Deeper Than the Headlines: Co-Pay Waivers

Many of us have heard the phrase that those who cannot remember the past are condemned to repeat it. It seems this is proving true with a couple of recent healthcare compliance settlements.

Twenty-two years ago the HHS OIG published a fraud alert regarding the routine waiving of patient co-pays. https://oig.hhs.gov/fraud/docs/alertsandbulletins/121994.html

Essentially, their concern revolved around the potentially improper inducement of patients to receive services from a provider. The Medicare program requires patients to pay various amount of copays and/or coinsurance. According to the fraud alert, the OIG believes, “When providers, practitioners or suppliers forgive financial obligations for reasons other than genuine financial hardship of the particular patient, they may be unlawfully inducing that patient to purchase items or services from them.” Most compliance and billing programs are aware of this danger, and have robust policies and procedures in place to make sure any waivers of copays are based on a good faith financial hardship analysis and a good faith effort to collect from patients when no such financial hardship exists. But a couple recent settlements seem to demonstrate that the routine waiver of copays might become an issue once again.

On Friday, October 21, 2016 the U.S. Attorney in Manhattan announced a $5.31 million civil settlement with Hudson Valley Hematology-Oncology Associates in New York. According to the court documents, Hudson Valley admitted to routinely waiving patient copayments for Evaluation and Management (E/M) codes without an individualized determination of financial hardship or exhaustion of reasonable collection efforts. The scheme revolved around routinely scheduled patient services such as injections, chemotherapy and venipunctures. In addition to these services, the practice would bill for the E/M services without documenting a significant and separately identifiable E/M service in addition to the routinely scheduled service. As a way to avoid patient concerns, the practice would bill Medicare the E/M but waive the patient's’ financial responsibility. Thus, the practice would be reimbursed for the E/M codes in addition to the routine services.

The government’s involvement was brought about through a whistleblower lawsuit under the False Claims Act. The whistleblower in this case was a former Accounts Receivable Representative at Hudson Valley, responsible for coding and charge entry for billing purposes.

Waiving the copay is permitted in exceptional circumstances. The hardship exception, however, must not be used routinely; it should be used occasionally to address the special financial needs of a particular patient, supported by documentation of financial hardship. Except in such special cases, a good faith effort to collect deductibles and copayments must be made. Hudson Valley routinely waived copayments, without making an individualized determination of financial hardship or exhausting reasonable collection efforts. Hudson Valley waived copayments for various reasons, including for individuals who sought frequent medical services from Hudson Valley, had a high balance, whose insurance did not pay certain amounts, or who expressed an inability to pay. None of these reasons was an allowable exception. Additionally, Hudson Valley consistently waived the copayments without receiving any supporting documentation or additional information from the patients.

Hudson Valley noted the waiver of these copayments in its billing system using terms such as “write-off,” “down coding for Medicare,” and “professional courtesy.” As one example, between August 2012 and September 2014, Patient A was treated 34 times at Hudson Valley. Hudson Valley did not collect the copayment for any of these treatments and its records do not contain any documentation explaining the reasons for the waivers.

Further, specifically as to Current Procedural Terminology (“CPT”) code 99212, Hudson Valley often waived the copayment associated with it even if the patient did not request a waiver. Hudson Valley would note the automatic waiver in its billing systems by indicating “99212 courtesy write off.” On a daily basis, Hudson Valley created two schedules: an “M.D. schedule” and a “Chem/Inj/RN schedule” (the “R.N. schedule”). The patients on the R.N. schedule were scheduled to receive minor or routine services administered by a nurse, such as B12 injections, blood withdrawals or chemotherapy. The patients on the R.N. schedule typically were not seen by a doctor during the appointment. Despite the fact that the physicians at Hudson Valley typically did not see any of the patients on the R.N. schedule, at the end of each day, the nonphysician practitioners who treated patients on the R.N. schedule left all of those patients’ medical charts on the desk of one of the Hudson Valley physicians to sign the progress notes. For those charts, the doctor would falsely certify that he or she had participated in the evaluation and management of the patients on the R.N. schedule.

Another recent settlement (June 2016) also involved the routine waiver of copays. Dr. Asad Qamar, a cardiologist in Florida also settled for approximately $7 million. He was also excluded from Medicare. In Dr. Qamar’s case, it was alleged he was performing a high volume of procedures on patients and in order for patients not to be discouraged from repeatedly coming back to his office for allegedly medically unnecessary services, the practice would waive copays.

According to court documents, one employee, speaking about being directed to waive copays, stated:

“Let me also clarify that Dr Qamar tells me, most often after the patient has already left :) that he wants the patient as ins[urance] only or a no pay. Other times the patient will try to cancel an appt because they say they can’t afford to come again when he wants them to. Dr Qamar most always says to have the pt come in anyway and just make it a no-pay. Those are a few situations where he may request this but I don’t question why he wants them a no-pay. I just make the notes. In many cases the pt may not qualify as a “financial hardship” but Dr Q is the boss :) and he figures it[’]s his way of giving back. I make notes when this happens but if when [sic] the patient comes in the office next time and the note pops up, you are more than welcome to have someone over there ask the patient to fill out the hardship form (even if financially they may not meet criteria) if it would keep things ‘across the board’ for you.”

From the government’s perspective, the bottom line is medical decision making by physicians and other healthcare providers should be based on what is in the best interest of the patient and financial benefits to the physician should not come into play when such decisions are made. By improperly waiving the co pay, there is essentially no check (financially speaking) against the physician by the patient if the physician declares the service needs to be done.

It might be a good time to dust off that policy or procedure on waiving patient copays. It’s probably been awhile since it was last reviewed. And, as stated already, if we choose to ignore the mistakes of the past, we are likely to repeat it.