Pros and cons of offering professional courtesy
This traditional practice now involves insurance carriers
Under Health Insurance Portability and Accountability Act (HIPAA), it is a federal crime to defraud private insurance companies, which could result in criminal prosecution and fines.5 The government can refuse to pay the claim and ban you from participating in Medicare and Medicaid. To date, there have been no settlements, prosecutions, or cases based only on the offering of professional courtesy.3
Additionally, discounts must comply with the federal Anti-Kickback Statute and the Stark Law (Ethics in Patient Referrals Act). The Stark Law regulations (2004 and 2007) specifically cite MDs, DOs, podiatrists, dentists, chiropractors, and optometrists.5,6
The Anti-Kickback Statute prohibits the offering, soliciting, or giving remuneration (i.e., professional courtesy) to any entity to induce referrals for items or services that are covered by any federal healthcare program.6
When we speak about professional courtesy, we mean that there can be no charge to the patient or the insurance carrier for professional care. Nor can courtesy be linked to referrals or even appear to be linked to referrals.
It is possible for the doctor to waive the practice’s entire fee for a service that is rendered to a specific group of persons (for example, your employees or your family members) as long as doing so does not conflict with federal or state laws and the insurance carrier is not billed for the charge with a waived copay.
In short, professional courtesies cannot be a vehicle to induce referrals, most particularly those items or services that may be covered or paid by existing state or federal health care programs.
To comply with Stark regulations, your courtesy policy must be in writing and approved by the practice’s governing body. Before crafting such a policy, read the regulations closely and consult your legal advisor.
Bottom line: If you don’t collect the copay from the patient, you cannot charge the insurance company without being liable for fraud. If you do bill the insurance company (or government payer), you must collect the copay or the percentage required by the insurance company from the patient.
AMA, OIG weigh in
Professional courtesy is becoming obsolete. The American Medical Association advises that physicians should be aware that forgiveness or waiver of copayments may violate the policies of some insurers.3 Routine forgiveness or waiver may constitute fraud. Ensure your policies on copayments are consistent and within the framework of current law as well as any and all insurer agreements or contracts.
The Office of Inspector General’s (OIG) “OIG Compliance Program for Individual and Small Group Physician Practices” guidelines speaks specifically to of professional courtesy.7 While not all professional courtesy discounts or free services are disallowed, the guidelines should be closely reviewed to make certain that the arrangement does not suggest or constitute fraud or abuse. Two factors provide guidance, citing how the recipients are selected and how the courtesy is extended.
Furthermore, doctors must avoid even the appearance of impropriety. If a patient is financially needy, then the doctor must make certain that offering a professional courtesy must comply with applicable laws and fully documents the facts.
The OIG has supported waiver of deductibles and copayment in individual cases of indigence. However, you must be able to justify the waiver with complete documentation. Good-faith collection efforts will also justify excusing the debt.
The OIG has the authority to impose civil monetary penalties for violations. Violation of the Stark regulations include up to $15,000 per claim and up to $100,000 for each referral-inducing financial arrangement. The government has a zero tolerance policy of fraud and abuse.
Remember that your current or past employees may elect to become “whistleblowers.” Whistleblowers are protected by law and have an incentive for reporting fraudulent practices because they retain a percentage of the recouped funds.