health care fraud in these declining economic times. In my opinion, the Federal government, through the OIG (Office of Inspector General), believe medical programs such as Medicare are ripe for plunder. This “season for plunder” can and should be avoided with proper legal advice. I read with great interest the article in the recent Michigan Medicine entitled Waiver of Co-Payments or Deductibles and Professional Courtesy. The essence of this article is that “Physicians should make sure there is no misrepresentation in an insurance billing statement which either states a fact or fails to reveal a material fact which results in a misrepresentation to the insurer. Any waiver or discount should be reflected in the insurance statement so as to avoid this potential statutory violation”, Michigan Medicine by Daniel J. Schulte, JD, MSMS Legal Counsel, Vol. 107 #2. Attorney Schulte provided excellent cautionary legal advice but did not provide a solution to this conundrum.
There are several legal vehicles to pursue a claim against a physician: False Claims Act, Qui Tam (Whistle Blower), Medicare Fraud, Stark Violation, or the Anti Kickback Law. This article will specifically address the Anti-Kickback Law and recommended avoidance of its False Claims Act liability.
REASON FOR STATUTE
The Federal Anti-Kickback Statute, 42 USC 1320a-7b, arose out of congressional concern that payoffs to those who can influence health care decisions will result in goods and services being provided that are medically unnecessary, of poor quality, or even harmful to a vulnerable patient population. The Act provides for criminal penalties for certain acts impacting Medicare and State healthcare, (e.g. Medicaid), reimbursable services. To protect the integrity of the Medicare/Medicaid programs Congress enacted a “per se” prohibition against the payment of kickbacks in any form regardless of whether the particular kickback gives rise to over utilization or poor quality medical care. The Anti-Kickback Statue prohibits any person or entity from making or accepting payment to induce or reward any person for referring, recommending or arranging federally funded medical services including services provided for the Medicare and Medicaid programs. A violation of the Anti-Kickback Statute can give rise to the False Claims Act Liability. In plain English, would a waiver of co-payments or deductible induce a patient to “refer” further medical care? The Office of Inspector General (OIG) should not answer this question for you.
Section 1320a-7b(b)(2) has generally been applied to broker-style arrangements, whereby an individual offers remuneration to another individual for the purpose of recommending or referring an individual for the furnishing or arranging for an item or service (i.e. back scratching). In an Anti-kickback Statute “per se” analysis, it is immaterial whether remuneration induces one in a position to refer or recommend. It is sufficient that the remuneration “may” induce one to refer or recommend. United States v. Greber. Under Greber, it is also irrelevant that there are other legitimate reasons for the remuneration (i.e. professional courtesy). If one purpose is to induce referrals, then the Anti-kickback Statute is violated. This could be the course of events by waiving a deductible or a co-payment.
REMEDY FOR FINANCIAL HARDSHIP
It is my belief in addressing this particular Statute it is best to err on the side of caution.
There are several regulatory safe harbors under the Anti-kickback Statute including, waiver of beneficiary co-insurance and deductible amounts. There is also an exception to the Anti-kickback Statute for economically disadvantaged patients. First, if personal hardship is an issue it should be documented to the billing record and verified by the patient (the patient may be out of a job, their house is being foreclosed, or some other tragic personal financial hardship). Second, the verification should be documented by patient acknowledgment on the bill. The basic prohibition of the Anti-Kickback Statute in the instance of a waiver is whether the waiver is meant to influence referrals. Both the person/entity paying and person/entity receiving payment can be charged with a felony or be subject to civil monetary penalties. The legal issue becomes whether the payment or receipt of the payment was made “knowingly and willfully”. How the Courts ultimately interpret this benchmark requirement is irrelevant for purposes of my advice and recommendation. . . Don’t let the issue go this far by failing to document the financial hardship.
CONCLUSION
In these difficult economic times many patients don’t have the financial where with all to pay a deductible or co-payment. Medical care can be compromised by non-compliant indigent patients. The suggested solution to providing appropriate medical care at a discount to financially strapped patients requires the savvy to review your physician contracts and utilization of proper documentation. The proper documentation can pass the smell test of the OIG.
