April 4 2020
I did not mean to address issue of co-payment waiving any further, when I stumbled on hundreds of legal reviews spelling it loud and clear: under federal laws and most state laws it is a felony to routinely waive copays, coinsurance, and deductibles for patients.
Insurance fraud. Waiving the collection of this portion is a crime of health insurance fraud because provider is claiming the wrong charge for services when insurance claims are created.
To explain this further, let’s use the following example: if your patient has a $10 copay, then Insurance Co will pay $90 on a $100 bill. However, if the copay was waived, the patient’s bill is only $90 total, not $100;
The same applies to pharmacies because the pharmacy misrepresents the correct charge for dispensing medications. Let’s say a patient has a $5 copay. Insurance Co will reimburse the pharmacy $45 for a $50 drug. If the pharmacy waived the copay, the actual cost of the drug is not $50 but $45. Waiving the copay in this scenario would affect the pharmacy’s usual and customary drug price.
The same laws apply to Medicare, Medicaid, and Tricare patients, but the risk is greater if provider does not comply: he may be charged with fraud against a government agency. Waiver of coinsurance raises potential Federal Anti-Kickback Statute, Federal False Claims Act, and state law liability.
Contractual violations. All third-party payer contracts require that participating providers collect deductibles, copays, and coinsurance amounts. If during an audit, the provider cannot present evidence it collected copays or made a fair attempt to collect, the insurance usually initiates a recoupment of all reimbursements paid to the provider for services and medications on which provider failed to collect copays. Then, Insurance Co usually terminates the provider out of their network.
There are only two scenarios when a provider may waive copays:
Financial Hardship. If a patient presents evidence of financial distress, provider must document such evidence with a financial hardship form and make copies of all information presented by the patient in support of waiving the copay, such as Medicaid cards, pay stubs, tax forms, etc. This practice should never be advertised and should be applied to all patients. In other words, if you allow Medicare patients to submit financial hardship forms, you should do the same for all patients.
Inability to collect copays. This usually applies for delivered or mailed medications. Pharmacies must pursue debt collection against patients and record all conversations with patients regarding financial responsibilities. During an audit, the pharmacy should be able to provide evidence that a good faith effort was made to comply with the law and healthcare contracts. A typical procedure under this scenario is to send an invoice to the patient, follow up, send another letter notifying of collection efforts, and write off the amount as uncollectable copay.
The question is: can Insurance Co, provider, or the POTUS himself permit each other to break federal and state laws?
The answer is “May Be”.
The government issued an unprecedented array of temporary regulatory waivers and new rules to allow maximum flexibility to respond to the COVID-19 pandemic, which are made possible by President Trump’s recent emergency declaration and emergency rule making for the duration of the emergency declaration.
The Center for Medicare and Medicaid Services (CMS) issued:
Why “May Be”? These actions expose administration to lawsuits for non-compliance with federal laws and allowing individual discrimination by favoring one patient over another based solely on diagnosis, or worse, based on a single test (for COVID-19), rather than actual threat to health, life and urgency. As we learnt from the recent past, almost every decision of this administration is being contested in a court of law, including decisions related to national security (“the wall”, “muslim immigrants”, etc.) There are at least two major plaintiff groups: patients who are discriminated and providers who are robbed of the part of their revenue. So, do not hold your breath. It is coming!