An example of a state that has enacted legislation that outright prohibits the waiver of copays is Florida. The Florida statutes state the following:
"It shall constitute a material omission and insurance fraud, punishable as provided in subsection (11), for any service provider, other than a hospital, to engage in a general business practice of billing amounts as its usual and customary charge, if such provider has agreed with the insured or intends to waive deductibles or copayments, or does not for any other reason intend to collect the total amount of such charge.” Fla. Stat. § 817.234(7)
State Anti-Kickback Prohibitions
Many states maintain anti-kickback provisions similar to the Federal Anti-Kickback Law. However, these states' provisions prohibit anyone from offering, paying, soliciting, and/or accepting any payments in exchange for the referrals of patients covered by private health plans, as opposed to referrals of beneficiaries of federally funded health programs. Some states, such as New York, have even enacted regulations that define the routine waiver of copays as a prohibited kickback. New York regulations state:
“Routine waiver by a clinical laboratory of co-payments, co-insurance, or deductibles for clinical laboratory services performed for recipients of such services who are patients of a referring health services purveyor shall be deemed consideration given for referral of specimens for performance of clinical laboratory services, and is prohibited.” 10 NYCRR 34-2.12(a)
Even in the absence of regulations that define such waivers as prohibited kickbacks, state enforcement agencies could still argue that waivers of copays violate state anti-kickback provisions. The argument would be that such waivers represent valuable remuneration to referring practices and are designed to induce referrals. If a laboratory routinely waives copays, that billing arrangement financially benefits the referring physician practice. The practice’s patients enjoy less costly care and as a result, the practice is more likely to retain the patient as a customer.
Another way a state enforcement agency could prohibit the waiver of copays is by defining the business practice as insurance fraud. Almost all jurisdictions have enacted provisions that prohibit fraud as part of the state's insurance code. Usually fraud includes the making of any false statements and/or representations in order to facilitate the payment of an insurance claim.
A state enforcement agency could argue that the routine waiver of copays is insurance fraud because the provider is falsely reporting its customary charges to the insurance carrier. The provider’s charge should be the amount it intends to collect from both the carrier and the patient. If the provider does not collect the patient’s copay, the charge reported to the health insurance carrier is inflated and may be deemed insurance fraud.
Note: The above discussion examines the laws of a small number of states. CodeMap does not maintain on file the applicable laws of all 50 states concerning the waiver of copays. Please consult licensed counsel in your jurisdiction to analyze your organization's unique situation.