Doctors Q & A

Waiving Co-payments and Co-insurance without Going to Jail

Q. I regularly waive my clients' Medicare Part B co-insurance and deductible payments. However, a colleague recently told me that waiving Medicare co-insurance and deductible payments may violate the law. Is it really against the law to waive such payments?

A. Yes. The Anti-kickback Statute, 42 U.S.C. Sec. 1320a-7b(b), states that a physician may not knowingly solicit, receive, offer or pay any remuneration (directly or indirectly), in cash or in kind, with respect to the referral of a patient or the furnishing of any service to a patient for which payment may be made under a federal health care program. The violation of this federal law is a felony offense and can result in significant monetary penalties and imprisonment.

While the wording of the Anti-kickback Statue is somewhat vague, the Office of the Inspector General has clearly stated that the waiver or reduction of Medicare cost-sharing amounts (i.e., co-insurance, deductibles) is a violation of the law. Nevertheless, the federal government has carved out certain exceptions to this general rule. These exceptions are called "safe harbors" and the most common ones are as follows:

Means testing

A physician may waive the coinsurance and/or deductible if (1) the waiver is not offered as part of any advertisement or solicitation; (2) the physician does not routinely waive such coinsurance or deductible amounts; and (3) the physician first determines, in good faith, that the particular patient is in financial need.

Bad Debt

A physician may waive the coinsurance and/or deductible if (1) the waiver is not offered as part of any advertisement or solicitation; (2) the physician does not routinely waive such coinsurance or deductible amounts; and (3) the physician has made a reasonable attempt to collect such amount, but has been unsuccessful.

Unfortunately, the federal government's well-intentioned effort to eliminate kickbacks is unduly broad. As such, a physician who wants to ensure compliance with federal law must collect all Medicare cost-sharing payments, unless the waiver of the payment fits neatly within an established "safe harbor."

Stephen A. Snyder, Esq.
Vice President/General Counsel

Disclaimer: The information contained within the MTBC^® Legal Corner is provided for general educational and informational purposes only and should not be construed as legal advice. The author of the Legal Corner does not represent the Web site user or the individual submitting a particular question. Please seek the advice of legal counsel to address any specific questions you may have regarding your particular facts or circumstances