May 1997
Volume 61 |
Number 5
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PRACTICE MANAGEMENT
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| Professional Courtesy
Discounts May Constitute Fraud |
Karin Bierstein,
Practice Management Coordinator
Discounting one's fees to fellow physicians and their family
members is a venerable practice. It has come as a surprise to
this lawyer and to three of her colleagues, inside and outside
ASA, that a physician who waives the patient's copayment and/or
the deductible may run afoul of the law. Two federal statutes
as well as state statutes and even language in contracts with
third-party payers may be implicated. This column will review
the applicability of the federal Health Insurance and Portability
Act, enacted last summer, and of the Medicare and Medicaid antikickback
laws to professional courtesy discounts. Contractual prohibitions
on such discounts also will be discussed, but space and time preclude
analysis of state laws here.
Health Insurance and Portability Act of 1996
Last year's major health care legislation created new categories
of criminal offenses for fraud and false statements. Fraud
and false statements committed or made in connection with claims
submitted to commercial or public health care insurers (e.g.,
Medicare/Medicaid) will trigger criminal liability.
What is fraudulent about granting professional courtesy discounts
to your peers? Waiving a copayment or a deductible, if your
patient's health insurance plan requires one, changes the fee.
If you file a claim listing your usual and customary fee of $100,
but you plan to waive the $20 copayment, your fee is really only
$80, in the view of the health plan. The plan, therefore, would
expect to pay 80 percent of $80, or $64. Accordingly, you have
misstated your fee to the health plan, and that misrepresentation
can constitute either fraud or a false statement within the meaning
of the Portability Act. The major distinction between the two
crimes, for purposes of this analysis, is the potential term of
imprisonment: up to 10 years for fraud and five years for false
statements.
Does it make a difference if you grant the professional courtesy
discount only once or very rarely? Being willing to accept
80 percent as payment in full in just one instance, one could
argue, would not have any impact upon the amount of your "usual
and customary" fee. The better view would probably be that
even a single claim that lists a standard fee greater than the
amount you intend to collect is a false statement. The truth or
falsity of a representation does not turn on the frequency with
which it is made.
Granting the discount only exceptionally might, however, have
some bearing on intent to commit fraud. The Portability
Act only penalizes fraud where there has been a knowing and willful
execution of a scheme to obtain funds from a health care benefit
program by means of false representations. False statements also
require "knowing and willful" conduct. A pattern of
discounts would be more suggestive of a knowing and willful effort
or scheme to collect an improper reimbursement than would a single
isolated instance.
One way to make it extremely difficult for the prosecutor to
establish the requisite criminal intent would be to note on the
claim form itself that the copayment is being waived. With such
a disclosure, there could be no intention to mislead or misrepresent.
The notation might well make you unpopular with the doctor to
whom you are granting professional courtesy, a practical and political
issue that is addressed below.
Antikickback Laws
Federal law prohibits the knowing and willful solicitation or
receipt of any remuneration in return for referring an individual
or for recommending or arranging the ordering of any item or service
payable under Medicare, Medicaid, CHAMPUS or other federal health
program. It also prohibits remuneration to induce a person to
refer patients.
Accordingly, if an anesthesiologist waives copayments and deductibles
in order to ensure that surgeons request the anesthesiologist's
services, there may be a kickback problem. There also might be
a problem if the anesthesiologist waives all payment, not even
submitting a claim to the patient's health plan for the plan's
portion. In the latter situation, there would be no false statement,
but there could well be an unlawful financial benefit in exchange
for referrals.
The Office of the Inspector General (OIG) within the Department
of Health and Human Services made its position on these issues
clear when it published the final rule on "safe harbors"
taking certain activities out of the antikickback laws in 1991
and, also in 1991, issued a special fraud alert concerning the
routine waivers of copayments or deductibles under Medicare Part
B by charge-based providers. Not only did the OIG reject requests
to create a safe harbor for waivers of patient fees, but it further
indicated that failure to reduce the charge submitted for services
to a patient for whom the copayment had been waived could give
rise to civil and criminal liability.
The OIG did, however, note an exception for cases of financial
hardship determined on a case-by-case basis. Although it is unlikely
that most physicians and their families will establish financial
hardship, this exception would protect the anesthesiologist who
grants a discount on a case-by-case basis in consideration of
a patient's financial straits or who makes a good faith effort
to collect the copayment or deductible. The exception appears
again in the Portability Act. Under the Portability Act, offering
"inducements" to Medicare, Medicaid or other federal
or state health plan beneficiaries may subject one to civil monetary
penalties. Inducements include offers of remuneration likely to
influence the beneficiary to order or receive from a particular
practitioner services payable under the health plan. Excluded
from the definition of "remuneration," however, are
waivers of copayments if these are not routine and the beneficiary
is in financial need.
Contractual Impediments to Discounts
If the anesthesiology group has contracts with commercial third-party
payers, before granting any waivers of copayments or deductibles
to patients insured by those payers, it should check whether the
contracts preclude such waivers.
The group should also consider whether a waiver would trigger
a "most favored nation" clause in a third-party payer
contract. Most favored nation clauses, which have been upheld
in the courts, require the physician group to bill the payer at
the lowest rate charged to any patient.
Provisions in the patient's insurance policy may also militate
against professional courtesy discounts. The policy may state,
as many do, that the insurer will not pay for charges for which
the patient is not legally obligated to pay. In a 1991 case, a
federal appeals court accepted CIGNA's argument that when the
plaintiff-chiropractor waived the 20-percent patient copay, the
patient had no legal obligation to pay anything, and therefore,
neither did CIGNA.
What if you are expected to grant professional courtesy discounts?
Fellow physicians who are accustomed to receiving professional
courtesy discounts may not be receptive to an argument that the
discount probably violates the fraud and abuse laws and/or a contract.
If you find yourself under pressure to run a legal risk that you
wish to avoid, you might seek guidance from the hospital's counsel,
preferably in writing. Depending on the extent of the problem,
it may be appropriate to have the lawyer meet with the medical
staff as a group to explain the basis for caution. Copies of the
opinion letter from ASA's outside counsel are available from the
ASA Washington Office, (202) 289-2222.
New Manual for Departments Available
The Committee on Quality Improvement and Practice Management
would like to remind the membership that the 1997 edition of the
Manual for Anesthesia Department Organization and Management is
available for purchase from the ASA Publications Department, (847)
825 -5586. The manual costs $25 per copy, including postage and
handling (Illinois residents: add 7.75 percent sales tax).
The manual contains practical information on continuous quality
improvement; informed consent; anesthesia and monitoring equipment;
delineation of privileges; a glossary of procedural times definitions
that permit analysis of scheduling, utilization and efficiency;
and a sample administrative manual for an anesthesiology department.
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