Pros and cons of offering professional courtesy

Professional courtesy, waiving all or part of professional fees, now has become a field day for lawyers and third-party carriers-and an unwary trap for the well-intentioned doctor. This practice was once almost a given when visiting a colleague for professional services. The concept hasn’t changed, but the rules have now levied a chilling effect on how professionals treat each other and their families.

While professionals are free to extend professional courtesy to whomever they wish, the difficulty is we now live in a controlled insurance environment with copays, insurance-only patient billings, and interprofessional referrals. Due to this shift in the way we do business-unless you have a cash-only practice-keep legal ramifications in mind.

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Origins of the practice

The original purpose of professional courtesy was to discourage physicians from treating themselves and their immediate family members.¹

While the custom dates back to Hippocrates, Thomas Percival endorsed complimentary professional care in 1803 with his essay on medical ethics. This courtesy extended to pharmacists, physicians, surgeons, and their children and spouses. This concept was further endorsed by the American Medical Association’s Code of Ethics in 1847.²

Insurance involvement

Clearly it is your financial bottom line that is directly affected should you choose to waive or discount a patient’s charge or copay. Unfortunately, third-party carriers have a different take on your generosity.

They argue that if you give your patients a break, they are entitled to the same level of generosity.³ The fact that reimbursements for your services may already be discounted as a plan provider is not considered.

Doctors may cut patient costs by waiving the copay and thus give patients a discount on their care. However, the federal government-as well as private payers-does not just discourage waiving the fee; it outright bans it.³ Furthermore, the doctor must make a reasonable effort to collect those copays.³

If you elect to give a discount or reduction of your usual and customary fee, you must apply that discount or percentage off the entire bill-both what the patient pays and what the insurance company is billed.⁴ It is conceivable the patient may pay his entire copay and the insurance company alone benefits from your generosity.

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Giving dollars off materials constitutes a discount as well⁴ and should be considered professional courtesy, falling under the same rules and regulations as professional services.

In addition, many insurance companies have a “most-favored nation” clause that allows the insurance plan to pay the lowest charge that you bill to anyone.⁴ Therefore, the doctor can neither hide medical information by not charging the insurance company when services are rendered nor refuse to charge the patient for a visit, then bill the insurance company for work that would not have been approved if it was part of a reimbursed visit.

Yes, this is very confusing.

Under Health Insurance Portability and Accountability Act (HIPAA), it is a federal crime to defraud private insurance companies, which could result in criminal prosecution and fines.⁵ The government can refuse to pay the claim and ban you from participating in Medicare and Medicaid. To date, there have been no settlements, prosecutions, or cases based only on the offering of professional courtesy.³

Additionally, discounts must comply with the federal Anti-Kickback Statute and the Stark Law (Ethics in Patient Referrals Act). The Stark Law regulations (2004 and 2007) specifically cite MDs, DOs, podiatrists, dentists, chiropractors, and optometrists.^5,6

The Anti-Kickback Statute prohibits the offering, soliciting, or giving remuneration (i.e., professional courtesy) to any entity to induce referrals for items or services that are covered by any federal healthcare program.⁶

When we speak about professional courtesy, we mean that there can be no charge to the patient or the insurance carrier for professional care. Nor can courtesy be linked to referrals or even appear to be linked to referrals.

It is possible for the doctor to waive the practice’s entire fee for a service that is rendered to a specific group of persons (for example, your employees or your family members) as long as doing so does not conflict with federal or state laws and the insurance carrier is not billed for the charge with a waived copay.

In short, professional courtesies cannot be a vehicle to induce referrals, most particularly those items or services that may be covered or paid by existing state or federal health care programs.

To comply with Stark regulations, your courtesy policy must be in writing and approved by the practice’s governing body. Before crafting such a policy, read the regulations closely and consult your legal advisor.

Bottom line: If you don’t collect the copay from the patient, you cannot charge the insurance company without being liable for fraud. If you do bill the insurance company (or government payer), you must collect the copay or the percentage required by the insurance company from the patient.

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AMA, OIG weigh in

Professional courtesy is becoming obsolete. The American Medical Association advises that physicians should be aware that forgiveness or waiver of copayments may violate the policies of some insurers.³ Routine forgiveness or waiver may constitute fraud. Ensure your policies on copayments are consistent and within the framework of current law as well as any and all insurer agreements or contracts.

The Office of Inspector General’s (OIG) “OIG Compliance Program for Individual and Small Group Physician Practices” guidelines speaks specifically to of professional courtesy.⁷ While not all professional courtesy discounts or free services are disallowed, the guidelines should be closely reviewed to make certain that the arrangement does not suggest or constitute fraud or abuse. Two factors provide guidance, citing how the recipients are selected and how the courtesy is extended.

Furthermore, doctors must avoid even the appearance of impropriety. If a patient is financially needy, then the doctor must make certain that offering a professional courtesy must comply with applicable laws and fully documents the facts.

The OIG has supported waiver of deductibles and copayment in individual cases of indigence. However, you must be able to justify the waiver with complete documentation. Good-faith collection efforts will also justify excusing the debt.

The OIG has the authority to impose civil monetary penalties for violations. Violation of the Stark regulations include up to $15,000 per claim and up to $100,000 for each referral-inducing financial arrangement. The government has a zero tolerance policy of fraud and abuse.

Remember that your current or past employees may elect to become “whistleblowers.” Whistleblowers are protected by law and have an incentive for reporting fraudulent practices because they retain a percentage of the recouped funds.

Decide your own policy

It is up to each practitioner to decide office policy with respect to extending professional courtesy, as well as to whom, how much, and how often. There is no best solution, only the best option for your practice and level of comfort. The best policy may in fact be that you decide no professional courtesy will be extended to anyone. This is particularly true when a patient holds third-party or government-issued coverage and you are billing for services. Perhaps we should consider returning to how services used to covered: cash only with no third-party or insurance billing.

If you currently extend professional courtesy, this is the time to rethink your policy. Your patients may need to be retrained, whether you just purchased the practice or have been in practice for years. The times are changing and you have to protect yourself and your practice. If you are just starting, don’t even go down that road if at all possible. If you do, be specific and only consider this action in very limited and defined circumstances, making certain you document as completely as possible.

If you are purchasing or taking over a practice, it is prudent to ask if the practice has an existing professional courtesy policy. If a policy exists, the new practitioner should review it and make appropriate updates or changes. I recommend to discontinue the practice and notify affected patients of the change in policy and practice ownership.

If you choose to offer professional courtesy in your office, remember to be careful, be consistent, be mindful of the laws and regulations, comply with the contracts you have in place, and consult your attorney when necessary.

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References:

1. Professional courtesy. Wikipedia. Available at: https://en.wikipedia.org/wiki/Professional_courtesy. Accessed 4/14/17.

2. American Medical Association. Code of Medical Ethics. Available at: https://www.ama-assn.org/sites/default/files/media-browser/public/ethics/1847code_0.pdf. Accessed 4/11/17.

3. Rathburn KC, Richards EP. Professional Courtesy. Missouri Medicine. Available at: http://biotech.law.lsu.edu/articles/Professional_Courtesy.html. Accessed 4/11/17

4. Doherty JF, Ras M. Most Favored Nation Clauses in Payor/Provider Agreements. Maryland State Bar Association. Available at: http://www.msba.org/uploadedFiles/MSBA/Member_Groups/Sections/Health_Law/AHLA%20MFN%20Article.pdf. Accessed 4/14/17.

5. US. Department of Health & Human Services. Summary of the HIPAA Security Rule. Available at:. https://www.hhs.gov/hipaa/for-professionals/security/laws-regulations/index.html. Accessed 4/14/17.

6. The American Health Lawyers Association. Anti-Kickback Statute. Available at: https://www.healthlawyers.org/hlresources/Health%20Law%20Wiki/Anti-Kickback%20Statute.aspx. Accessed 4/14/17.

7. U.S. Department of Health and Human Services. OIG Compliance Program for Individual and Small Group Physician Practices. Federal Register. Available at: https://oig.hhs.gov/authorities/docs/physician.pdf. Accessed 4/11/17.