Waiving copays puts you at risk for fraud
A: Rising copays and deductibles have shifted the physician office's responsibility from collecting from the insurer to collecting from the patient. Unfortunately, many offices haven't caught up with the trend and are not sure how to collect effectively, especially in person. Be advised that the chance of collecting from a patient drops 16% as soon as the patient leaves the office.
Although most offices find it easier to send a statement after the visit, this practice has a hidden cost. Studies have shown that it can cost up to $10 per patient to send and process statements.
Waiving copays and deductibles, however, is not the solution to collections issues. Except in limited circumstances, Medicare and Medicaid don't allow such waivers and demand that providers collect those amounts from patients. Routinely waiving them can be interpreted as program abuse. After all, sending a claim to government programs for patients in which a copayment or deductible was waived is misrepresenting the true charge for service.
Out-of-network providers sometimes waive copayments for commercial health plan patients for strategic reasons. Doing so levels the playing field on which an out-of-network provider and an in-network provider are competing for customers of a particular plan. Although no federal law bars these waivers, legal considerations, particularly HIPAA, come into play.
Providers who waive copays are exposed to HIPAA risk because, arguably, the provider is misstating his or her charge to the commercial plan. For example, assume a $100 total charge where the patient has an 80/20 plan. If the provider waives the patient's obligation to pay 20%, then, again arguably, the commercial plan owes only 80% of $80.
Different states have different policies as to what constitutes insurance fraud, and in some locations, waiving copayments and deductibles might qualify as fraud. Be aware of your state's regulations, and review your policies and procedures. If you routinely waive these charges or offer "insurance-only," you're not only potentially hurting your practice's financial health but also potentially committing fraud.
Answers to readers' questions were provided by Thomas J. Ferkovic, RPh, MS, managing director, SS&G Healthcare Services LLC, Akron, Ohio. Send your practice management questions to
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