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Government and commercial insurers have different policies practices must know about waiving copayments. What do practices have to know?
The Office of the Inspector General (OIG) takes the position that routine waiver of coinsurance payments in Medicare cases amounts to a type of healthcare fraud. This is either because a provider has falsely certified compliance with the requirement to attempt to collect the patient-responsible portions of the charges, or because routine waiver of copayments would result in a misrepresentation of the provider’s usual and customary charges. As the OIG has explained in Special Fraud Alerts, if the stated charge is $100, but the provider waives the $20 coinsurance routinely then the usual charge is in reality, $80, not $100. Therefore the government was overcharged $16 (80 percent of the $20 difference).
On the other side, commercial insurance and other types of health insurance plans may or may not require coinsurance payments, because healthcare plans are not uniform. Some are fully-insured plans and some are self-funded employer plans. Some benefits commonly do not contain a coinsurance provision, such as federal employee. Many commercial plans covering hearing loss due to on-the-job noise exposure.
When a copayment is required, both Medicare and commercial plans typically require a presentation of the bill to the patient, and a legitimate attempt to collect. “Dunning letters” are the minimum that is required. “Street law” holds that the requirement is to make three legitimate attempts to collect, which is similar to the test for writing off “bad debt” on an income tax return. In reality, the dunning letter requirement is whatever the insurance agreement or insurance manual dictates. In the absence of a contractual provision, three attempts is the norm.
Typically, it is not required that a provider send the bad debt to a third-party collection agency, unless the plan language, contract or manual makes this a requirement. Providers who do send patients to collection agencies over minor bills, may expect to lose about 30 percent of those patients.
Reporting patients to credit reporting bureaus does not appear to be a requirement and according to the Texas Bar Association Ethics Opinion 652, published in January of this year, lawyers could be subject to discipline for reporting delinquent accounts. Specifically, Opinion 652 states “a lawyer should not report a delinquent client to a credit bureau, either directly or through a collection agency, because this is not necessary to the collection of the debt, the effect is punitive, and it unjustifiably risks the unauthorized disclosure of confidential client information.”
If you have questions regarding your policies and obligations to collect patient-responsible portions of charges for services, consult a health lawyer to ensure that you are in compliance with your policies.