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Waiving Copays and Deductibles,
Is it Worth the Risk?

What is the risk for waiving copays and deductibles? This is a question that you as a provider must ask yourself. Routinely, patients who are in dire need of medical care ask their doctor to waive their copay and deductible because they are overwhelmed with medical bills and cannot or do not want to pay the amount the insurance plan deems as their responsibility. Whether this patient is covered under Medicare, Medicaid or a Commercial / Managed Care plan, this can be a serious situation for the provider. Many doctors feel as though they got into medicine to help the sick, not make life harder for them. This noble way of thinking can be costly to the provider by leading to a legal web of lawsuits, fraud charges, and even jail.

Many private insurance carriers ban waiving co-payments and deductibles in their contracts with providers. By engaging in this practice you open yourself up to having your contracts terminated along with a host of consequences. These companies can sue based on the failure to collect the co-pay changes the value of the service rendered to the patient under the insurance plan. If a doctor waives the patients 10% co-pay, the insurance carrier reasons that he or she should knock off 10% off the bill the insurance company as well. The carriers feel that by billing the company for the full 90%, the physician is defrauding the company. One way to solve this, if you feel compelled to waive the co-pay, is to notify the company in writing when submitting the claim so you disclose to them your intentions.

The Medicare False Claims Act has fraud provisions allowing healthcare providers to be sanctioned for filing false or inflated charges. The government also make it quite clear that they want the Medicare recipient to be treated the same as commercial patients. Some of the penalties that you could face are civil monetary penalties; threat of $10,000 per item, exclusion from federal and state funded programs, criminal fines and imprisonment.

The reasonable provider should know that if you let the word get out that you waive co-payments this can increase referrals into your practice and then you could be charged under the anti-kickback status. In the last five years we have seen an increasing number of whistleblower suits exposing fraud and abuse, and some pretty substantial rewards for doing it. We read information sent out to patients from their carriers asking them to report their doctor if they suspect fraudulent billing. There is a range of 15 to 25 percent rewards to whistleblowers, which is a very powerful incentive to report these suspected cases.

So even if you are doing adjustments with the very best of intentions, someone can use this against you.

The only way to do write-offs is to establish a policy for cases of extreme hardship and you obtain financial data from the patient by a consistent method and have set standards for determination. This information must be documented in the medical record. Annually, the government publishes poverty guidelines. Another word of caution would be not to make it the routine to obtain these forms, but the exception, and for true hardship cases. You must also document a good faith effort on your part to collecting payments.

Overall the best advice is avoid write-offs, the cost to the provider is not worth the risk. Patients sign up for insurance plans and must also be held accountable for their co-pays. In addition, if the patient pays for their part they will value the service more.

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