Drug and alcohol treatment centers are often faced with the business decision of whether to waive copay and deductible obligations. For many patients in one of the most vulnerable times of their lives, copay and deductible waiver can mean the difference between getting needed treatment or not! The well intentioned desire of the treatment center to lower this barrier to entry may, however, expose the center to serious legal liability.
Though many treatment centers do not accept governmental payment (e.g. Medicare, Medicaid, CHAMPUS and TriCare), some do and all need to understand the thinking of governmental regulators and private insurers on the issue. In 1994 the Office of the Inspector General of the Department of Health and Human Services (the “OIG”) issued a Special Fraud Alert stating, in essence, copayment waiver for any reason other than the patient’s demonstrated inability to pay is fraudulent!
State law also factors into the analysis. Florida law, for instance, prohibits routine waiver of copays and deductible. Moreover, inaccurately charging a payer for services can constitute insurance fraud. If, for instance, the facility charges $100, waives the patient’s $20 copay or deductible responsibility, then bills the payer $100, without also clearly stating in the claim form that that $20 has been waived, the payer can allege insurance fraud. For participating facilities (those with a contract with the payer) this can cause a domino effect as the payer offsets this “liability: against future claims, sometimes without notice!
The prohibitions, roughly translated, creates serious risk for any healthcare provider from waiving copay or deductible in advance of treatment (unless perhaps it is disclosed in writing to the payer), doing so routinely, not having adequate and documented grounds for the waiver, failing to follow usual collection policies before deciding to waive, and failing to specifically identify to a payer such waiver in the event of a post provision of services decision to waive. Does this mean a facility cannot waive copays or deductibles for indigent patients? No, but the facility has to be very careful to comply with BOTH federal and state law.
Facilities which contract with payers also have to consider the language of those participation agreements. Language ought to be developed to allow facilities with such agreements to implement their reasonable and compliant waiver policies without violating the contract or applicable law. Facilities would do well to develop clear, written policies and procedures on the issue so they can “set it and forget it.”