Cutting Patients a Break: Your Financial Hardship Policy

financial hardshipBy David Hirshfeld

with Jean Acevedo, Guest Contributor

As premiums and deductibles rise and coverage shrinks, more and more patients have difficulty paying for their health care.  You can provide financial relief to your patients if you wish, but you should only do so in accordance with a uniform hardship policy.

As a general rule, the practice should not routinely waive co-pays or deductibles, or offer discounts based on a patient’s statement that the patient is suffering from financial hardship.  If the practice does routinely offer discounts or waivers of deductibles without properly investigating a patient’s financial wherewithal, the practice runs the risk of violating its payor contracts, being accused of committing insurance fraud, and/or paying an illegal kickback to induce patients to come to the practice.  Some payor contracts require the practice to bill the payor the lowest rate that the practice bills any of its patients, a so-called “most favored nation provision.”  Typical Medicare participation agreements are subject to this type of provision.  If the practice waives deductibles or co-pays, then insurers often take the position that the amount being billed by the practice to the insurer ought to be reduced by the amount waived.  In addition, a regulator could conceivably accuse the practice of waiving co-pays and deductibles as a means of inducing patients to seek treatment from the practice in violation of anti-kickback laws.

The practice should offer discounts, waive co-pays and/or deductibles only after it has conducted a diligent inquiry into the patient’s finances, and made its own determination as to whether the patient is suffering a financial hardship.  The practice should make this inquiry periodically with respect to repeat patients to assure itself that the patient’s financial situation has not changed.  We suggest the practice develop an application for financial hardship that collects documents and information regarding a patient’s household income, assets and liabilities.  The practice should then review this data in relation to Federal or state poverty income guidelines and determine, in a uniform manner, whether a discount is appropriate.

The practice should maintain all records and information it gathers to determine financial hardship, and should maintain records of the amounts waived.

Regardless of hardship, the practice can offer a discount to those patients who pay at the time of service or very shortly thereafter.  These “prompt pay” discounts should only be offered on a uniform basis, to all patients and third-party payors.  The amount of the discount should not exceed the expenses to the practice that are saved by a prompt payment; that is, the expense of ordinary billing and collection plus the amount of undiscounted fees that customarily have been uncollectible by the practice.

In order to assure smooth operations and compliance with relevant laws and contractual provisions, we suggest utilizing a written policy, developed with advice from a bona fide billing consultant and/or health care attorney, including underwriting guidelines to determine a patient’s eligibility for discounts and waivers.


FHLF Attorney David Hirshfeld worked closely with veteran healthcare consultant Jean Acevedo to bring you this article. Jean has particular expertise in chart audits, compliance and education relative to physician documentation and coding.  She is a workshop presenter for the American Academy of Professional Coders and co-author of the Academy’s Compliance Toolkit, an instructor at Florida Atlantic University, and a member of several Coding Institute Editorial Advisory Boards. Jean has been a Participant in CMS’ Medicare Provider Feedback Group, CMS Division of Provider Information Planning and Development since 2007 and is a member of the Jurisdiction 9 MAC’s Provider Outreach and Education Advisory Group. 561-278-9328

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