To Collect or Not Collect; The Question on Everyone's Mind

With the dramatic shift in cost sharing and ultimately healthcare payment responsibility, patients owe more money today than ever in the history of modern healthcare. There is a big misconception on both sides as to the moral and legal obligations in collecting patient responsibilities. Patients believe providers should be satisfied with the payments that are collected from insurance carriers. Many practices and providers believe they are providing a moral service by indiscriminately waiving or reducing patient responsibilities. Whenever a health care provider is faced with the decision of whether to waive or discount a patient’s co-payment or deductible, they must consider the various legal and business risks attendant to such practice.   

 BUT MY INSURANCE PAID YOU ENOUGH !

This is a common theme with many patients as they navigate into the new world of healthcare consumerism. Every member of a health plan, no matter private, federal or state sponsored, signs an agreement to which they have some financial responsibility. The amounts vary and can be $0, such as Medicaid, but it is an agreement with many different components.

 This responsibility can come in the form or a Co-Pay, Deductible, or Co-Insurance. These are all in addition to your monthly premiums. Below are some definitions;

 Deductible— is the amount you pay for health care services before your health insurance begins to pay.

How it works: If your plan’s deductible is $1,500, you’ll pay 100 percent of eligible health care expenses until the bills total $1,500. After that, you share the cost with your plan by paying coinsurance.

 Coinsurance—is your share of the costs of a health care service. It's usually figured as a percentage of the amount we allow to be charged for services. You start paying coinsurance after you've paid your plan's deductible.

How it works: You’ve paid $1,500 in health care expenses and met your deductible. When you go to the doctor, instead of paying all costs, you and your plan share the cost. For example, your plan pays 70 percent. The 30 percent you pay is your coinsurance.

 Co-pay—is a fixed amount you pay for a health care service, usually when you receive the service. The amount can vary by the type of service.

How it works: Your plan determines what your copay is for different types of services, and when you have one. You may have a copay before you’ve finished paying toward your deductible. You may also have a copay after you pay your deductible, and when you owe coinsurance. 

Like all insurance policies, health insurance is a contract or agreement between you and the insurance company you select. Your insurance company agrees to pay all or part of your medical costs when you get sick or hurt. Understand your obligation in that agreement is vital in mitigating undo expenses, such as out-of-network providers and authorizations. Please take the time to review your plan in detail.

WE WANT TO PRACTICE MEDICINE NOT PATIENT COLLECTIONS

Many providers feel stuck in the middle of the healthcare cost imbalance happening in today's world. By definition, A provider is a person skilled or specializing in healing arts; especially :one (such as a physician, dentist, or veterinarian) who holds an advanced degree and is licensed to practice. They are generally not business people, they want to care for their patients and therefore many times over look what is due.

 THE BUSINESS SIDE OF THE COIN.

Rising business costs, changing healthcare regulations, and shrinking physician reimbursement are among the factors many say are leading to the demise of the private practice. Many practices are struggling to do more with less revenue, due in part to changes in the Affordable Care Act, shifts in reimbursement models, and an increase in consumerism in the health care landscape. In fact, Forbes recently reported that the average provider (across all medical specialties) is seeing top line revenue drop by over $50,000 per year since the health reform law went into effect.

With the Patient revenue stream totaling 25% or more of your business, why would you consider writing it off?

It is extremely expensive to run a medical practice and even more when your patients aren't paying their  responsible part. Your sending statements, you have staff calling, and potentially sending a soft reminder letter, this is an extra expense to you and your practice. Your rates are being cut and the requirements with MCRA and MIPS increase every year, can you afford not to collect.

If you are a solo practitioner and you work hard all year and generate $1,000,000 in revenue, $250,000 or more of that is coming out of your patients pockets. Considering the cost to operate your practice is 50% or more of the total revenue, your patient revenue stream is vital to your survival.

 THE COMPLIANCE AND LEGAL RISKS.

From a payor's perspective, waiving cost-sharing amounts creates two problems. First, payors often contract with providers to pay based in part on the provider's usual charges. The Office of Inspector General ("OIG") has argued that a provider who routinely waives co-pays is misrepresenting its actual charges. Second, and more importantly, payors require co-pays to discourage over-utilization and reduce costs. Waiving co-pays and deductibles removes the disincentive for utilization, thereby potentially increasing payor costs. Accordingly, federal and state laws as well as payor contracts generally prohibit waiving cost-sharing absent genuine financial hardship.

Federal Programs. Waiving co-pays and deductibles for government program beneficiaries implicates at least the following laws:

1. Monetary Penalties Law. The federal Civil Monetary Penalties Law ("CMPL") prohibits offering or transferring remuneration to federal program beneficiaries if the provider knows or should know that the remuneration is likely to influence the beneficiary to order or receive items or services payable by federal or state healthcare programs (e.g., Medicare) from a particular provider. (42 USC 1320a-7a(a)(5)).
2. Anti-Kickback Statute. The federal Anti-Kickback Statute ("AKS") prohibits knowingly and willfully offering, paying, soliciting or receiving remuneration to any person to induce such person to order or receive any items or service for which payment may be made under a federal healthcare program unless the arrangement fits within a regulatory safe harbor. (42 USC 1390a-7b(b)). The Office of Inspector General ("OIG") has interpreted the Anti-Kickback Statute to apply to waiving patient cost sharing amounts if "one purpose" of the waiver is to induce or reward federal program business, a difficult standard to defend against. The OIG has specifically warned against some of the following practices:

• Advertisements which state, "Medicare Accepted as Payment in Full", "Insurance Accepted as Payment in Full," or "No Out-of-Pocket Expenses."
• Advertisements which promise that "discounts" will be given to Medicare beneficiaries.
• Routine use of "financial hardship" forms which state that the beneficiary is unable to pay the coinsurance/deductible (i.e., there is no good faith attempt to determine the beneficiary's actual financial condition).
• Collection of co-payments and deductibles only where the beneficiary has Medicare supplemental insurance ("Medigap") coverage (i.e., the items or services are "free" to the beneficiary).

In addition to relevant laws, private payor contracts generally require that the provider collect co-pays and deductibles. Failure to do so without the payor's express approval would violate the contract terms and could result in claims for breach of contract or repayment. Most payors likely would not complain if the provider could establish that it waived the cost-sharing amount due to financial need, but to be safe, the provider may want to confirm same with the payor.

THE EXCEPTION TO THE RULE

With the increased pressure on the patient to adsorb more of the financial burden, many patients have to select between healthcare and other essential needs on a daily basis. However, the OIG has confirmed that it will not enforce the CMPL and AKS against providers who waive co-pays or deductibles due to genuine financial hardship.

The CMPL specifically excludes from the definition of "remuneration" the waiver of copays and deductibles if all of the following conditions are satisfied:

1.  The waiver is not offered as part of any advertisement or solicitation;
2. The person does not routinely waive coinsurance or deductible amounts; and
3. The person

• waives the coinsurance and deductible amounts after determining in good faith that the individual is in financial need; or
• fails to collect coinsurance or deductible amounts after making reasonable collection efforts.

The OIG recognizes that what constitutes a good faith determination of "financial need" may vary depending on the individual patient's circumstances and that providers should have flexibility to take into account relevant variables. These factors may include, for example:

1.  The local cost of living;
2. A patient's income, assets, and expenses;
3. A patient's family size; and
4. The scope and extent of a patient's medical bills.

Hospitals should use a reasonable set of financial need guidelines that are based on objective criteria and appropriate for the applicable locality. The guidelines should be applied uniformly in all cases. While hospitals have flexibility in making the determination of financial need, we do not believe it is appropriate to apply inflated income guidelines that result in waivers for beneficiaries who are not in  genuine financial need. Hospitals should consider that the financial status of a patient may change over time and should recheck a patient's eligibility at reasonable intervals sufficient to ensure that the patient remains in financial need.

In addition to the foregoing, waiving cost-sharing amounts may violate other laws. For example, waiving co-pays and deductibles for referring physicians would usually establish a financial relationship that would trigger the federal Stark law unless the arrangement were structured to fit within a regulatory safe harbor, such as the "professional courtesy" exception.

There are many sample hardship policies and applications available on line for use. Having a sound policy and procedure that is practiced consistently throughout the practice and understood by your patients is key to your success and your patients well being.