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Patient Cost Forgiveness - Why is it a problem?

By Karen Weintraub posted 08-18-2015 10:40 AM

  

 

When the topic of patient cost forgiveness comes up in an SIU, you may initially wonder what the big deal is with cost forgiveness.  This does not appear to be money that directly impacts an insurance company, and on the surface may sound like a good thing for patients that may have a financial hardship.  However, once you start researching the issue a little further it becomes easier to see why it's not always as benign as it seems. 

 

Yes, for a patient that may not have enough money to cover a large deductible or coinsurance amount on a surgery or inpatient stay they may need, payment plans may be needed or the opportunity to work with a doctor or facility to lessen the burden.  In an AMA opinion piece on the code of medical ethics, it states "In some cases, financial hardship may deter patients from seeking necessary care if they would be responsible for a copayment for the care. Physicians commonly forgive or waive copayments to facilitate patient access to needed medical care. When a copayment is a barrier to needed care because of financial hardship, physicians should forgive or waive the copayment."[1]

 

However, that is not the situation an SIU is looking to uncover and stop.  The problem arises when a provider actively and routinely waives all patient responsibility for his/her patients because they want to hide the true cost of what they are billing for from their patients.  Many times, these are unnecessary and excessive services.  In the same AMA article it states "Cases have been reported in which some of these clinics have conducted excessive and unnecessary medical testing while certifying to insurers that the testing is medically necessary. Such fraudulent activity exacerbates the high cost of health care."

 

In addition, routinely waiving patient copays could also be construed as fraud.  This article poses an important view to take into consideration: "Providers who waive copays are exposed to HIPAA risk because, arguably, the provider is misstating his or her charge to the commercial plan. For example, assume a $100 total charge where the patient has an 80/20 plan. If the provider waives the patient's obligation to pay 20%, then, again arguably, the commercial plan owes only 80% of $80.

 

Different states have different policies as to what constitutes insurance fraud, and in some locations, waiving copayments and deductibles might qualify as fraud. Be aware of your state's regulations, and review your policies and procedures. If you routinely waive these charges or offer 'insurance-only,' you're not only potentially hurting your practice's financial health but also potentially committing fraud."[2]

 

In addition, Medicare and Medicaid also have policies regarding patient responsibility.  If someone is a preferred provider under Medicare, they must collect the difference between what is allowed and what is paid. It's against the law for a provider to write off the designated patient responsibility.[3]

 

So how does an investigator go about starting an investigation for this activity?  It can be difficult to find through data analysis.  Healthcare Fraud Shield recommends using a data mining tool such as PostShield to identify providers that should be collecting fees from members.  In addition, investigators can review advertising habits for suspect providers and expand to patient outreach to confirm routine waiver of fees via confirmation letters or phone surveys.  A review of records can also be helpful in these cases, as the provider needs to demonstrate in writing that the patient has a financial hardship before writing off the patient's financial responsibilities.  When requesting the patient records always ask for the patient's financial ledger.  Last, but not least, it is recommended to review your insurer's policies regarding fee forgiving prior to starting an investigation of this nature.  

 

Questions or comments?  Please feel free to contact Healthcare Fraud Shield's Subject Matter Experts at SIU@hcfraudshield.com for more information.

 


[1] AMA

[2] Risk of Waiving Copay

[3] Medicaid/Medicare

 

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11-03-2015 10:13 AM

Here is an issue that keeps me busy, a great deal of my consulting has this as one aspect of the scheme
Don't forget the HHS OIG had a special advisory on "Inducements" and referenced a potential $10,000 civil fine per occurrence
see
https://oig.hhs.gov/fraud/docs/alertsandbulletins/SABGiftsandInducements.pdf

10-02-2015 12:31 PM

Thank you! One of our staff (Cassandra) wrote this one so I can't take credit for it!

10-02-2015 11:43 AM

Karen this was excellent information. I referred to this post when putting together information for a briefing on forgiveness of coinsurance. As always the information you provide is very helpful!

09-25-2015 03:47 PM

Great information Karen, thank you!