Ann & Dan's compliance corner
Welcome to Ann & Dan's Compliance Corner! Launched last month, this column gives you updates on compliance issues you want to know about. This month, we bring you an update on Medicare rules on waivers of co-pays and deductibles. (Missed last month's column on the much-anticipated HIPAA Enforcement Rule? Click here.)
Many providers are concerned about the appropriateness of waiving Medicare co-pays and deductibles. With good reason: the Office of the Inspector General (OIG) gets suspicious about the waiver of co-pays and deductibles involving federally funded health care programs. That's because the OIG reports that the routine waiver of deductibles and co-payments could potentially result in the submission of false claims.
The co-payment or coinsurance, which is "the portion of the cost of an item or service which the Medicare beneficiary must pay," is typically 20% of the Medicare allowable charge, which is the lower of the Medicare fee schedule amount or a provider's "actual charge." The OIG has stated that providers who routinely waive Medicare co-payments or deductibles may be misstating their actual charge. For example, if the Medicare fee schedule amount for a medical imaging service is $100, but the provider routinely waives the co-payment, the OIG can claim that the provider's "actual charge" is really $80. Medicare should therefore be paying 80% of $80 ($64) rather than 80% of $100 ($80). As a result, the Medicare program is arguably paying more than it should.
Providers can waive co-payments and deductibles only if a patient demonstrates financial hardship. If you do waive co-payments and deductibles, make sure to get documentation of the patient's financial need in accordance with the practice's established written policy.
Disclaimer: The content of Compliance Corner is for general informational purposes only, and should not be interpreted as compliance guidance or advice. Consult your compliance advisor or attorney for compliance or legal advice on specific issues related to your practice or compliance program.