"Routine waiver of deductibles and copayments by charge-based providers, practitioners or suppliers is unlawful because it results in (1) false claims, (2) violations of the anti-kickback statute, and (3) excessive utilization of items and services paid for by Medicare."
Subsequent guidance from the OIG has expressed the agency's view that waivers of these copays based upon the financial need of the patient may be appropriate under certain circumstances. However, that is a topic for another briefing. For more information see our CodeMap® Radiology Briefing from August 17, 2011.
Beneficiaries of Private Health Plans
The remainder of this briefing will discuss the routine waiver of patient obligations owed by beneficiaries of private health insurance plans. Such business practices are governed differently by each individual state. As we will see, some states have enacted provisions that outlaw such practices, while many jurisdictions' legislatures have remained silent concerning this issue.
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. State enforcement agencies could 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 radiology provider 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. Typically, the definition of 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 customary 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.