Though it can be tempting to offer help to patients in this era of sky high healthcare costs, out-of-network physicians must remember that they should not only be collecting copayments and deductibles from their patients at the time of service and before they leave the office, but also that collecting these payments is their obligation. For physicians and other providers who engage in the practice of failing to collect payments there is a significant legal exposure under federal and state laws including civil litigation brought by commercial health plans, managed care organizations and medical benefit managers regarding routine waiver of these payments.
A handful of states have enacted direct prohibitions relating to a health providers waiver of co-payments and deductibles which are the obligation of patients to pay pursuant to their insurance policy. Many providers are aware that Medicare and Medicaid programs have a clear policy prohibiting routine waiver of patient co-insurance amounts but there is still some confusion on whether this prohibition applies to commercial insurer and health benefit plans under state laws.
Specifically, Florida has enacted a prohibition on waiver of co-payments and deductibles. F.S. §817.234 (7), provides that it is insurance fraud 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 the provider has agreed with the insured or intends to waive deductibles or copayments or does not intend to collect the total amount of the charge. In looking at whether the provider has engaged in this general practice, consideration is given to evidence of whether the provider made a good faith attempt to collect the deductible or copayment. Florida has imposed criminal charges ranging from third degree felony to first degree felony. F.S. § 817.234 (11). (There are limited cases applying state law insurance fraud provisions and the case law that does exist is concentrated in a few states).
The prevailing theory is that if an out-of-network provider accepts the insurer’s payment, less the copayment or deductible as payment in full, the provider is overcharging the insurer for the service. Commercial insurers and other managed care plans are now taking the position that routine waivers result in a charge that is a phantom number and does not represent the usual and customary charge for the out-of-network provider’s services. These commercial insurers and plans further take the position that there is no obligation to reimburse the services where there is evidence of a routine practice of waiver.
Providers can have a policy of non-routine waiver of cost-sharing amounts but it must be based on documented financial need which should only be determined and offered in a very controlled and compliant way. More on developing a financial hardship policy here. Providers and staff alike must be well trained and educated on these issues to avoid getting tangled in the ever growing web of regulatory reach.