Physician Professional Courtesies Can Still Come at a Cost

November 23, 2011

Providing medical services for free, or at a reduced rate, at your practice comes with some restrictions.

A long time colleague who refers to your practice calls to ask a favor. His wife has a medical issue and needs to see a physician in your specialty, sooner than later. You immediately agree and make arrangements for her to come in as soon as possible.

Doing favors for friends and family is common no matter what industry you are in. But providing medical services for free, or at a reduced rate, comes with some restrictions. The AMA has guidelines on this topic, which encourages physicians to use their own judgment when deciding to waive or reduce their fees when treating fellow physicians or their families (see Ethical Opinion 6.13 - Professional Courtesy). Ethics aside, the key issues for physicians to be aware of are legal ones:

(a) As most physicians know, routine waiver of co-payments can violate health insurance policies or programs and may constitute fraud under state and federal law. Your office should have a strict policy regarding when co-payments can be waived (documented financial hardship) and these policies should be followed under all circumstances.

Another problem with waiving co-pays is that it means you are accepting “insurance only.” This can have the unintended consequence of changing what is considered your “usual and customary” fee. Say, for example, you charge $200 to an insurer and you are paid $160 (80 percent of the charge). You would then collect the co-payment of $40. Accepting $160 as payment in full can result in that amount becoming your actual charge, so that the payment by insurer will be 80 percent of that, or $128. How often you need to accept “insurance only” for this to occur is not clear. Offering professional courtesies and marketing your practice by offering discounts can all add up to a change in your usual and customary fee.

The Anti-Kickback Statute is also implicated by the waiver of co-pays and deductibles, which are specifically considered “remuneration” under the Statute. This means that if you are waiving co-pays and deductibles for someone who is a beneficiary or in a position to directly or indirectly generate referrals of federal beneficiaries to your practice, you may be in violation of the law.

(b) Providing something of value for free is also considered “remuneration” under the Anti-Kickback Statute. If free services are provided to anyone who is in a position to directly or indirectly refer Medicare or Medicaid patients, this can be a problem.

With all these legal limitations, how can you properly provide professional courtesies?

Unfortunately, there is little guidance available. Stark had a proposed exception for professional courtesies, but in the final rule the exception was modified so it may now be used only by hospitals or other DHS entities with medical staffs. Although there is no other exception to follow for Stark compliance, many groups apply the Stark gift-giving limits, which are $359 in 2011, with each individual gift being a maximum of $30. I discussed this in an earlier blog.

Under the Anti-Kickback Statute, there are no clear exceptions for professional courtesies. If the free service is being provided to a Medicare beneficiary, there is always the de minimus exception, which allows incentives of nominal value (not more than $10 per item or $50 in the aggregate per year to a single individual).

Although there is no great answer, I recommend the following steps:

1. Have a written policy within your practice regarding professional courtesies. Make sure everyone understands the rules and can follow them.

2. Make sure professional courtesies are offered to everyone on the same basis without regard to ability to refer.

3. Do not offer courtesies to any physician or family member who is a federal health care beneficiary, unless there is a showing of financial hardship that meets the same standards that are followed for other patients of the practice.

I always urge my clients to consider what kind of professional courtesy really needs to be offered to friends and colleagues. Sometimes a same-day appointment or an extended one-on-one conference is all that is being asked for, without the need to discount or provide free services.

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