Professional Courtesy: When

Good Manners Violate the Law

by Ronald E. Nyman, Esq.

As the owner of a medical billing firm, I usually Regarding the false claim issue, if a provider
receive at least one inquiry a week from a routinely waives deductibles or co-pays, he
physician regarding professional courtesy. is misstating the charge. A common example
Undoubtedly, the waiver of co-pays or deducti- occurs when a provider charges Medicare $100
bles for friends, colleagues, and their families has for a procedure. Medicare then pays $80, and the
been a widespread practice. Why not offer a provider waives the co-pay. In essence, the actual
discount as a friendly gesture to those who charge should have been $80, which means that
deserve it? Other professionals, including lawyers Medicare should only have paid 80% of $80, or
and accountants, commonly grant discounts to $64. Because of the misrepresentation, Medicare
preferred clients. overpaid the claim by $16. Sub-
mission of a false claim is a
Such reasoning, although sound Although physicians violation of the False Claims Act
in the past, can no longer be and can subject the provider to
might have good
relied upon. Unlike lawyers and civil and criminal penalties and
accountants, physicians have an intentions in granting exclusion from both federal and
additional partner in the reimburse- state healthcare programs.
ment process, the insurance carrier. professional courtesy,
Although physicians might have good Providers who routinely waive co-
intentions in granting professional in many cases they may pays and deductibles can also be
courtesy, in many cases they may be held liable under the Medicare and
be violating the law.
violating the law. According to the Medicaid anti-kickback statute.
U.S. Office of Inspector General According to the OIG, the anti-
(OIG) 1994 Fraud Alert, the routine kickback statute "makes it illegal to offer, pay,
waiver of deductibles and co-payments "is solicit or receive anything of value as an
unlawful because it results in (1) false claims, (2) inducement to generate business payable by
violations of the anti-kickback statute, and (3) Medicare or Medicaid." In other words, when a
excessive utilization of items and services paid provider waives a co-pay or deductible, he "may
for by Medicare." be unlawfully inducing that patient to purchase
items or services from [him]." Violation of the
anti-kickback statute can result in criminal
prosecution and exclusion from federal and state
healthcare programs. Moreover, the OIG views
professional courtesy as a cause for over-
utilization of healthcare services. In their view,
when patients pay for their portion of health care,
they become "better health care consumers, and
select items or services because they are medically
needed, rather than simply because they are free."
Providers should also be aware that the govern-
ment can prosecute providers who improperly
grant professional courtesy discounts to patients
who have commercial insurance. Under the Health
Insurance Portability and Accountability Act
(HIPAA) of 1997, the federal government now
has jurisdiction to take action against those who
defraud private as well as public health programs.
Therefore, all laws and regulations affecting
waivers of co-pays and deductibles apply,
regardless of whether the insured is covered by a
commercial or government insurance program.
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Finally, when can a provider waive a co-pay or
deductible? Notwithstanding certain narrow
exceptions, the general rule is that a provider can
waive such charges if he determines in good faith
that the patient is in financial need. In such an
instance, it is good practice to document that need
in the patient file. However, providers should note
the OIG caveat that the financial need exception
"must not be used routinely; it should be used
occasionally to address the special financial needs
of a particular patient."
The issue of professional courtesy is but one
component of a myriad of compliance issues that
all providers need to address. Nevertheless,
a provider's past use of the practice makes it an
area for potential liability. Providers should
monitor their practices to ensure compliance
with all applicable federal and state laws.
Ronald E. Nyman, Esq. is founder and president
of Medi-Claim Services, Inc.