Economic Business Strategies May Lead to Jail Time

Some Doctors of Chiropractic provide incentives to attract and retain patients—including offering discounts on services and waiving copayments and deductibles. Though exceptions may apply, routinely waiving copayments and deductibles may not be advisable.

Posted in Risk Management on Wednesday, November 29, 2017

The legality of waiving copayments and/or deductibles was first addressed by a fraud alert in 1994 through the Office of Inspector General (OIG).¹ This alert stated that routine waivers of deductibles and copayments were unlawful because they result in:

• False claims
• Violations of the anti-kickback statute
• Excessive utilization of items and services paid by Medicare

The OIG further expanded on these concerns on October 5, 2000,² stating that remuneration for referrals, such as routine waiver of copayments and deductibles, is illegal because it can distort medical decision making, cause overutilization of services or supplies, increase costs to federal healthcare programs, and create unfair competition.

Remuneration for referrals also may affect the quality of patient care because it encourages physicians to order services or supplies based on profit rather than on the patient’s best medical interests.³ The OIG has consistently been concerned with false claims and violations of the anti-kickback laws.

False Claims Act

Generally speaking, the government believes that physicians who waive copayments or deductibles are misstating or distorting their actual charges. For example, if a physician claims a charge is $100 and waives the 20 percent copayment, the government believes the provider’s actual charge is $80. Providers who submit claims in which the copayment or deductible was waived may be submitting a false claim and may be subject to:⁴

• Sanctions of fines up to $25,000
• Imprisonment of up to five years
• Both fines and imprisonment
• Automatic exclusion from federal healthcare programs

Specifically, the government can take action under the Civil False Claims Act against providers who waive copayments and deductibles for federal healthcare program claims.⁵ When doctors sign Box 31 of the 1500 Health Claim Form, they certify that the facts on the claim form are true and they understand the penalties for falsifying them.

Violations of the Civil False Claims Act include fines of up to $11,000 for each false claim submitted, plus up to three times the amount unlawfully claimed. A provider who violates the Act is also subject to possible exclusion from future participation in federal healthcare programs.

Furthermore, most state statutes prohibit a dual-fee system and may have penalties for those who do charge patients different fees.

Kickback Violations

What’s more, if you offer your services for free or for any amount other than fair market value, you may be in violation of the Anti-Kickback Statute, the Civil Monetary Penalties Law, as well as other laws and regulations. When doctors waive copayments or deductibles, they may be unlawfully “inducing” the patient to purchase items or services. This is in violation of anti-kickback regulations prohibiting offering something of value as an inducement to generate business in a federal healthcare program. To avoid being considered being an item of value, the item must be $10 or less and no more than $50 per year.

The anti-kickback statute makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce referrals of items or services reimbursable by federal healthcare programs.⁶ Violation of the criminal anti-kickback statute can lead to a felony conviction punishable by a maximum fine of $25,000, imprisonment of up to five years, or both. A conviction also can lead to exclusion from federal healthcare programs.

The government may choose to proceed civilly against those providing a service for anything less than fair market value. The Civil Monetary Penalties Law prohibits a provider from offering remuneration to any Medicare or Medicaid beneficiary the provider knows (or should know). Violating this law can result in:

• Fines up to $10,000 per item or service and up to three times the amount claimed
• Exclusion from federal healthcare programs

Permissible Waivers

In certain instances, the government will permit waivers of copayments and deductibles. However, each patient’s case must be reviewed individually, and the waiver must:⁷

1. Not be offered as part of any advertisement or solicitation
2. Be made by someone who doesn’t routinely waive the amounts
3. Be made by a person who:

• Determines in good faith that the individual is in financial need
• Fails to collect after reasonable efforts

Though certain exceptions apply, it’s clear that caution is the word when it comes to waiving any copayments or deductibles. So, if you decide to waive a copayment or deductible based on hardship, make sure to document the need for a waiver and keep it in your files. Also, carefully monitor your practice management techniques and marketing strategies to ensure compliance with all the appropriate rules and laws. 
 

^{1 Special Fraud Alert on Routine Waiver of Copayments or Deductibles under Medicare Part B. 59 F.R. 242 (1994).}

^{2 OIG Compliance Program Guidance for Individual and Small Group Physician Practices. 65 F.R. 9434.}

^{3 65 F.R. 59440}

^{4 42 U.S.C. 1320a-7b}

^{5 31 USC 3729-3733}

^{6 42 U.S.C. 1320a-7b(b)}

^{7 42 U.S.C. 1320a-7a}