Professional Courtsey, it’s just bad business!

Professional Courtesies are a common practice among offices and the debate as to whether or not it is appropriate and acceptable is still a hot button issue.  Some doctors claim that a professional courtesy is a time-honored tradition dating as far back as the Hippocratic Oath.  Although, it may be a time honored tradition, there may be severe consequences.

I will present some key documents related to the issue and let you make up your mind…

First let’s explore what the Office of Inspector General for the Department of Health and Human Services (OIG DHHS) has to say on the issue.  The original OIG DHHS Fraud Alert (December 19, 1994 Federal Register) addressed the issue of Routine Waiver of Copayments  and Deductibles stating  specifically:

“Discounts and professional courtesy may not be appropriate unless the total fee is discounted or reduced.  In such situations, the payor (eg., Medicaid, Medicare or any other private payor) should receive its proportional share of the discount or reduction.”  Simply put if you give the patient a discount you must also give the insurance carrier the same discount.

In this same document, the OIG has extended the obligation to make a good faith effort to collect money from patients beyond simply collecting co-payments and deductibles; they have indicated that providers also have the obligation to make a good faith effort to collect for non-covered services as well.

Further “Billing companies should encourage providers to make a good faith effort to collect co-payments, deductibles and non-covered services from federally and privately-insured patients.”

If you would like  more information on the OIG’s stance you may read the entire document. It may be found at the following web address: http://www.dhhs.gov/progorg/oig/frdalrt/121994.html

The OIG’s Compliance Program Guidance for Third-Party Medical/Dental Billing Companies may be found at the following web address: http://www.os.dhhs.gov/progorg/oig/modcomp/thirdparty.htm

Additionally, the OIG recently released Compliance Program Guidance for Individual and Small Group practices in this document there is considerable commentary on Professional Courtesy.  It states as follows:

  • Professional Courtesy

The term “professional courtesy” is used to describe a number of analytically different practices.  The traditional definition is the practice by a physician of waiving all. or a part, of the fee for services provided to the physicians office staff, other physicians, and/or their families.  In recent times, “professional courtesy” has come to also mean the waiver of coinsurance obligations or other out of pocket expenses for physicians or their families (i.e. insurance only billing) and similar payment arrangements by hospitals or other institutions for services provided to their medical staffs or employees.  While only the first of these practices is truly “professional courtesy,” in the interest of clarity and completeness, we will address all three.

In general, whether a professional courtesy arrangement runs afoul of the fraud and abuse laws is determined by two factors; (i) how the recipients of the professional courtesy are selected, and (ii) how the professional courtesy is extended.  If recipients are selected in a manner that directly or indirectly takes into account their ability to affect past or future referrals, the anti-kickback statute–which prohibits giving anything of value to generate Federal health care program business may be implicated.  If the professional statutes may be implicated, including the prohibition of inducements to beneficiaries, section 1128A(a)(5) of the Act (codified at 42 U.S.C. 1320a-7a(a)(5)). Claims submitted as a result of either practice may also implicate the civil False Claims Act.  The following are general observations about professional courtesy arrangements for physician practices to consider:

  • A physicians regular and consistent practice of extending professional courtesy by waiving the entire fee for services rendered to a group of persons (including employees, physicians, and/or their family members) may not implicate any of the OIG’s fraud and abuse authorities so long as membership in the group receiving the courtesy is determined in a manner that does not take into account directly or indirectly any group members ability to refer to, or  to otherwise  generate Federal health care program business for , the physician.
  • A physicians regular and consistent practice of extending professional courtesy by waiving otherwise applicable co-payments for services rendered to a group of persons (including employees, physicians, and/or other family members), would not implicate the anti-kickback statute so long as membership in the group is determined in a manner that does not take into account directly or indirectly any group members ability to refer to, or otherwise generate Federal health care program business for, the physician.
  • Any waiver of co-payments practice, including that described in the preceding bullet, does implicate section 1128a(a)(5) of the Act if the patient for whom the co-payment is waived is  a Federal health care program beneficiary who is not financially needy.

For information on Medicare’s stance on discounts, rebates and other reduction in price including Anti-kickback laws read Section 14028 in the Medicare Carrier Manual (MCM) it is available at the following web site: http://www.hcfa.gov/pubforms/progman.htm

The Health Insurance Portability and Accountability Act (HIPAA) also has commentary on routine waiver of co-payments and deductibles.  You may find this information at the following website http://www.hcfa.gov/hipaa/hipaahm.htm

The legalities of particular professional courtesy arrangements will turn on specific facts presented, and, with respect to the anti-kickback statute, on the specific intent of the parties.  You may wish to consult with your attorney if you are uncertain about your professional courtesy arrangements.

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