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Costly Consequences of Waiving Patient Copays

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Writing off patient copays may be well-intended, but this generosity can have costly consequences. Write-offs may be hurting your practice by compromising your contracts with private payers. Violating these terms of your contract may negatively affect reimbursements from those payers. You may even be found guilty of a felony if the patient is enrolled in Medicare or Medicaid. The repercussions of said felony are: up to five years in prison, criminal penalty of up to $25,000, administrative penalty of up to $50,000, triple damages, and permanent exclusion from these programs. These risks are avoidable providing you follow the proper channels to help your patients with their out-of-pocket expenses.

There are several reasons why waiving copays could be a problem. It is harder for payers to enter into contracts when practices are undervaluing their services by writing off patient copays or deductibles. Copays being a part of the contract between provider and payer, waiving them can be a breach of contract resulting in civil lawsuits, compensatory damages, and loss of additional contracts. Payers use copays to prevent overuse of services, so waiving patient charges may be seen as encouragement to use more services, effectively increasing the payers’ costs. Other possible consequences include violation of a number of statues including the Anti-Kickback Statute (AKS), Civil Monetary Penalties Law (CMPL), and Stark Law. For Medicare or Medicaid patients, you could find yourself in violation of the AKS wherein waiving copays and deductibles may be seen as bribing patients to seek your services instead of going to another practice. Violations of the AKS are penalized by $5,500 to $11,000 per claim and repayment of the funds your practice erroneously received. Your practice would be guilty of breaking the CMPL if waiving a Medicare copay induces the patient to seek specific services or medical equipment from your provider or another by your recommendation. Influencing a patient to seek services from a specialist or provider your practice is associated with by waiving out-of-pocket expenses is a violation of the Stark Law.

Despite the penalties for erroneously waiving copays, practices should not be dissuaded from assisting Medicare and Medicaid patients when situations of financial hardship arise. When you have evidence supporting a patient’s financial need, there are exceptions to the AKS and CMPL that provide proper channels for forgiving patient responsibility. Poof that the write-off is not an inducement to seek services or equipment from you or an affiliate is necessary to ensure that the write-off is legitimate. Additionally, you may need to provide evidence that your office is not waiving copays and deductibles regularly to avoid violations and penalties. Your practice should have an established policy that outlines the circumstances in which it is and is not appropriate to forgive a patient’s out-of-pocket expenses. Documentation should be kept in patient files as proof of the financial circumstances supporting your decision to waive patient responsibility per your policy. Your policy and documentation will benefit all parties, upholding your contracts, safeguarding your practice, and providing financial assistance to your patients.

CMS.gov. “Medicare Fraud & Abuse: Prevent, Detect, Report.” MLN Booklet , Centers for Medicare & Medicaid Services, Feb. 2019, https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/Downloads/Fraud-Abuse-MLN4649244.pdf .

NHIC, Corp. “Improper waivers.” Fraud & Abuse Guide, Centers for Medicare & Medicaid Services, 5th ed., Oct. 2007, pp. 13-15, https://cdn.ymaws.com/www.aahcm.org/resource/resmgr/2007_fraud_policy.pdf.

Pegg, Bruce. “Know When You Can – and Cannot – Waive Patient Copays.” AAPC Knowledge Center , American Academy of Professional Coders (AAPC), 4 Sept. 2019, https://www.aapc.com48289-know-when-you-can-and-cannot-waive-patient-copays/.

 

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